IPW

Good afternoon, everyone. And thank you for participating in today's Conference Call to discuss iPower's Financial Results for its Fiscal Third Quarter 2025 ended March 31, 2025. Joining us today are iPower's Chairman and CEO, Mr. Lawrence Tan; and the Company's CFO, Mr. Kevin Vassily. Mr. Vassily, please go ahead.

Thank you, Victor. Good afternoon, everyone. By now, everyone should have seen release of our fiscal third quarter 2025 earnings issued earlier today at approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of our website at meetipower.com. This call will also be available for webcast replay on our website. Following our prepared remarks, we'll open the call for your questions. Before I introduce Lawrence, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans, strategies, projections, anticipated events and trends, the state of the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, changes in circumstances that are difficult to predict, and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the Company's filings with the SEC, including our annual report on Form 10-K, which was filed with the SEC, on September 20th, 2024. Do not place undue reliance on any of the forward-looking statements, which are being made only as of the date of this call. Except as required by law, the Company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. With that, I'd now like to turn the call over to iPower’s Chairman and CEO, Lawrence Tan. Lawrence?

Thank you, Kevin, and good afternoon, everyone. We took important steps to strengthen our operational foundation during the quarter, even as we navigated a more cautious demand environment. In response, we have accelerated efforts to diversify our supply chain by expanding manufacturing into the U.S., onboard more U.S.-based suppliers, as well as continuing to cultivate relationships with alternative suppliers in other geographics. These actions are central to our strategy to build a more agile and durable supply chain capable of supporting long-term growth and reducing exposure to external volatility. In our SuperSuite business, we continue to see solid momentum, reflecting both the strengths of our platform and the growing demand for our market-leading solutions. SuperSuite now accounts for approximately 20% of our total revenue mix, a significant milestone that underscores the accelerating adoption of our integrated supply chain offerings. As a tech-based, data-driven platform, SuperSuite empowers our partners with the infrastructure, intelligence, and executional support needed to scale effectively in today's fast-paced e-commerce environment. During the quarter, we continued to add depth into our SuperSuite capabilities by implementing key functions from value-added partners across logistics, merchandising, and data analytics to further enhance our services. As an example, we recently extended our national fulfillment network through newly onboarded warehouse locations, enabling faster and more cost-efficient delivery across key region markets. These additions are not just incremental improvements, but strategic components that make SuperSuite a more sophisticated, more connected, and more agile ecosystem. The purpose of SuperSuite is simple. Deliver a turnkey solution that enables our partners to scale faster, operate more efficiently, and stay ahead of evolving consumer expectations. By building a seamless bridge between supply chain input and e-commerce execution, we are not only improving outcomes for our partners, but also positioning SuperSuite as a go-to solution for emerging brands looking to compete in a data-driven omnichannel world. As we announced earlier this week, we further expanded SuperSuite's capabilities with the Made in USA module. Made in USA is designed to facilitate the establishment and expansion of domestic manufacturing lines by offering comprehensive support in areas such as legal and regulatory compliance, facility sourcing and setup, local management and labor sourcing, funding opportunities, and access to both online and offline sales channels. By providing these critical resources, we are bridging the gap for manufacturers and supply chain partners who are considering domestic production but may lack of infrastructure or guidance to do so effectively. The initiative serves as a cornerstone of SuperSuite's broader supply chain solution and aligns with the increasing global focus on reshoring as a critical lever for supply chain resilience. As manufacturers seek to diversify operations, reduce dependency on international logistics, and respond to shifting geopolitical dynamics, the Made in USA module provides a much-needed platform to bring advanced manufacturing skills and capabilities to U.S. soil. As the first of several planned collaborations under the Made in USA platform, we are actively engaging with a sales partner that has an existing sales team here in the U.S. and established a customer base, and a manufacturing partner to establish a comprehensive domestic production line. This partnership will leverage our robust support infrastructure, aiming to integrate manufacturing expertise from international partners while utilizing iPower's established sales and fulfillment network to scale production effectively. This deal represents the initial step in a series of strategic initiatives aimed at attracting manufacturers and supply chain partners to the United States. At the operating level, we are implementing targeted initiatives aimed at reducing expenses and streamline operations, laying the groundwork for improved margin and greater efficiency. Our commitment to enhancing operational efficiency and building a more resilient, adoptable supply chain remains a strategic priority. A core element of this approach is supplier diversification, which reduces reliance on any single region and enhances our agility in responding to global disruptions. Late last year, we expanded our manufacturing footprint into Southeast Asia, establishing new partnerships that are already showing early signs of promise. More recently, we have taken the initial steps towards developing a domestic manufacturing facility here in the U.S. A step that not only aligns with our long-term cost management goals, but also positions us to respond more quickly to shifts in customer demands, improve lead times, and further insulate our operations from geopolitical and logistical risk. As our supplier base continues to broaden and we begin to scale purchasing with new partners, we anticipate a range of operational benefits, including more favorable production economics and streamlined logistics. Additionally, a more agile and cost-efficient supply chain will enhance our ability to deliver value to both our customers and bottom line, enabling more competitive pricing and stronger margin performance. We remain focused on building a diverse global supplier network that supports the continued growth of our business with the flexibility to adapt a dynamic operating environment. Looking ahead, we are taking a disciplined approach to capital allocation as we strengthen our operational foundation and build a more robust supply chain. While macro conditions remain uncertain, our proactive diversification across both suppliers and the sales channel positions us to effectively manage near-term volatilities. We believe these initiatives, coupled with our accelerating momentum in SuperSuite and ongoing efforts to broaden our sales channel, will enable us to navigate the current market environment and execute our goals ahead. I'll now turn the call over to our CFO, Kevin Vassily, to take you through our financial results in more detail. Kevin?

Thanks Lawrence. Unless referenced otherwise, all variance commentary is in comparison to the year ago quarter. Let me dive right into the fiscal Q3 results. Total revenue in the fiscal third quarter of 2025 was $16.6 million, compared to $23.3 million prior year. Decrease was driven primarily by lower product sales to our largest channel partner, partially offset by growth in our SuperSuite supply chain offerings. Gross profit in the fiscal third quarter of 2025 was $7.2 million, compared to $10.3 million in the same quarter of fiscal 2024.%age of revenue gross margin was 43.3%, compared to roughly 47% in the year ago period. Decrease in gross margin was primarily driven by an increase in services income in the quarter. Total operating expenses in fiscal Q3 improved 15% to $7.4 million, compared to $8.8 million in the same period in fiscal 2024. Decrease in operating expenses was driven primarily by lower general and administrative costs from our optimization initiative, as well as lower selling and fulfillment expenses related to our largest channel partner. Net loss attributable to iPower in the fiscal third quarter was $340,000, or a loss of $0.01 per share, compared to net income attributable to iPower of $1 million, or a profit of $0.03 per share for the same period in fiscal 2024. Moving to the balance sheet, cash and cash equivalents were $2.2 million at March 31, 2025, compared to $7.4 million at June 30, 2024. As a result of our consistent debt paydown, total debt was reduced by 43% to $3.6 million, compared to $6.3 million as of June 30, 2024. To summarize our financial performance, we're up against a fairly difficult comp year-over-year this quarter due to elevated purchasing volumes from our largest channel partner in the year ago period. Despite this, we continue to realize meaningful benefits from the optimization initiatives we've been putting in place over the last fiscal year, resulting in a 15% reduction in operating expenses for fiscal Q3. Additionally, we further reduced our debt obligations by nearly 20% during the fiscal third quarter alone, reinforcing our commitment to strengthening the balance sheet. With our ongoing efforts to diversify our supply chain, accelerating momentum in SuperSuite, and an optimized operating structure, we believe we're well-positioned to deliver long-term value to our customers and shareholders alike. This concludes our prepared remarks, and we'll now open it up for questions.

[Operator Instructions] Our first question will come from the line of Kunal Madhukar from Water Tower Research.

Hi, thank you for taking the questions. Couple of very quick. One would be to understand now that you have diversified your supply chain and manufacturing, what is the respective exposure to the different geographies based on the sales that you did in the fiscal third quarter? How much of that was coming from different countries, and where is the exposure?

Okay. The Southeast Asia is growing, but right now still most like the majority of the supplies are coming from China. We have U.S.-based suppliers now onboarded. So still the most of them are from China. The 20% of the services are mostly delivered here for us to sell, but the imported ones, most of the manufacturers are from China still. We are on our way to diversify that further.

Got it. And then you have been trying to reduce your inventory, but you are still probably sitting on a large amount of inventory. How does that create you and that inventory is already in the U.S. How does that place you comparatively, as far as your largest channel partner is concerned, in terms of when it decides to reorder? Your inventory may be the closest and the cheapest to reorder from.

Our U.S. inventory is a critical part to compensate any products that other channel partners do not have enough inventory. So it's very important to keep adequate inventories in the U.S. to balance the overall demand. My take to navigate across the robust macroenvironment is that we should not overstock or try to bet on any political-influenced events. Instead, we keep operating with a very reasonable, efficient inventory level, usually two to three months. That's my goal. Batting or preparing for one way or the other in today's environment may result in unexpected results as they change from day to day and week to week.

I totally understand that. In fact, they change from hour to hour. So predicting that is a tough one. The other one, sorry and this is the last one. This is on the Made in the USA. So there are a number of things that you're doing, a number of initiatives within this, in terms of helping setting up manufacturing facilities, maybe siting land, and even with labor, trying to help other companies with labor. Now, one of the key questions that people would potentially have is like what is your level of expertise in the U.S. that you can help support a consulting business where you're helping other people kind of navigate the tough manufacturing environment in the U.S.?

Right. We not only just provide consulting services; we heavily involve into this Made in the USA effort. First of all, we have established sales channels online, and we have established business partner relationships with offline big box retailers, and now we have B2B sales partners on board already. So that's number one. We have the sales channel. Number two, we have product capabilities, market research, analytical, data-driven approach that we have been doing for years. And thirdly, compared to the international manufacturers, we understand the local policies and laws, and we have access to resources and communication channels for a variety of different tasks that are very essential for setting up Made in the USA. So overall, from a sales perspective, from a product perspective, from a setting up and local perspective, these are critical ones that to successfully launch a manufacturing plant here. I'm pretty excited. With SuperSuite, that's already bringing us a lot of like a U.S.-ready products for sales, which SuperSuite has contributed 20% of our sales as of today, and our soon to be launched like Made in USA production line in the pipeline. And the expansion of our Southeast Asia manufacturing, I think I'm pretty excited to have these diversified supply chains going on that become like the majority of our mix. And by saying that, we also have other manufacturers who have established their locations here and are working with us on the sales side only. Like they don't need help on the manufacturing setup part. So they are much, much bigger and more sophisticated. Yes, with all these works in place, we'll become a true global sourcing platform and sales primarily for the U.S. market, bringing the best values from all different parts of the world.

Thank you. Now I'm not showing any further questions in the queue. I would now like to turn it back over to Kevin for closing remarks.

Okay. Well, thank you everyone for joining. And we look forward to speaking again with everyone in September when we report our fiscal Q4 and full year results. Thanks again for joining. Goodbye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.

Good afternoon, everyone. By now, everyone should have access to our fiscal second quarter 2025 earnings press release. Which was issued earlier today at approximately or 5:00 PM EST. The release is available in the investor relations section of our website. This call will also be available for webcast replay on our website. Following our prepared remarks, we'll open the call for questions. Before I introduce Lawrence, I'd like to provide listeners that certain comments made on this conference call and webcast are considered forward looking statements under the Private Securities Litigation Reform Act of nineteen ninety five. Forward looking statements are neither historical facts nor assurances of future performance, they are based only on our current beliefs, expectations, and assumptions, regarding the future of our business, future plans, strategies, projections, anticipated events and trends, the state of the economy, and other future conditions. Because forward looking statements relate to the future, are subject to inherent uncertainties, risk changes, and circumstances that are difficult to predict. And many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC, including our annual report on Form 10-K, which was filed with the SEC on September 20, 2024. Do not place undue reliance on any of the forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. Our presentation today also includes certain non-GAAP financial measures, including adjusted net income and EPS, supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You will find reconciliation tables and other important information in the earnings press release and Form 8-K that we furnished to the SEC this afternoon. With that, I would now like to turn the call over to iPower's Chairman and CEO, Lawrence Tan.

Thank you, Kevin, and good afternoon, everyone. We delivered strong results across all key financial metrics in our fiscal second quarter while further enhancing our SuperSweet platform throughout the quarter. We continue to optimize operations and strengthen our presence across both our established and emerging sales channels. We also remain focused on supply chain diversification by exploring new supplier relationships beyond our existing network, reinforcing our commitment to building a more resilient and adaptable infrastructure. Our SuperSweet platform is gaining further momentum as we drive sales growth for partners with innovative product catalogs. Additionally, the platform offers strategic insights that enhance our operational efficiency and competitive positioning in the market. SuperSweet's continued revenue acceleration underscores the value we bring through our expertise in supply chain management, fulfillment, and merchandising. As we advance our pipeline of prospective partners, we are focused on scaling SuperSweet's capabilities, and we anticipate it will grow as a larger share of our overall revenue mix. This quarter, we took meaningful steps to strengthen SuperSweet by integrating critical functions from value-added partners across logistics, merchandising, and data analytics to optimize our service offerings. This enhancement reinforces our commitment to fostering a fully connected ecosystem where all partners collaborate towards a common goal, which is driving sales in both US and international markets. By creating seamless integration across the supply chain, we empower our partners with the tools to expand efficiently, navigate shifting market dynamics, and optimize their operations for long-term success. This collaborative approach positions SuperSweet as a leading comprehensive solution for today's evolving ecommerce and supply chain landscape. We continue to make steady progress with our recently launched SuperSuite supplier portal as well, refining its capabilities to enhance supplier collaboration and streamline operations. This platform is designed to optimize supplier interactions by providing data insights, facilitating access to multiple sales channels, improving shipment efficiency, and enabling seamless collaboration on merchandising strategies. Additionally, as part of our ongoing innovation efforts, we are actively researching artificial intelligence applications to further enhance the platform's predictive analytics, automate routine processes, and provide smarter decision-making tools. Integrating these advanced features will enable us to foster stronger engagement between our suppliers, internal teams, and partners while driving greater efficiency across the supply chain. We have always prioritized diversifying our revenue streams, as evidenced by the launch of SuperSweet and our continued expansion into new sales channels like AliExpress. Our approach to channel expansion is strategic, focusing on strengthening our presence on our established channels like Amazon, where we have a proven sales track record and well-defined operational processes. At the same time, we continue to build our momentum on other channels like TikTok, which offer access to younger demographics and the growing social commerce space, and T-Mobile, which unlocks new revenue avenues for brand exposure and sales growth in rapidly expanding marketplaces. Our commitment to expanding across these diverse channels underscores our commitment to providing a comprehensive multi-channel solution that enables our partners to reach and engage customers both in the US and globally with greater efficiency and scale. At the operating level, our ongoing efforts to optimize our cost structure have delivered meaningful results as we continue to drive gross margin expansion and operating leverage in our business. We have also officially shuttered our legacy commercial hydroponics business, as we are now focused on our core competency as a data-driven, technology-driven consumer products and services company. As we mentioned before, we are continuing to benefit from a healthier supply chain, which enables us to operate with a lower level of inventory as lead times have normalized compared to recent years. As of December 31, 2024, we reduced our inventory level by approximately 12% compared to June 30, 2024. As we often say, we remain committed to enhancing operational efficiency and building a more resilient, adaptable supply chain. A key part of the strategy is our ongoing effort to diversify our supplier network, reducing dependency on any single region and strengthening our ability to navigate global supply chain fluctuations. Last quarter, we took a significant step forward by expanding our manufacturing base to Vietnam, reinforcing the viability of our outsourced strategy for most customers. As we further diversify and become geographically balanced, we expect to see meaningful benefits, including lower production and logistic costs. Our optimized supply chain will also be able to react more quickly to demand changes, using our diversified network to mitigate risks and avoid unnecessary trade restrictions. These enhanced efficiencies will enable us to offer more competitive pricing, strengthening our margins, and positioning iPower for long-term sustainable growth. We plan to continue identifying new supplier partnerships to further optimize our cost structure and ensure a robust, flexible supply chain that supports our growing business. Looking ahead, we are well-positioned to build our momentum and execute our strategic initiatives. We will continue expanding our sales channels while further investing in SuperSweet to enhance its capabilities and drive greater value for our partners. We are committed to strengthening every aspect of our supply chain, ensuring a resilient, efficient infrastructure that supports the evolving demands of ecommerce, supply chain management, and logistics. By leveraging our deep expertise in supply chain optimization, warehousing, and merchandising, we are well-positioned to achieve our long-term goals, both for iPower and our partners. We are confident that we will stay resilient as we adapt to market dynamics and capitalize on potential M&A opportunities, placing us in a strong position as a leader in end-to-end supply chain solutions. I will now turn the call over to our CFO, Kevin Vassily, to give some of our financial results in more detail.

Thanks, Lawrence. Unless referenced otherwise, all variance commentary is in comparison to the year-ago quarter. So I will dive right into the fiscal Q2 results. Total revenue in the fiscal second quarter of 2025 increased 14% to $19.1 million, compared to $16.8 million. The increase was driven primarily by growth in our SuperSweet supply chain business as well as greater product sales to our largest channel partner. Gross profit in the fiscal second quarter of 2025 increased 15% to $8.4 million, compared to $7.3 million in the same quarter of fiscal 2024. As a percentage of revenue, gross margin increased 40 basis points to 44%, compared to 43.6% in the year-ago period. The increase in gross margin was primarily driven by improved pricing through key supplier negotiations. Total operating expenses for fiscal Q2 improved 22% to $7.7 million, compared to $9.9 million for the same period in fiscal 2024. The decrease in operating expenses was driven primarily by lower selling and fulfillment expenses related to our largest channel partner. Net income attributable to iPower in the second fiscal quarter improved to $0.2 million or $0.01 per share, compared to a net loss attributable to iPower of $1.9 million or a loss of $0.06 per share for the same period in fiscal 2024. Moving to the balance sheet, cash and cash equivalents were $2.9 million as of December 31, 2024, compared to $7.4 million as of June 30, 2024. As a result of our debt pay down, total debt was reduced by 31% to $4.4 million, compared to $6.3 million as of June 30, 2024. As Laurence mentioned earlier, we continue to benefit from the optimization initiatives we implemented last fiscal year, reflected by another period of gross margin expansion and improved operating leverage. We have also reduced our debt obligations by nearly $2 million compared to June 30, 2024, reflecting our commitment to strengthening our balance sheet. These initiatives, coupled with our accelerating growth in our SuperSweet business, should enable us to execute on our goals ahead. This concludes my prepared remarks. We will now open it up for questions. Operator?

Thank you. The first question comes from Thierry Wuilloud with Water Tower Research. You may proceed.

Yes. Good afternoon, Kevin and Lawrence. A few questions on the product sales. In the fourth quarter, if we look at seasonality, I mean, the main driver there would be the fence business, right? Kind of a slow quarter for fans, but with your other product categories, are there any other seasonality factors?

We have categories like products that perform especially well. The hydroponics side of the business, the ecommerce sales side, performs well typically in the fourth quarter. As we transition away from commercial hydroponics, the consumer side continues to perform well, but it's a smaller share of our business.

Okay. Maybe one more question on the product sale. You said you shuttered the commercial hydroponics business. I know you have been deemphasizing it, and it's become a smaller and smaller percentage of your revenues, but why actually close down that line of business rather than let it go?

We are transitioning ourselves from a hydroponics-centered retailer to a multi-category retailer across multiple categories. With other categories growing much more meaningfully compared to hydroponics. And we are also transitioning ourselves from an online retailer to a services provider with the SuperSweet platform. That's our goal, to become a platform that connects supply chains, logistics, merchandising, and potentially financial services to facilitate sales for online and offline channels, here and globally. By shuttering the commercial hydroponics business, it no longer contributes to our revenue as it had not been contributing any meaningful numbers recently.

Yes, and Thierry, just to be clear, this is the commercial side. We still have hydroponics as part of the product portfolio, and we are selling that through our online channels to consumers. But it's the commercial piece that we have officially shuttered.

Okay, great. Moving on to SuperSweet. Can you give us an update on how many partners you currently have? You talk about a strong pipeline. I am kind of curious if there is a limit in terms of how many new partners you can onboard on a quarterly basis, or what's going to drive that business going forward?

While I don't think the number of partners indicates much, what I can share with you is that SuperSweet contributed about 20% of sales last quarter, so it is growing fast.

Another piece of data you can use is that it's roughly a $16 million annual run rate, which is meaningfully up from the prior year.

Last year, at this time, you were more on a $2 million annual run rate, right?

Yes, we were a little higher than that this time last year, but it was definitely below where we are right now. We are gaining progress and momentum with this approach.

Okay. Is there any way to describe the pipeline of new partners, or just stay tuned and see how things go?

We have a number of partners that we are actively engaging at certain stages. We are constantly onboarding new partners, and we are not pausing anything.

Kevin, I had a hard time understanding you all, and maybe you can kind of summarize what he said.

Yeah, the connection's breaking up. It's just bad. Thierry, let's take this on the follow-up call.

Okay. I had just one last question. I heard anecdotally that Amazon was continuing to reduce its 1P relationships and pushing some of the smaller players out of those relationships. Can you comment on that, and does it impact you in any way?

Are you talking about Amazon moving smaller vendors off its 1P platform? We don't get impacted, and that's actually good. It means they are focusing resources on better servicing their larger partners, and that's positive for us.

Thierry, that dynamic is something we have observed happening, starting probably six months to a year into the pandemic. Amazon was pretty aggressive in inviting suppliers onto the first-party platform before that, but the pandemic revealed some weaknesses amongst vendors with less operating history, and our view is that we actually executed fairly well on the metrics that Amazon measures, strengthening our relationship there. In some ways, it presents a market share opportunity for us.

Great. That does it for me. Thank you, guys.

Thanks, Thierry.

I would now like to turn the call back over to Kevin Vassily for any closing remarks.

We want to thank everyone for dialing in today. We look forward to speaking with you again for our March quarter earnings release and call and potentially at some conferences in the near future. Thanks again, and take care.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Good afternoon, everyone, and thank you for participating in today's Conference Call to Discuss iPower's Financial Results for its Fiscal First Quarter 2025 Ended September 30, 2024. Joining us today are iPower's Chairman and CEO, Mr. Lawrence Tan; and the Company's CFO, Mr. Kevin Vassily. Mr. Vassily, please go ahead.

Thank you, Liz. Good afternoon, everyone. By now, everyone should have access to our fiscal first quarter 2025 earnings press release, which was issued earlier today at approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of our website at meetipower.com. This call will also be available for webcast replay on our website. Following our prepared remarks, we'll open the call for your questions. Before I introduce Lawrence, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the state of the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, and many of which are outside our control. Our actual results and financial condition may differ materially from those indicated in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the Company's filings with the SEC, including our annual report on Form 10-Ks, which was filed with the SEC today, November 14, 2024. Do not place undue reliance on any forward-looking statements, which are being made only as of this date. Except as required by law, the Company undertakes no obligation to revise or publicly release the results of any revision to forward-looking statements. With that, I'd now like to turn the call over to iPower’s Chairman and CEO, Lawrence Tan. Lawrence?

Thank you, Kevin, and good afternoon, everyone. We maintained a solid momentum in the third quarter, while continuing to refine our cost structure, leading to year over year gross margin expansion and a reduction in operating expenses. Additionally, we made progress in expanding our SuperSuite supply chain platform. By onboarding key partners across the supply chain, we are enhancing our service capabilities, positioning SuperSuite as an increasingly valuable solution for our partners. We also broadened our sales reach by launching on AliExpress and further strengthened our presence on newer platforms such as TikTok Shop and Temu, aligning our offerings with a diverse and expanding customer base. In our SuperSuite business, we continued to work through a robust pipeline of prospective partners, integrating essential components across sales channels, marketing, merchandising, logistics, technology and data analytics to enhance our comprehensive service offerings. By adding these components, SuperSuite is equipped to address today's complex supply chain needs with a seamless end to end solution for e commerce, supply chain management and logistics. We are committed to strengthening each segment in the supply chain sales, enabling our partner to navigate to market needs, scale effectively and better serve their customers. At the end of the quarter, we launched our SuperSuite supplier online platform, which is designed to optimize supplier interactions, streamline operational workflow and better align our partners with evolving market demand. This platform enables suppliers to gain valuable data insight, access multiple sales channels, submit product offers, optimize shipments and collaborate on merchandising plans, among other key features. This SaaS platform represents a transformative step in unlocking SuperSuite's full potential, enabling more seamless and impactful engagement between our suppliers, our team and our clients. As I mentioned earlier, we continued to expand our sales channel by launching on AliExpress, granting our supply chain partner access to another major U.S. marketplace. AliExpress joins our growing list of U.S. Sales channels, which includes platforms such as Amazon Vendor, Amazon 3P, Walmart.com, Temu, TikTok Shop and several others. We are committed to offering a robust multichannel solution that enables our partners to reach U.S. consumers more effectively and efficiently. Launching sales on AliExpress further underscores our dedication to enhancing market access and driving value across our entire platform. We continue to benefit from the optimizing initiatives implemented last fiscal year, which led to gross margin expansion and lower operating expenses for the quarter. We are also benefiting from a healthier supply chain environment and no longer need to maintain elevated inventory levels as lead times with our international suppliers have normalized. It's also worth noting that with the growth of the SuperSuite, we can operate our business with a lower level of inventories, leading to improve the cash flow generation. As of September 30, 2024, we've reduced our inventory levels by approximately 18% compared to June 30, 2024. As we mentioned before, we are firmly committed to optimizing our operations to maximize efficiency. To further this effort, we diversified our manufacturing base with a new partner in Vietnam, strengthening the resilience of our supply chain for both customers and partners. In September, we completed our first purchase order shipment from this new manufacturer, marking a significant milestone in our ongoing strategy to diversify our supply chain. As products begin to arrive in the U.S. and commence sales, we anticipate benefiting from reduced production and logistics expense. These lowered costs will enable us to offer more competitive pricing, while improving margins, an essential factor for long-term sustainable growth. Looking ahead, we will continue to bolster each aspect of SuperSuite platform to provide a market-leading solution that meets the evolving needs of e-commerce, supply chain management and logistics. By strengthening these areas, we are not only driving efficiencies, but also building a more resilient infrastructure that can adapt to market changes and support scalable growth. This holistic approach positions us to better serve our partners' need from inventory optimization to faster, more reliable fulfillment, further solidifying our roles as a leader in e-commerce and supply chain innovation. I will now turn the call over to our CFO, Kevin Vassily, to take you through our financial results in more detail. Kevin?

Thanks, Lawrence. Unless referenced otherwise, all variance commentary is comparison to the year ago quarter. Total revenue in the first fiscal quarter was $19 million compared to $26.5 million. The decrease was driven primarily by higher promotional activity in the year ago period related to selling down inventory. This was partially offset by growth in our SuperSuite supply chain offerings. Gross profit in the fiscal first quarter of 2025 was $8.5 million, compared to $11.8 million in the same quarter of fiscal 2024. As a percentage of revenue, gross margin increased 30 basis points to 44.7% compared to 44.4% in the year ago period. The increase in gross margin was primarily driven by improved pricing through key supplier negotiations and optimizations. Total operating expenses for fiscal Q1 improved 14% to $11.2 million as compared to $13 million for the same period in fiscal 2024. The decrease in operating expenses was driven primarily by lower selling and fulfillment expenses, resulting from a combination of lower marketing and promotional activity. This was partially offset by approximately $1.8 million in write downs of certain inventory and credit loss reserves. Net loss attributable to iPower in the first quarter was $2 million or $0.06 per share compared to net loss attributable to iPower of $1.3 million or $0.04 per share in the same period of fiscal 2024. Moving to the balance sheet. Cash and cash equivalents were $2.6 million as of September 30, 2024 compared to $7.4 million at June 30, 2024. Total debt was reduced by 45% to $3.5 million as compared to $6.3 million as of June 30, 2024. Yesterday, we announced the renewal of our secured revolving credit facility with JPMorgan Chase, extending the maturity by three years to November 2027. The new facility has a revolving commitment of $15 million with an accordion feature that would allow us to obtain additional lender commitments of up to $40 million. Under new agreement, the interest on borrowing will be SOFR plus 2.25 to 2.5. We're pleased with the vote of confidence from a leading institution like JPMorgan Chase and look forward to growing our partnership as we execute on our goals. As Lawrence mentioned earlier, the work we've put in to optimize our cost structure is starting to bear fruit. It's reflected in this year's or this quarter's year over year gross margin expansion and reduction in operating expenses. We've also made further improvements to our balance sheet as we reduced our total debt obligations by nearly $3 million in this fiscal first quarter, in addition to our recently extended credit facility with JPMorgan Chase. We believe these actions combined with continued growth of our SuperSuite business and optimized cost structure will enable us to deliver on our goals for fiscal 2025. With that, this concludes our prepared remarks. We'll now open it for questions.

[Operator Instructions] Our first question comes from Thierry Wuilloud with Water Tower Research.

Yes, good afternoon. Maybe let me start with a couple of housekeeping items. You had some service income and service expenses. Can you give us some information as to what's that related to?

Sure. So, we've got as part of SuperSuite kind of two components of the business. One is kind of our resale or wholesale agreements we have on the sales side with partners and the other are fee for service related business lines. So, the service fees are part of that fee for service business line. And because it was, I think, materially enough as part of the overall revenue, we decided to disclose that piece.

Okay. That's great. Yes, looking forward to seeing that number progress. The other household item was you had a $1.8 million inventory write down. Does that go through the income statement? Or is it just a balance sheet adjustment?

Yes. That goes through the income statement. So, of the roughly 2.7%, I think that was in kind of operating loss, 1.8 of it was related to the write downs.

Okay, great. If we look at the top line, it feels like you're kind of in the same range as you were in the last quarter. Are we -- is that kind of a baseline we should think of going forward? Or you had some quarters where the top line was affected by different inventory strategies from your main online partner? Can you give us some color on, again, are we at a baseline there of $19 million a quarter, or how should we think of it going forward?

Yes. So, I think it's a good question. I think that's probably close to being a baseline. I think, you’ve kind of rightly pointed out, our December quarter last year was extraordinarily kind of seasonal relative to historical patterns. And so, we're, at least so far, not seeing that type of activity. We're only about halfway through the quarter at this point. So, we don't, at least now expect to see the same type of kind of seasonal downtrend. I think the other thing to point out here too is, well, a couple of things. One, in comparison to last year, last year was an extraordinarily strong quarter, but I think it was impacted by pretty active promotional work that we did to move inventory so that we could get through kind of the last stages of the high-cost inventory from that prior inventory buildup, one. Two, we -- as Lawrence was pointing out, have been in the process of negotiating with our supply chain, looking for more efficient manufacturing partners. And as part of that transition, we saw some delays in getting product over the summer. And so, that had a bit of a dampening effect on the top-line. There was demand. We just didn't have enough product to do that. We're through that transition, and we believe it will no longer be a drag in the top-line, but that had a little bit of an impact too. So, I think from a standpoint of -- is it a baseline number, I think that's a reasonable number to think about kind of what the business can do kind of without any of the other levers that we can pull. And then from there, we expect our ability to kind of continue to grow the top-line to kind of resume.

So just so I understand, you switched some production to Vietnam and maybe there was a bit of delay there in getting some of that product over during the quarter?

A combination of the Vietnam new supplier coming on and switching to some new suppliers within China as well.

Okay. Over the last 15 months or so, you've announced three new promising channels: Temu, TikTok and the Alibaba affiliate. Any of those three we should really pay attention to, or you're still kind of just kind of equally at the beginning or equally attractive to you? I'm kind of wondering, if there's going to be a strong kind of second channel for you beyond your main partner.

Lawrence, why don't you take this one?

Yes. Sure. I think about the three, Temu has the best potential. The platform fits more of our product portfolio, and the marketing efforts they are putting together behind are probably the best and the strongest amount three of them so far. AliExpress is pretty new. We're still working with our team. We got some orders in already, but they're small, but still working with their teams to adjust and working with their internal policies and strategies to adjust. Now TikTok, the fate of TikTok wasn't clear now with the new administration. I think it has a much, much better hope to continue the business. But again, that Temu still fits out of our product portfolio better than the other two. So, if you want to put attention on one of the three, I’ll pick Temu two.

Okay. That's helpful. Can you give us an update on SuperSuite? I think you were maybe in the low teens in terms of revenue percentage there in the previous quarter. Is that the right trajectory? Is -- what are your expectations for SuperSuite going forward?

Sure. Kevin, do we -- can we disclose the percentage of sales or is that okay?

Yes. Yes. Because we talked about that before.

Yes. So, we SupreSuie today, accounts about 10% of our overall sales. The platform is a connector or central places to connect every aspect of successfully conducting the sales to the U.S. consumers, including online and in the future offline. Now, by saying that, we have logistic partners. We have, even though we didn't announce that publicly, we are testing two new logistic partners, that joined onboard. And we are having a partnership with Zyla, which is a subsidiary with Ant International, which will potentially lead, have supply chain financial financing products into SuperSuite platform, which enables -- which is another benefit for suppliers to work with. Now for the supplier supply chain side, our supply chain partners, we have made a pretty good progress as having them on board. But having the sales having, the supply chain on board is what I'm saying, having the sales to start to pick up, is you will see you start to see the settings growing, snowballing, like in usually in a three to six months period of time after the supplier chain, get on board. So, and we have a pipeline of them coming in, and we have partners that are helping growing the base of supply chains. And that platform, I'm pretty confident on its growth in the future, and that, I believe, will become the biggest growth driver in the future. And also having the supply chain partners onboard will help us in two things. One is it's going to further reduce our cash need for stocking inventories. Now secondly, it will help us to prepare for the potential incoming tariff increase, as we don't -- we are not responsible for importing or purchasing or maintaining the inventories in the United States. So that will help. Together with the efforts, we're getting manufacturers in other places other than China, and we are also researching and getting more potential partners in the United States. So, I think the SuperSuite is not just for supply chains. The outside U.S. is also for the U.S. brand and manufacturer supply chain as well. So, the SuperSuite supply platform is the main focus for me at least for the foreseeable future.

You mentioned potentially upcoming increases in tariffs. I'm kind of wondering, how are you looking at the whole situation? How much of your, I mean, would you try to move a greater percentage of your production to Vietnam or I'm also kind of wondering what kind of lessons you learned from the last time around when tariffs were introduced and consumers' reaction, competitors' reaction, I mean, you just passed along the price increase and nothing much else happens, or how are you looking at the whole situation?

Right, right. That's a great question. We have been preparing this for the last few years. Ever since that we had that impact of 25% increase, we started -- SuperSuite is one of the efforts. So, my view on this is that now we have the supply chain partners that we like not only just the ones that are working with us in the partnership, but also the ones that will manufacture for us and we buy their inventories. Everyone has some plans to for this particular event. So, in the worst case, I believe our suppliers and the manufacturers, some of them already have a plan to manufacture alternatively outside China. The ones that who evaluated that could not move out of China, everyone will face the same problem. And unfortunately, for those part of the product categories, since no other countries could produce as effectively, we have no choices but pass the cost to the consumers. Now in that case, doesn't mean, while the raising the price is not a good event to have, but end of the day, since everyone has to be forced to do that, it still comes down to, like, who can effectively sourcing, who can it be like more effectively doing the merchandising, marketing and then fulfillment for the sales. Now that part is we do pretty well. So, what I mean is that for the ones that could avoid a huge tariff, people will act on it. It's not just us. For the ones that -- there's no other countries can be substitutions to the China manufacturer. The price will increase, but it's going to be, like, whole market, activity. We are not -- well, end of the day, it will be the same. It's just everyone will raise the price. So, as long as we do our parts efficiently, effectively, and quick, and maintain a low inventory, and be flexible, I think that's the most important thing, to adapt to potential impact, and prepare, and be able to act quick, and have strong partners. Yes. I mean, change is always not always bad. It suffers when it rains, but that's the worst case. Maybe China will have a good talk with Trump. Who knows? But in case that doesn't talk well, you know, I think, our partners and ourselves, we all have certain we're much better prepared than four years ago.

Okay, good. Maybe a last question for Kevin. We talked about the kind of the baseline for revenue, and I'm looking at gross margins over the last two or three quarters, and you've been in the mid- to high-40s. Is that also kind of a reasonable range going forward? I mean, that's a nice pickup from where you were 12, 18 months ago.

Yes, I think so. What you're seeing in that uplift is a function of the work we did over the last, let's call it, year and half years with our supply chain, Vietnam move will help that. The move that I referenced with a little bit of this supply issue. That move was made with the intent on bringing kind of unit cost down as well. And so yes, we feel good about where gross margins are on that side. So yes, I think that should be the target. The one thing that could swing that is container costs. But right now, container costs are kind of behaving quite nicely. So, I would suggest people that are kind of looking at kind of the gross margin line to pay attention there. But the work that we can really control, I think we've set a higher bar now. So, I think we feel good about where gross kind of margins are and feel like that's a decent place for people to be kind of targeting for modeling.

Right. And one more thing I want to add on to it. If our SuperSuite start to take off, then the gross margin, maybe you will see that lower because for the SuperSuite model, it's different than our traditional in-house product model where we buy and sell. So, you'll see a lot of expenses built in, in the purchase cost. So, but until then, I'll just give you more information.

Great. That's helpful. Thank you very much.

That concludes today's question and answer session. I'd like to turn the call back to Kevin Vassily for closing remarks.

Okay. Thank you everyone for joining us on the call. We look forward to speaking with you again in the upcoming quarter. Have a good day. Bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss iPower's Financial Results for its Fourth Fiscal Fourth Quarter and Full Year 2024 Ended June 30, 2024. Joining us today are iPower's Chairman and CEO, Mr. Laurence Tan; and the Company's CFO, Mr. Kevin Vassily. Mr. Vassily, please go ahead.

Thanks, Josh. Good afternoon, everyone. By now, everyone should have access to our fiscal fourth quarter and full year 2024 earnings press release, which was issued earlier today at approximately 4:05 p.m. Eastern Time. Releases available in the Investor Relations section of our website at meetipower.com as well. This call will also be available for a webcast replay on our website. Following our prepared remarks, we'll open the call for your questions. Before I introduce Lawrence, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, state of the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the Company's filings with the SEC, including our annual report on Form 10-K, which was filed with the SEC on September 15, 2023. Do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. Except as required by law, the Company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. Our presentation today also includes certain non-GAAP financial measures, including adjusted net income and EPS as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation tables and other important information in the earnings press release and Form 8-K we furnished to the SEC this afternoon. With that, I'd now like to turn the call over to iPower's Chairman and CEO, Lawrence Tan. Lawrence?

Thank you, Kevin, and good afternoon, everyone. I'm proud of our team's hard work in fiscal 2024 to drive record levels of gross margin, operating expenses reductions and another year of positive cash flow from operations. Throughout the year, we delivered on multiple strategic initiatives to lay the foundation for future growth and profitability. For example, we onboarded several high-quantity supply chain partners onto our super suite services platform. We also strengthened the capabilities and resilience of our supply chain through partnerships with suppliers in Southeast Asia. Additionally, we expanded channel distribution by launching sales on new platforms like TikTok Shop and Team. Throughout the year, we continued to evaluate our SuperSuite services platform by integrating key components from value-added partners across logistics, technology and marketing to enhance our service offerings. This collaborative approach has positioned SuperSuite as a leader in merchandising and sales, supply chain management and warehousing and performance, attracting a diverse array of new partners to our platform. As an example, in May, we announced a strategic partnership with the leading provider of a comprehensive logistics solutions. Through this collaboration, we integrated the partner's fulfillment center network into the SuperSuite platform, enhancing our operational efficiencies and technology capabilities. This partnership not only as critical depth to our suppliers’ capabilities, but also opens the door to a new portfolio of prospective supply chain and brand partners. We also integrated Amazon Logistics services in June to bolster our last-mile delivery capabilities, enhancing a critical component of SuperSuite supply chain offerings. With this partnership, SuperSuite clients can deliver products with the speed, reliability and efficiency that Amazon is renowned for, adding further depth to the SuperSuite value proposition. As I mentioned earlier, in fiscal 2024, we deepened our online presence by launching sales on platform like TikTok Shop and Temu. These additions align with our strategic vision to empower supply chain partners with diversified sales channels, poised for sustained long-term growth. We are pleased with the early results and will continue to explore additional sales channels that would further enhance our partner sales offerings. In regarding to supply chain OpEx, the optimization initiatives we implemented earlier this year to drive the improvements in our selling, marketing and fulfillment operations are yielding results. With a healthier supply chain environment, we no longer need to maintain high level of inventory and the lead times with our international suppliers have normalized. It's also worth noting that with this growth of SuperSuite, our business can operate with lower levels of inventory, leading to improved cash flow generation. Additionally, we have sold through nearly all our high-cost inventory, enabling us to eliminate short-term warehousing expenses and enhanced margins. As of June 30, 2024, we further reduced our inventory levels by almost 50% compared to December 31, 2023. We are deeply committed to optimizing our operation to maximize efficiency. To further this initiative, in June, we announced the addition of a new manufacturer supply partner in Vietnam. Expanding our manufacturing base will help mitigate future risk and strengthen the resilience of our supply chain. Looking ahead, we will be leaning into our core principle as a technology and data-driven company to enhance transparency and operational efficiencies between iPower and its supplier performance and channel partners. This approach will streamline processes, reduce cost and improve information utilization across the supply chain to strengthen our customers' operation. We believe these initiatives, coupled with our optimized cost structure will enable us to deliver on our growth and probability objectives in fiscal 2025. I will now turn the call over to our CFO, Kevin Vassily, to take you through our financial results in more detail. Kevin?

Thanks, Lawrence. Unless referenced otherwise, all variance commentary is in comparison to the prior year quarter. So, diving right into the fiscal Q4 results. Total revenue in the fiscal fourth quarter was $19.5 million compared to $23.4 million in the prior year. Increase was primarily driven by higher promotional activity in the year ago period related to selling down inventory. This is partially offset by growth in our SuperSuite supply chain offering. Gross profit in the fiscal fourth quarter of 2024 increased 2% to $9.2 million compared to $9.1 million in the same quarter of fiscal 2023 and percentage of revenue gross margin increased 870 basis points to 47.4% compared to 38.7% in the year ago period. The increase in gross margin was primarily driven by improved pricing through key supplier negotiations as well as favorable product mix in the quarter. Total operating expenses for fiscal Q4 improved 34% to $8 million compared to $12 million for the same period in fiscal 2023. As a percentage of revenue, operating expenses improved 1,050 basis points to 41% compared to 51.5% in the year ago period. The decrease in operating expenses was driven primarily by lower selling and fulfillment expenses driven by both lower marketing and promotion costs as well as some vendor credits from some of our key vendors. Net income attributable to iPower in the fiscal fourth quarter improved to $0.7 million or $700,000 or $0.02 per share compared to a net loss attributable to iPower of $3 million or a net loss of $0.10 per share in the same period in fiscal 2023. Adjusted net income attributable to iPower, which excludes legal fees to arbitration, net of their tax impact, improved to a little under $1 million at $900,000 or $0.03 per share in the fiscal fourth quarter of 2024 compared to an adjusted net loss attributable to iPower of $2.1 million or a net loss of $0.07 per share in the year ago period. Moving to the balance sheet. Cash and cash equivalents were $7.4 million at June 30 compared to $3.7 million at June 30, 2023. Note that this cash balance includes net proceeds of approximately $4.5 million from our previously announced registered direct offering in June. Total debt was reduced by 46% to $6.3 million compared to $11.8 million as of June 30, 2023. Cash flow from operations for fiscal Q4 was a little under $1 million at $960,000, and that's down a bit from our year ago period. As Lawrence mentioned earlier, our consistent optimization efforts have enabled us to materially expand our gross margin and achieve a consecutive quarter of profitability in this fiscal. We also continue to make some improvements to our balance sheet, reducing our total debt by nearly half compared to fiscal 2023. We are pleased with the progress we've made in this fiscal year and the foundation we built, and we look forward to delivering on our goals in fiscal 2025. This concludes our prepared remarks, and we'll now open it up for questions.

[Operator Instructions] Our first question comes from Scott Fortune with ROTH Capital Partners. You may proceed.

Just want to unpack a little bit on the top line and where that growth is coming from. You're seeing, obviously, you had a big destocking and reordering from your large online partner last quarter. We've seen that probably drop off this quarter. But if you could just provide a little more color on kind of revenue growth where that's coming from with your large online partner. And then you mentioned, obviously, ramping up Temu and TikTok on that side, too. And then outside that, last quarter, 10% of sales was coming from the SuperSuite just kind of a sense where that super suite percentage of sales is on this quarter? Just kind of unpack the whole top line kind of $19.5 million for this quarter and going forward here, that would be great.

Okay. The top line, it's -- the new platform, the TikTok Shop and Temu, they are showing pretty good results initially. But in terms of the total percentage, they still little compared to the overall sales. Our majority sales are still coming from Amazon platform. And in terms of the SuperSuite, we have seen a pretty healthy growth, and we have onboarded multiple partners, new partners over the last few months, which I believe it will be coming more and more part of our revenue. And with the new platforms like TikTok Shop, Temu, and also, we signed up with Ali Express, which is kind of similar to Temu, but it’s from Alibaba just this month, we onboarded and they are coming into the competition of the U.S. online retail market, which we think it's a pretty beneficial things for us, like the sellers and services providers for online markets. I believe the competitions between platforms will drive very interesting results in the coming year or two until it's kind of settle down again, which is great. So forward casting, I think with the momentum we have in the SuperSuite and the new partners we signed on board, we think it's a very great business line, and we'll continue to see the growth and the smaller platforms, but yet new platforms some of this competitive marketplace will become a bigger share of our business.

That's great. Can we just expand -- Kevin prevents color on the demand side from your large channel partner and kind of the return to normalized ordering that this kind of big point here is kind of for that partner is from a normalized ordering growth. I know things can be seasonal, but I just want to get a sense for kind of that ordering cadence moving forward from that online channel and how that challenge is doing?

Right. Yes. So, as we had kind of -- as we kind of anticipated a bit, we thought there would be some kind of rationalization might be a little strong, but some slowdown in kind of their order rate after such a strong rebound from them in March, which, again, for kind of listeners who were privy to the last couple of calls. Our December quarter was well below kind of what we expected in terms of demand, which was a function of seasonality some inventory rationalization on the part of our largest channel partner. And was our belief that they had essentially kind of over rationalize their inventory and that they would and that they would snap back. We did see the snapback in the March quarter, but we were a little surprised of the strength of the snapback suggesting that they were still trying to find their bearings with our product suite over the next quarter and so. So, I think what we saw in this quarter was from a top line perspective, kind of that they took on enough inventory and they work through some of that while continuing to order. We're getting back to more normal kind of order patterns. And so, I think we don't have a ton of kind of additional color there. I think we're kind of probably narrowing the amplitude of the ups and downs a bit with them after the December quarter. Hopefully, that's kind of what you were looking for.

Yes, just to add on to it. I mean, we have -- compared to what -- so compared to what happened in the -- like during the call which we have up and down in the inventory side. And I think the ordering patterns now is much more normalized. So, we'll -- we can safely say it's like it's going back to the like pre-COVID pattern, where we'll see steady growth and steady inventory turnaround, which, to us, is very welcomed patterns of our operating businesses. And we can continue to deepen the offering of our products, getting more market share at all supply chain -- more supply chain partners. And all of this by dragging like mature existing channels like Amazon, Walmart, et cetera, et cetera, and adding new sales platforms like TikTok and Temu shop at the same time, adding more supply chain partners. So, we have more sales channels, better market shares on existing product categories and adding new supply channels. And supporting this are our in-house proprietary ERP systems, and our business in BI platforms. So that's the model of growth going forward that I envision.

Got it. Now a follow-up on the SuperSuite. You've done a really nice job of building out that robust supply chain offering of those SuperSuite services. which drives higher margins. But just can you provide -- I know you have three existing partners or customers there, as part of the business, but can you just provide a little color on potential new customer adds in the outlook in 2025 now that you have the foundation that SuperSuite in place kind of what that pipeline is like and kind of expectations for that converting to new customers on that SuperSuite for '25 here.

Okay. We have got some pretty good partnerships from supply chain side onto our SuperSuite. Going down, and we have got a few pretty significant really great supply chain partners on board over the last few months including furniture, electronics in these categories as well. Now these partners so far, has been pretty big ones, like their revenues are pretty big. Going down, we also will start to expand partners into like channel partner side, where we will work with different channel partners to have their customers to become our customers. So, we use our SuperSuite capabilities to benefit their customers, which will accelerate the onboard process and the number of partners as the SuperSuite become more and more mature. So, in the next month or two, we'll start to launching more online, like platform side of products to enable and reduce the complexity of onboarding new partners and opening up the channels for our channel partners to help driving more customers to our way. So hopefully, that answers your question. Basically, we are working on the technologies to reduce complexity, thus prepare for bigger number of partners potentially to come in and through our business development channels with our partners.

Appreciate the color there. And then one last one for me. You mentioned you have now manufacturing in Vietnam, a partner there, and the savings you can see there moving forward, kind of what percentage of the sourcing do you think will come from Vietnam from that standpoint? And does that help hold and kind of keep the margin structure in place or they continue to be more savings to pass through on a competitive pricing standpoint to drive volume there? Or how do you look at that gross margin side from all the OpEx things and rightsizing you've done here.

Right. It's a great start. It's an effort of us like a diversified supply chain outside China. It's just beginning, but it will grow. Now in terms of gross profit and margin, it's definitely saving our cost of goods sold. So, we definitely see savings there. And I think that will become generate more profitability for us and as well as making our product more competitive.

And we'll go ahead.

Scott, just to be clear, too, we don't really have product out in the market yet from the transition. We push pretty hard to get that up and started, but the manufacturing time takes time getting it over. So, those benefits will accrue in future quarters. It's not reflected yet in kind of our financials as we speak. So, we'll keep you posted on kind of how that rolls out. And I think the other thing that it's worth pointing out is while we are diversifying out of China, and it will never be completely out of China, but it's a strategic kind of initiative on our part. On an ongoing basis, we continue to rationalize and look for improvements within our existing supplier base in China as well as bring on other suppliers. We think that is one, important for keeping us continually cost competitive and also keeping kind of our contract manufacturing partners kind of honest. We've been good partners for almost all of them over the last, let's call it, five years. But we still have expectations that they need to deliver when we see areas for kind of efficiency and improvement. So, our supplier base is an ongoing optimization effort. And Vietnam and potentially other places in Southeast Asia over time is just the part of that ongoing strategy.

Yes. Yes. Just in addition to what Kevin's mentioned, it doesn't mean that we are not optimizing we are dishing China. It's not like that. We have been optimizing our supply chain in China over the last few months as well. And we see -- we have seen significant cost down from there. So, we will see receivings showing up later on.

Thank you. Our next question comes from Thierry Wuilloud with Water Tower Research. You may proceed.

Just following up maybe on the activities in Southeast Asia in Vietnam. Are those new different contract manufacturers? Or are those people you work with in China and they're just moving operations with you at your request in Vietnam. I was curious about that.

That new manufacturer, that's new manufacturer, yes. Though, we have seen a lot of our suppliers in the process or already moved certain of the production lines outside China, including Vietnam, Mexico and other countries. Not all of them has reached a cost point where it's cheaper overall. So, we're still waiting for some of them to speed up and make the new manufacturer more efficient. But to answer your question, the specific ones that we are talking about in the Vietnam where we started, it's a new supply chain comment.

And then maybe if you have some colors on how the specific categories we're doing, you've had some movements, some categories are becoming more important. Others are becoming less. So, I'm kind of wondering if you can give us a rough idea of where that's at? Is it about the same as the end of the March quarter? Or do you see areas kind of where the sales are growing and others where they might be slowing down or any color there?

Right. We continue to focus on the hard lines. In terms of the sales compensation of different categories, the few top-selling categories so on a home pad furniture, et cetera, the hydroponics line is no longer a significant part of the overall sales as compared to a few years ago. And the growth will come in the future, I believe, home furniture pads and electronics as well. So, these are the categories that we think will continuously see growth on. We have seen quite a few quantity partners on board over the last few months in these categories. We also are, like I mentioned earlier with Kevin, optimizing the existing supply chain network with better quantity of products and lower cost and also expanding that network to different countries to make it more robust. So, we'll continue to see the cost down from existing suppliers. We also will see more quantity partners coming on board through SuperSuite platform, but mostly hydroponics.

Okay, well, you covered the ground with Scott. So, Kevin, did you have any other color to add?

Yes, I just wanted to kind of follow-on Lawrence's comment about hydroponics. It has become a much less meaningful portion of our overall sales. And I don't think it's any secret that kind of the demand environment more broadly for hydroponics has not been terribly good. I think when we look at our results, relative to what we've seen in kind of others who are selling consumer-ish products in the marketplace. I think we are faring better, but it's still not a great demand environment for that. And so, I mean, I think the -- luckily for us, we have restored kind of the profitability of that business along with everything else that we've done in the last 18 months. But that is not an area that we expect a whole lot of growth for us going forward, partly because we've got other categories and other initiatives that will make them a sense. But until that end market becomes a bit more robust, it's hard for us to see that the hydroponics piece be a bigger portion of kind of our overall revenues anytime soon. So, I think that color pretty consistent with, I think, what other people are seeing. I think there's some underlying -- there's some underlying weakness in that end market that we've been lucky enough to overcome with some of our other product offerings.

Yes. I mean that market is still there. It's not going away. We're still a leader on the online retail side. But our core strength came from the technology and the data and our platform will build like our ERP systems internally, we build the business intelligent platforms reporting as well as the SuperSuite products we build, which enable us to moving quality products from any categories to the consumers. So, joining that's the strength, and that's where the growth will come from by become efficient merchandising and distribution and sellers online, providing all these great services to all of our partners, and move the best value product to the consumers. That's where the foundation comes from. And I believe that's a business model where we focus on would expand in the future pretty quickly.

I would now like to turn the call back over to Kevin Vassily for any closing remarks.

Thank you, Josh. Thanks, everyone, for your questions and for dialing in. Look forward to speaking with you again shortly for our fiscal first quarter results and potentially at some investor conferences over the next several months. Thanks again, and we'll talk again soon. Bye.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss iPower's Financial Results for its Fiscal Third Quarter 2024 ended March 31, 2024. Joining us today are iPower's Chairman and CEO, Mr. Lawrence Tan; and the company's CFO, Mr. Kevin Vassily. Mr. Vassily, please go ahead.

Thank you, operator, and good afternoon, everyone. By now, you should all have access to our fiscal third quarter 2024 earnings press release, which was issued earlier today at approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of our website at meetipower.com. This call will also be available for webcast replay on our website. Following our prepared remarks, we'll open the call for your questions. Before I introduce Lawrence, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the state of the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in these forward-looking statements. Our presentation today also includes certain non-GAAP financial measures, including adjusted net income and EPS, as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation tables and other important information in the earnings press release and Form 8-K, which we furnished to the SEC this afternoon. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC, including our Annual Report on Form 10-K, which was filed with the SEC on September 15, 2023. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to forward-looking statements. With that, I would now like to turn the call over to iPower's Chairman and CEO, Mr. Lawrence Tan. Lawrence?

Thank you, Kevin, and good afternoon, everyone. We achieved strong financial results in our fiscal third quarter as we generated double-digit revenue growth, record gross margins and improved operating leverage, resulting in our return to profitability. We are also gaining momentum in our super suite supply chain business, which contributed to our top line growth in the quarter and now accounts for approximately 10% of the total revenue. In fiscal Q3, our largest channel partner returned to a normalized inventory position and purchasing cycle, which led to stronger order volumes during the quarter. We are pleased with the demand from our largest channel partner and will ensure our product catalog is stocked with the high-quality offerings that our customers expect. Our super suite business, as we have often stated, provides us with valuable insights that we can utilize to enhance our internal capabilities. The acceleration of revenue reflects the value we provide through our superior supply chain, performance and merchandising expertise. We will continue to invest in this new business as we work through our robust pipeline of prospective partnerships, and believe this business will continue to take a greater share of revenue mix going forward. We have always placed a strong emphasis on diversifying revenue demonstrated by the launch of super suite last fiscal year. We have also deepened our online presence with social e-commerce platforms like TikTok Shop, where we continue to see solid growth. In April, we expanded our sales channels by launching on Tmall and have seen promising early results in the kitchen and pet categories. Over the last couple of years, we have purposely shifted our focus from hydroponics to prioritize our core competence as a data-driven consumer products and services company. More recently, we've begun to wind down our legacy commercial hydroponics business where we sold directly to local commercial distributors. We are working through the remaining inventory now and expect to sunset this channel altogether in the coming months. Turning to OpEx. We continue to benefit from our internal initiatives to drive savings in our selling and performance operations. With a healthier supply chain environment, we are no longer required to hold high levels of inventory as we have returned to normalized lead times. We have also sold through most of our high-cost inventory, enabling us to eliminate short-term warehousing costs and improve margins. As of March 31, we further reduced our inventory level by 25% compared to December 31, 2023. We are also in the early stages of benefiting from third-party warehouse staffing and expect to realize additional savings in the future. Looking ahead, we are well-positioned to close out fiscal 2024 on a strong footing between the strong demand from our largest channel partner, accelerating growth in super suite, and expansion into new e-commerce channels such as Tmall. I will now turn the call over to our CFO, Kevin Vassily, to take you through our financial results in more detail. Kevin?

Thank you, Lawrence. Unless referenced otherwise, all variance commentary is in comparison to the prior year quarter. So let me dive into our fiscal Q3 results. Total revenue increased 15% to $23.3 million, compared to $20.2 million. The increase was primarily driven by greater product sales to our largest channel partner, in addition to growth in our super suite supply chain offerings. Gross profit in the third fiscal quarter of 2024 increased 41% to $10.9 million, compared to $7.8 million in the same quarter of fiscal 2023. As a percentage of revenue, gross margin increased 850 basis points to a record 47%, compared to 38.5% in the year-ago quarter. The increase in gross margin was primarily driven by improved pricing through our key supplier negotiations, as well as favorable product mix. Total operating expenses for fiscal Q3 were $9.3 million, compared to $9.6 million for the same period in fiscal 2023. As a percentage of revenue, operating expenses improved 740 basis points to 40.1%, compared to 47.5% in the year-ago period, reflecting the operating leverage in our business as well as lower selling and fulfillment costs resulting from, among other things, some vendor credits. Net income attributable to iPower in fiscal third quarter improved to $1 million or $0.03 per share, compared to a net loss of $1.5 million or a loss of $0.05 per share for the same period in fiscal 2023. Adjusted net income attributable to iPower, which excludes legal fees for arbitration, net of tax impact, improved to $1.6 million or $0.05 per share, compared to an adjusted net loss of $1.4 million or a loss of $0.05 per share in the same period in 2023. Moving to the balance sheet. Cash and cash equivalents were $2.7 million as of March 31, 2024, compared to $3.7 million at June 30, 2023. Total debt stood at $6 million, compared to $11.8 million as of June 30, 2023. The decrease was driven by our continued efforts to pay down debt, which resulted in a 59% reduction in net debt to $3.3 million, compared to $8.1 million of net debt as of June 30, 2023. Cash flow from operations was essentially neutral in fiscal Q3, largely driven by an increase in our direct import business with Amazon, which carries both higher operating margins but slightly longer payment terms. To summarize, we are beginning to realize the benefits of less high-cost inventory and internal optimization efforts, which drove our record gross margin and improved operating leverage for the quarter. We also continued to strengthen our balance sheet by reducing net debt by nearly 60% during the quarter compared to June 30, 2023. And as Lawrence touched on, we've got multiple initiatives in place to drive further growth as we look to fiscal Q4 and the year ahead. This concludes our prepared remarks, and we'll now open it up for questions. Operator?

[Operator Instructions] Our first question will come from the line of Scott Fortune with ROTH MKM.

Congratulations on the strong quarter. And it seems that a lot is driven from the strong order from, obviously, you've called out the largest channel partner as they returned to more of a normalized inventory kind of purchasing cycle. But moving forward, how should we look at this kind of going forward? Can we kind of take a historical kind of growth from years past as far as going forward with this, moving forward with them? And just kind of call out the products that -- or the kind of the industries that's driving a lot of this growth through that large channel partner. Because it seems like the consumer demand remained strong for your products, but what is your partner telling you as you look out for the rest of the year with them?

Lawrence, why don't you take the second part of the question, the products and kind of the overall demand, and I can talk a little bit about kind of what this means kind of going forward?

Sure, sure. So the largest channel partners, they historically have, in the last couple of years, been at a similar position as us, like going through the high-cost, overstocked inventory. We moved quite a bit faster than the industry. Our partner seems to work better than the rest of comparable larger partner channels. So what this means, that the -- what I think is that going down the road, it has been returning to a steady, normal, healthy, replenished mode. As for our product mix, since our products are focusing on value of the commercial -- I'm sorry, consumer products, those products are pretty resilient to economical change. And what I think is that the demand will continue to grow. So even during the years where we -- iPower has been trying to recover from the overstocking from the high-cost inventory, what we see is the demand is still there, is demand still grow. And I believe this is going to be a trend going forward. As we introduce super suite, we will add on more of the supply chain partners to provide good-value product to the consumers in our network. I believe going down the road, we have a pretty good future to cash on.

And then, Scott, just on kind of how to think about kind of this quarter versus prior quarters. I'll remind everyone we don't give specific guidance. But what I'll say is we -- in a way, I think we talked about this a little bit on the last quarter, the kind of order rates from our largest channel partner in the December quarter were really a reflection and probably a larger than we anticipated work on kind of their own inventory management. And we did expect a bit of a rebound in this quarter, and we saw it. So I think some combination of historical kind of quarterly trends, with some caution on our part because we want to make sure that we're not seeing kind of a bit of a bull whip from that channel partner where they may have potentially brought a little bit of extra demand into this current quarter. But I think what Lawrence touched on is correct. We have multiple additional opportunities to work with, partners on the super suite side, all of which we can use that large channel partner as a sales avenue for them. So still a little early to say in this quarter, but we're very optimistic about where we're headed. So hopefully, that's enough for you to kind of tape your model, and we can talk a little bit more if you've got other questions.

Yes, that's helpful. I appreciate that color. And just following up with that, the super suite of services that now accounts for, what, 10% of the business, but are you expanding your existing partners there? Or will you -- a lot of this came from the new kind of food industry partner that you're bringing on board? Just kind of step us through kind of the partnerships you have and kind of the growth from a capacity side, on the expense side, to kind of -- you have enough room here without adding too much more on the expense side to continue that, and service new partners here, which will continue to drive the gross margin side. And just kind of remind us gross margins on service side business, and is that ticking up or kind of the overall gross margins as it helps for that gross margin improvement? Just kind of more color on the service suite would be helpful.

All right. So there were a lot of questions there. Let me try to do a couple of them one by one. I think we've said in the past that early on, as we bring new partners on, our gross margins, in particular as we're using as our entree with a new partner the sales and fulfillment service offering, those gross margins are going to be at or even slightly below our normalized gross margins. But as we grow those individual partners, I think we can get better than our kind of historical gross margin average. And I think we were seeing some of that in this quarter. I'll let Lawrence talk a little bit about some of the kind of opportunities that we have. Most of what we're doing in the quarter was growing was growing our current partners. And so I think when I said, as these partners mature with us, we can see better than corporate average gross margins, I think you're seeing some of that show up in this quarter. I think it's important also to point out that, over the last year, in addition to working hard to bring down inventory, remove the additional cost that we had both from kind of the high freight burden but as well as kind of excess costs associated with temporary warehouse space, we were working with quite a few of our suppliers at ways of taking additional costs out of the products that were being manufactured, such that we can then bring to market products that we're carrying better gross margins. We're seeing the fruit of that as well. So I think we've been working hard on both the cost of goods sold as well as operating costs, and I think we're very pleased so far as to where we are. And we think we still have some work to do going forward. I will remind, and I think we said this on the last call too, there still is some inventory that we have, particularly in our fan business, which is strongest in the summer months, that carry higher freight cost burdens than products that we're buying now in that category. So we're going to have to bleed that through. It's not a ton, and we don't think it will materially impact gross margin, but we were not selling any of that in the January to March period. As you might expect, people aren't buying a whole lot of fans when it's cold outside. Lawrence, maybe you could touch on just the kind of potential companies that we might be working with as we bring additional partners on in the super suite business.

Sure, sure. So the super suite really come out of the internal capabilities we've been developing as a retailer online. So with the logistics ability, the software and technology and business intelligence where we developed both internally and working with external technology suppliers, enabled us to become an effective sales and merchandising platform and fulfillment platform for supply chain brand. We started to get inquiries from these partners in a couple of years, starting a couple of years ago, about working together and marketing and merchandising their products. So where the super suite, that's -- where the super suite comes from and the few categories we've been already working on, including electronics and home products, we'll probably share with more details in the coming short time to see -- to give more details to the market. Now what I -- the framework has been working on by -- internally for a while. And I do see -- I do have quite a bit of a down the road in the pipeline where we are actively working on and hopefully start to see good results going down the road. As for the gross margin, it all -- it actually depends on the product categories. But what I see this is our in-house products will continue to grow and will still drive the business substantially for a period of time, until the super suite start to explode. But the super suite side can grow much, much faster than our in-house parts of the business. So that's why we have a pretty good -- we feel like that part might start to see much, much better growth rate than the in-house part. Now as for the gross margin, as it grows faster, it may carry -- it may not carry as high as the gross margin of the in-house product, but the revenue side going to be a lot higher. That's what I tend to see down the road.

And Lawrence, real quick, just to follow up on that. You've had super suite in play here for a little while. Are you seeing the pipeline looking to accelerate? Are you having more discussions kind of further down the road on bringing on new clients to the super suite? Just kind of help us understand kind of the expansion opportunity here near term, obviously, long term, pretty good opportunity, but kind of near term, what are you seeing from those discussions?

Near term, I'm working with both the branded supply chain partner to bring on board as well as key strategical partnerships to bring on board. I tend to think that super suite is kind of like open platform where we can bring key partners into this platform and where they can bring more supply chain and brands into the platform. So that's what I see down the road and have been working on it for a while, yes.

Our next question comes from the line of Thierry Wuilloud with Water Tower Research.

Lawrence, Kevin, congratulations on the quarter. You covered quite a bit of ground, but maybe just a few questions. First, on the gross margin, is cost input like a big factor? You get better pricing or lower cost on the input for your product? Is that what I'm reading?

Kevin, you want to take this?

I didn't hear the question.

There's 2 reasons for improved margins: favorable product mix and then improved pricing. Does it mean the input costs have been going down or have been better than expected?

Okay. Yes, I heard that part now. Do you want me to take it, Lawrence, or do you want to take it?

You can take it, that's fine.

Yes, yes. So it's both. Every quarter, I think I tried to emphasize this, we -- given the size of our catalog, now as well including the super suite partners that are utilizing our sales channel, there is a distribution of margins as they're not all, obviously, sitting at 43%. And so the mix is skewed towards our higher-margin products, for sure, this quarter. The other thing that has been at work though, and I think I referenced this in my answer to Scott, was that there have been a number of initiatives underway for the last year with some of our largest contract manufacturing partners to take costs out of the products that they're manufacturing for us, that allows us to bring products to market with a lower cost of goods sold. And those efforts are starting to show up. So it's both, Thierry.

In terms of sales channels, you mentioned you started Tmall in April, so obviously, that was not in that quarter's result. But can you give us a sense of which channels are developing the fastest besides Amazon, and if you're going to have any meaningful maybe physical channel also?

Lawrence, do you want to take that?

Yes, sure. Tmall is a very interesting channel. Now they approached us and we are working with them since April. So far, we've been seeing pretty good results early on. And the platform is pretty value-centric. So it's more -- like very similar to Amazon, where they're trying to bring the best value to the consumer. And that fits our category and our catalog pretty well. So I think we're going to do well there on this channel. So, so far, I think this channel is growing pretty fast. On the social media side, on TikTok Shop, we've been seeing a steady growth and we've been working pretty well on there, but we all know that the uncertainty of the TikTok Shop going down the road -- is uncertain. But fortunately, it's not a big part of our business so far. So we'll play and see. We already have the infrastructure developed. We already have a methodology. And so far, it's doing well, so we'll see. We've also been working on homedepot.com, lowes.com target.com, where we -- those have pretty different model, working with these platforms, than the Amazon, give a comparison, where we work with buyers and we work with product selections, and we've been getting more product be improved. We're still working on that. Now, but at the same, that, is once we do well on the dot-com, we may get an opportunity to enter in the physical stores, if that's what you've been asking, yes, questions.

And then maybe one last question. You mentioned that the business -- suite business is helping you enhance your internal capabilities. And I'm kind of curious how that's working or what that means.

Okay. So along the way where we're working with our partners on the super suite platform, we're also gaining more knowledge on industry different categories and we're also enhancing our abilities of data, software, as well as performance. So we -- think that of that as an open platform where we not only just work with the supply chain partners, we're also working with logistics partners as well and other technology partners. So along the way, where we're working with everyone, we've been getting better and better, enhanced capabilities and we absorb and working with all these partners. And so not only we service people, we also gain knowledge and expertise and other strengths along the way.

That concludes today's question-and-answer session. I'd like to turn the call back to Kevin Vassily for closing remarks.

Okay. Thank you, everyone, for joining us today. We look forward to either speaking with you when we report our fiscal Q4 and full year results for 2024 in September, and/or seeing you or speaking with you at a conference in the interim. Thanks again, and we'll talk again soon. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.