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Operator
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. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected 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. 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'd like to turn the call now over to iPower's Chairman and CEO, Lawrence Tan. Lawrence?
Lawrence
Thank you, Kevin. Good afternoon, everyone. We had a challenging come this quarter. Given the record 74% revenue growth, we achieved a fiscal Q3 2022. Nonetheless, we demonstrated a continued momentum in setting through inventory build up from prior period as reflected by our 16% reduction of inventory from last quarter and 36% reduction from our fiscal year end. Throughout the quarter, we continued to emphasize our in-house brand, which made up more than 90% of the revenue and the scoring, the consistent demand for our market-leading products. Some of our strongest brand sales come from several of our newer products, most notably in our shopping category. Consumer feedback for our product remains strong, and we expect those categories to grow further as we add new in-demand products to our catalog. As mentioned on prior calls, we have made the strategical decision to diversify our product portfolio beyond hydroponics. What once was the vast majority of our business now accounts for approximately 35% of sales. Although hydroponics has become a smaller segment of our business today, it remains an important catalog, and we will continue to invest in the product line as the market dictates. Investing resources in new product development has been and will always be a key focus for us to keep our portfolio stocked with high-quality products our customer has come to expect. In the next few weeks, we are planning to unveil our new countertop hydroponics line, iFarm. iFarm provides consumers with an easy to operate space-saving appliance to grow herbs, green leafy vegetables, tomatoes, peppers, and other produce in their kitchen year-round. After extensive research and data collection, we saw a niche in the market that was not being well served, and we built the product with attributes consumers were demanding and at a compelling price. We are excited to launch this new product line and look forward to releasing additional products later this year. In recent months, we have experienced promising traction on the services side of our business as well. Our focus is to leverage our supply chain and merchandising expertise to drive sales growth from partners with cutting edge product portfolios. This is a small segment of our business today. However, the early demand is encouraging, as reflected by recent partnership we formed with companies in home goods and electronic categories. We are providing merchandising and sales services, as well as some logistics support for these initial pilots. Since launching the program two months ago, we have already begun to see strong momentum with increasing order volumes. We will have more to say about these programs in the next several quarters and look forward to offering our sales, marketing, and merchandising expertise to service more brands and partners in the future. As mentioned earlier on the call, we proactively stockpiled inventory in calendar 2022 to offset supply chain challenges and to account for increased demand for our in-house products. This led to a surplus of inventory with very high associated freight costs and the need for additional warehousing space, which increased our operating expenses impacted the probability. The supply chain began stabilizing in late calendar 2022, so we no longer required the access inventory levels or the associated warehousing space. To date, We have sold through the majority of the inventory carrying the elevated cost of goods sold. However, we still have a small portion to work through. Our selling and marketing costs have been higher than usual to move through the excess inventory. However, we expect that to normalize in the quarters ahead, which will lower our total operating expenses. These savings combined with the continued strong demand for our in-house product will enable us to return to profitability in fiscal 2024. Moving ahead, we will focus on future diversifying our product mix while adding depth to our in-house offerings. We are also optimistic about our services business and looking forward to utilize our best in-class sales, marketing, and merchandising capabilities to accelerate the growth for high-quality brands looking to elevate their sales channels. These initiatives, coupled with a normalized supply chain environment and lower operating expenses, will enable us to improve our financial and operating results as we enter our next fiscal year. I'll now turn the call to our CFO, Cameron Bethely, and take you through our financial results in more detail. Kevin?
Operator
Thanks, Lawrence. As mentioned earlier, fiscal Q3 of last year was a period of record growth for iPower. It made this quarter a pretty challenging comp on a year-over-year basis. Given the circumstances, though, we were pleased with our results in this quarter, so diving right in. Total revenue was $20.2 million compared to $22.8 million in the year-ago period. The decrease was primarily driven by fewer third-party branded sales to our channel partners. Our fiscal third quarter revenue mix from in-house brands increased to over 90% compared to 82% in the year-ago period. Gross profit in the fiscal third quarter was $7.8 million compared to $9.2 million in the year-ago quarter. As a percentage of revenue, gross margin was 38.5% compared to 40.4% in the year-ago quarter. but the decrease in gross margin primarily driven by higher cost of goods sold resulted from selling inventory that previously incurred much higher freight costs. As we have mentioned, freight and container shipping costs have normalized this year, and we expect gross margin to improve as we work through our older inventory. Total operating expenses for fiscal Q3 were 9.6 million compared to 7.8 million for the same period in fiscal 2022. The increase in operating expenses was primarily driven by higher selling fulfillment and marketing costs related to the sale of inventory we built up over the summer of last year. As our inventory normalizes, we expect lower OpEx levels along with improved working capital as we no longer have to carry that higher cost inventory and our excess warehouse expenses that we had shown in the prior two quarters. Net loss attributable to iPower in the fiscal third quarter was $1.5 million or $0.05 per share compared to an income of $1.2 million or $0.04 per share for the same period in fiscal 2022. In our bottom line was primarily driven by lower gross profit and the aforementioned higher selling fulfillment marketing and marketing costs. Moving to the balance sheet, cash and cash equivalents were 1.4 million as of March 31st, 2023, compared to 1.8 million at June 30, 2022. As of March 31st, 2023, total debt at 9.7 million compared to 16 million as of June 30, 2022. The decrease was driven by our decision to pay down a significant portion of our revolving credit facility. As a result, our net debt position was reduced 42% to 8.2 million compared to 14.2 million as of June 30, 2022. As Lawrence mentioned earlier, we expect to improve both on our gross and operating margins, given the stabilization of the supply chain and the reduction in our excess inventory and the lowering of our excess warehousing costs. We believe these initiatives, in addition to the continued strong demand for announced products, will enable us to return to growth and profitability in our fiscal 2024. So with that, that concludes our prepared remarks.
Lawrence
and we will now open it for questions operator thank you that's a question please press star one one on your telephone and wait for your name to be announced to withdraw your question please press star one one again please stand by we'll compile the q a roster one moment our first question will come from line of scott fortune from ross your line is open
Kevin
Good afternoon and thanks for taking the questions. Inventory levels, just want to get a sense for obviously you're working through that, but there still seems to be some left in there. You don't want to discount it too much from that. But when you look at kind of the normalized inventory, what type of terms are you looking at? And then this kind of sense of the levels here, And once it's been completely cycled out, kind of the timing, you expect kind of inventory to be normalized from the next couple of quarters standpoint, if that can be helpful from that standpoint. Thanks.
Operator
Lawrence, do you want to take that one in terms of timing? Maybe I can talk a little bit about what we think a normalized level would be.
Lawrence
The timing to that would return to normal inventory.
Operator
Yeah, the cycle time through some of the higher cost stuff that we still sit on.
Lawrence
I think by the end of June quarter, we should be achieving that goal.
Operator
And then from the standpoint of kind of inventory turns and what we think is normal, prior to IPO, we were running the business, you know, six, six and a half turns a year. I don't know that that's necessarily a realistic number. However, we've got kind of a soft inventory goal based on kind of demand expectations of at least initially trying to get our inventory levels down to the 15 or 16 million level. Some of that will change depending on demand forecasts, but I think we still have some
Lawrence
absolute levels of inventory reduction that we feel like we can achieve over the next quarter or so yeah I think our goal is to to turn inventory about around five times a year so that could be that's a goal that we are trying to achieve got it no I appreciate that color there
Kevin
And then you mentioned, you know, attractive service side model here, the drive growth for partners. You're seeing pretty good demand. I know it's initial and just beginning to start up, but kind of help us understand the margin profile and the kind of as you go after these different categories, kind of the The service opportunity where you can see, you know, a percentage, what percentage it can be of the revenues and the margin profile on the services going forward. That'd be great, helpful from that standpoint.
Lawrence
I'd take this, Kevin. Sure. So it's still early. We have engaged a few partners. We have seen pretty promising results with these pilots. From the profit standpoint, I think it will be around the similar levels of our in-house products, actually, in terms of the bottom line. I think this services side of the revenue has a much, much higher potential than just like a build purely from an in-house product line point of view. So I think this is something that we could, I personally have a high expectation to looking forward to.
Kevin
Got it. And then one last one for me. You know, hydroponics is down to 35% sales. And congratulations on the new high farm side of things. But any color on big box and kind of initiatives there? I know that has been a focus from that standpoint. But any additional colors on working with the big box retailers and moving more of your products into those channels going forward here?
Lawrence
The big box retailers, we've been working with these potential partners, developing brand strategies and product lines to work with them. We have been attending meetings and conferences, but it still takes some more time before we can reveal any significant achievement.
Kevin
Okay, I appreciate it. I will jump back in the queue.
Lawrence
Thank you. I have no further questions in the queue. I'd like to give the call back over to Kevin for any closing remarks.
Operator
Okay, well, thank you, those of you who dialed in and participated in the call. We look forward to speaking with you again The time that we report our full year 2023 results and that fiscal year will end June 30 of this year. Thanks again and look forward to talking to you.
Lawrence
This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.
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