What caused DFLI's earnings to decline in 2024?

Dragonfly Energy Holdings Corp (DFLI) experienced a decline in earnings in 2024 primarily due to weakness in direct-to-consumer battery sales and strategic shifts in the trucking sector.

1. **Impact of Direct-to-Consumer Sales**: The decline in earnings can be attributed to a significant drop in sales from the direct-to-consumer segment. These sales plummeted from $10.3 million in Q3 2023 to $5.2 million in Q3 2024. This decline is a result of rising interest rates and inflation, which have negatively affected consumer spending on discretionary items such as batteries.
2. **Strategic Shifts and Market Penetration**: Despite the challenges, DFLI has made strategic advances, particularly in the trucking sector. The company reported its first meaningful revenue from this sector in Q3 2024, indicating successful market penetration. However, this positive development may not have been enough to offset the losses from the direct-to-consumer segment, leading to a decline in overall earnings.
3. **Cost Management and Liquidity**: DFLI has implemented cost-cutting measures, which have led to a reduction in operating expenses. For instance, expenses decreased from $10.5 million in Q3 2023 to $8.9 million in Q3 2024. Additionally, the company has improved its liquidity, ending Q3 2024 with $8.0 million in cash, up from $4.7 million at the end of Q2 2024. While these measures are positive for the company's stability, they may not directly contribute to earnings growth in the short term.

In conclusion, DFLI's earnings decline in 2024 was primarily due to a decrease in direct-to-consumer battery sales, which was influenced by macroeconomic factors such as rising interest rates and inflation. Although the company has made strides in market penetration and cost management, the impact of these efforts was not sufficient to offset the losses from the direct-to-consumer segment, leading to a decline in overall earnings.