Core Insights - Grove has disclosed its AI-related carbon footprint and launched an open-source measurement formula in collaboration with Gravity, aiming to promote sustainable AI practices within the industry [1] Group 1 - The company emphasizes the importance of measuring and reducing the carbon footprint associated with AI technologies [1] - The open-source measurement formula is intended to encourage other companies in the industry to adopt similar sustainable practices [1] - Grove's initiative is positioned as a push for the industry to embrace AI in a more environmentally friendly manner [1]

Summary of Grove Collaborative Holdings Inc. Conference Call Company Overview - **Company Name**: Grove Collaborative Holdings Inc. (Ticker: GROV) - **Industry**: E-commerce for sustainable and healthy home products - **Business Model**: Online destination for everyday essentials focused on health, sustainability, and reducing plastic usage [1][3][5] Key Points and Arguments Business Strategy and Market Position - Grove aims to build a durable business in the direct-to-consumer (DTC) space by creating a strong value proposition centered on curation and high standards for health and sustainability [5][9] - The company has transitioned from a subscription-only model to an open marketplace, allowing all customers to shop without a subscription, which has expanded the total addressable market (TAM) to 57 million people [12][54] - Grove is positioned as a trusted retailer, with 89% of surveyed customers expressing trust in the company for health and wellness products [24][56] Financial Performance - Revenue decreased by 16% year-over-year but showed a 1% increase quarter-over-quarter [29] - The company has improved gross margins by over 800 basis points and has focused on profitability, achieving breakeven EBITDA over the last eight quarters [31][33] - Grove has reduced SG&A headcount by 70% and prioritized cleaning up its balance sheet, which has removed existential risks associated with its previous debt [36][37] Growth and Future Outlook - The company anticipates sequential growth in Q2, Q3, and Q4, with a goal of achieving year-over-year growth by Q4 [39][45] - Grove is exploring mergers and acquisitions (M&A) to enhance its product offerings and accelerate growth, with a focus on acquiring subscale brands that align with its mission [65][69] - The CEO expressed confidence in the company's ability to grow into a $300 million business with double-digit growth rates while remaining profitable [45][75] Market Trends and Consumer Behavior - There are secular tailwinds in sustainability and wellness, with increasing consumer awareness about the impact of plastics and a demand for healthier products [13][14] - Grove's strategy includes expanding into new categories such as vitamins, minerals, and supplements, which are seen as significant growth opportunities [56] Additional Important Insights - Grove was the first retailer to claim plastic neutrality and has a strong commitment to sustainability, which differentiates it from competitors like Amazon and Walmart [10][54] - The company has a unique box economics model that allows for efficient shipping and fulfillment, which is crucial for competing with larger marketplaces [20][21] - The leadership team, including the CEO's experience at Amazon, is focused on building a customer-centric business that prioritizes trust and education [3][18] This summary encapsulates the key points discussed during the conference call, highlighting Grove Collaborative's strategic direction, financial performance, growth potential, and market positioning within the sustainable product industry.

Summary of Conference Call Company Overview - The company is focused on providing thoughtfully vetted and curated products for environmentally conscious consumers, positioning itself as a "nontoxic Amazon" [4][3] - The leadership team has undergone significant changes, with a new CEO and CFO introduced in 2023, aiming to transform the business and improve shareholder returns [6][7] Financial Performance - The company has transitioned from losing $100 million annually to breakeven, with a focus on improving customer experience and operational efficiency [7][37] - Revenue has seen fluctuations, with a 15% year-over-year decline, but there is guidance for growth in Q4 [37][48] - Gross margins are improving, and the company is operating with positive cash flow [37][40] Market Position and Strategy - The company aims to serve a larger customer base, expanding from a previous limit of 5 million to potentially 57 million environmentally conscious consumers [15][16] - The focus is on building a scalable platform that emphasizes high standards for product curation, particularly in health and sustainability [11][20] - The company is moving away from a default subscription model to enhance customer experience and increase average order value [21][26] Product and Brand Development - The company has added over 100 brands in recent years, focusing on vitamins, minerals, and supplements (VMS) to drive customer loyalty and revenue [29][30] - There is a strong emphasis on developing proprietary brands with high gross margins, differentiating from typical private label strategies [31][32] - The company is exploring acquisition opportunities to integrate subscale brands that align with its mission [34][59] Environmental and Health Focus - The company is committed to addressing plastic pollution and promoting human health, recognizing that consumers are increasingly concerned about these issues [14][27][29] - The narrative around microplastics and their health impacts is being leveraged to connect with consumers [18][19] Future Outlook - The leadership is optimistic about achieving significant growth, targeting a company valuation of $300 million to $400 million in the medium term [58][70] - There is a strong commitment to maintaining a clean balance sheet and avoiding dilution unless absolutely necessary [71][72] - The company is actively seeking growth opportunities and is prepared to explore acquisitions that align with its strategic goals [76] Key Takeaways - The company is undergoing a significant transformation with a focus on sustainability, customer experience, and financial health [6][7][37] - There is a clear strategy to differentiate from larger competitors like Amazon by serving a specific customer segment with high-quality, curated products [55][22] - The leadership is confident in the company's ability to grow and deliver shareholder value while adhering to its mission of promoting environmental and human health [49][75]

Core Insights - Grove Collaborative has partnered with Novi to enhance third-party claim validation in its e-commerce platform, aiming to set a higher industry standard for ingredient transparency and safety [1][4] - The partnership addresses consumer demand for verified product data amidst growing concerns about ingredient safety and environmental impact, allowing Grove to streamline claim verification across various product categories [2][4] - Grove's mission is to simplify the shopping experience for consumers by integrating verified claims into its offerings, thereby promoting trust and transparency in the marketplace [3][4] Company Overview - Grove Collaborative is an online platform focused on providing everyday essentials that promote a healthier home and planet, with a commitment to high standards in health, sustainability, and performance [5] - The company operates as a B Corp and Public Benefit Corporation, ensuring that every order is carbon neutral and supports environmental initiatives [5] Industry Context - The partnership signifies a shift in the retail industry towards prioritizing trust and transparency, with third-party verification becoming essential for meeting consumer expectations [4][6] - As retailers adapt to a landscape increasingly influenced by AI, the need for reliable data infrastructure to support consumer confidence and product discovery is becoming critical [4][6]

Financial Data and Key Metrics Changes - Revenue for the second quarter was $44 million, down 15.5% year over year but up 1.1% sequentially, indicating early momentum in revenue stabilization [13][21] - Adjusted EBITDA for the second quarter was negative $900,000, reflecting a negative 2.1% margin, which was below expectations due to the e-commerce platform migration [11][27] - Net loss was negative $3.6 million, an improvement from negative $10.1 million in the prior year, attributed to lower interest and operating expenses [27] Business Line Data and Key Metrics Changes - Total orders for the quarter were 640,000, a decline of 12.6% year over year but an increase of 3.4% compared to the first quarter [22] - Active customers ended the quarter at 664,000, down 10.9% year over year and 2.2% sequentially, reflecting the impact of reduced advertising spend [22] - DTC net revenue per order was $65.22, down 3.7% year over year, driven by a temporary increase in low-value shipments [23] Market Data and Key Metrics Changes - The company is focusing on expanding its third-party assortment, growing the number of brands offered by 47% and individual products by 59% year over year [13] - The company is shifting focus from cleaning products to personal care, vitamins, and clean beauty, responding to customer demand for high-standard products [46] Company Strategy and Development Direction - The company aims to build a curated marketplace for clean and sustainable products, emphasizing a differentiated value proposition from larger competitors like Amazon [6][8] - Strategic pillars include sustained profitability, balance sheet strength, revenue growth, and a focus on environmental and human health [10][14] - The company is committed to maintaining investment in customer acquisition despite short-term revenue challenges, reflecting confidence in long-term growth potential [11][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sequential revenue growth in the latter half of the year, expecting slight year-over-year growth in the fourth quarter [33] - The company is navigating short-term headwinds but is focused on stabilizing revenue, protecting gross margins, and managing cash efficiently [32] - Management highlighted the growing consumer demand for safer ingredients and transparency, positioning the company to meet these evolving market needs [34] Other Important Information - The company amended and extended its asset-based loan facility, improving financial flexibility and pushing maturity out to April 2028 [29] - The company received a continued listing standard notice from the NYSE due to market capitalization falling below $50 million but has since submitted a compliance plan that was accepted [29] Q&A Session Summary Question: Insights on lower revenue per order - Management indicated that the decline in revenue per order is primarily tied to the e-commerce platform migration, which affected average order value [37][38] Question: Returns on increased marketing spend - Management confirmed that the increased marketing spend is yielding positive returns, contributing to new customer acquisition and confidence in future revenue growth [39][40] Question: Opportunities for expanding product categories - Management noted a strategic shift away from cleaning products towards personal care and wellness categories, indicating strong customer interest in these areas [45][46]

Financial Performance & Outlook - Q2 2025 revenue was $44 million, a 15.5% decrease year-over-year but a 1.1% increase compared to Q1 2025 [56] - Gross margin in Q2 2025 was 55.4%, a 150 bps improvement year-over-year [56] - Adjusted EBITDA for Q2 2025 was -$0.9 million, representing -2.1% of revenue [56] - Operating cash flow for Q2 2025 was $1 million [56] - The company anticipates sequential revenue growth in Q3 and Q4 2025, with a return to slight year-over-year growth in Q4 [68, 69] - Full-year 2025 revenue is expected to decline by a mid-single-digit to low double-digit percentage year-over-year [17, 72] - Full-year 2025 Adjusted EBITDA is projected to be negative in the low single-digit millions to breakeven range [17, 72] Strategic Initiatives - The company is focused on scaling its platform, growing its product mix, and building customer loyalty [33] - The company aims to empower 57 million conscientious consumers to create a healthier home and planet [25, 31] - The company is expanding its product mix through third-party expansion, owned brand innovation, and potential mergers and acquisitions [33] Operational Improvements - Interest expense decreased by 90% in 2025 compared to 2024 due to the repayment of term debt [65] - The company has optimized its fulfillment center network and streamlined operations [9, 36]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes for periods ended June 30, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets show a decrease in total assets and cash, and an increase in stockholders' deficit from December 31, 2024, to June 30, 2025 Condensed Consolidated Balance Sheets (Amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $10,049 | $19,627 | | Total current assets | $36,796 | $44,941 | | Total assets | $57,826 | $65,010 | | Total current liabilities | $27,631 | $27,064 | | Total liabilities | $47,062 | $48,787 | | Total stockholders' deficit | $(14,008) | $(8,549) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations show decreased revenue and gross profit, but a significantly reduced net loss due to lower interest expense Condensed Consolidated Statements of Operations (Amounts in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue, net | $44,026 | $52,099 | $87,573 | $105,644 | | Gross profit | $24,395 | $28,063 | $47,459 | $57,803 | | Operating loss | $(3,490) | $(6,936) | $(6,998) | $(7,469) | | Net loss | $(3,626) | $(10,061) | $(7,173) | $(13,452) | | Net loss per share attributable to common stockholders, basic and diluted | $(0.10) | $(0.28) | $(0.21) | $(0.38) | [Condensed Consolidated Statements of Redeemable Convertible Preferred Stock, Common Stock and Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock%2C%20Common%20Stock%20and%20Stockholders%27%20Equity%20%28Deficit%29) This statement details changes in preferred stock, common stock, and equity, showing an increased stockholders' deficit from December 31, 2024, to June 30, 2025, primarily due to net losses Changes in Stockholders' Deficit (Amounts in thousands) | Metric | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :----------------------------------- | :---------------- | :------------- | :------------ | | Total Stockholders' Deficit | $(8,549) | $(11,648) | $(14,008) | | Net loss (Q1 2025) | | $(3,547) | | | Net loss (Q2 2025) | | | $(3,626) | | Stock-based compensation (H1 2025) | | $969 | $1,378 | | Class A shares issued and outstanding (June 30, 2025) | 35,871,574 | | 41,002,440 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show a net decrease in cash, equivalents, and restricted cash for H1 2025, driven by operating and investing activities Condensed Consolidated Statements of Cash Flows (Amounts in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(5,885) | $(10,769) | | Net cash used in investing activities | $(3,820) | $(906) | | Net cash used in financing activities | $(648) | $(554) | | Net decrease in cash, cash equivalents and restricted cash | $(10,353) | $(12,229) | | Cash, cash equivalents and restricted cash at end of period | $13,951 | $82,634 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the financial statements, covering business, accounting policies, acquisitions, debt, equity, and subsequent events [1. Description of Business](index=9&type=section&id=1.%20Description%20of%20Business) Grove Collaborative Holdings, Inc. is a digital-first, sustainability-oriented consumer products innovator - Grove Collaborative Holdings, Inc. is a digital-first, sustainability-oriented consumer products innovator specializing in household, personal care, and beauty products with an environmental focus[25](index=25&type=chunk) - The Company primarily sells products through its direct-to-consumer (DTC) platform (www.grove.co and mobile apps), offering both Grove-owned brands and third-party products[25](index=25&type=chunk) - In Q3 2024, the Company made a strategic decision to wind down sales through the retail channel to improve profitability[25](index=25&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the company's significant accounting policies, including revenue recognition, going concern, and recent accounting standard adoptions - The Company has an accumulated deficit of **$655.7 million** as of June 30, 2025, and believes existing cash and cash equivalents will fund operations for at least one year, but additional capital may be needed long-term[28](index=28&type=chunk) - The Company is an 'emerging growth company' and utilizes the extended transition period for complying with new or revised accounting standards[30](index=30&type=chunk) - Revenue is primarily generated from product sales through the DTC platform, recognized upon delivery to a third-party carrier[43](index=43&type=chunk)[47](index=47&type=chunk) - VIP membership fees are allocated to two material rights (free shipping, free products) and recognized ratably over the membership period[48](index=48&type=chunk)[49](index=49&type=chunk) Revenue by Product Type (Amounts in thousands) | Product Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Grove Brands | $17,825 | $21,438 | $35,438 | $44,484 | | Third-party products | $26,201 | $30,661 | $52,135 | $61,160 | | Total revenue, net | $44,026 | $52,099 | $87,573 | $105,644 | Fulfillment Costs (Amounts in thousands) | Cost Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Shipping and Handling | $6,785 | $7,287 | $13,195 | $15,237 | | Fulfillment Labor | $2,267 | $2,591 | $4,686 | $5,377 | | Payment Processing | $1,095 | $1,254 | $2,145 | $2,521 | | Total fulfillment costs | $10,147 | $11,132 | $20,026 | $23,135 | - The Company adopted ASU 2023-07 (Segment Reporting) on January 1, 2024, for annual periods and January 1, 2025, for interim periods, with no impact on consolidated financial statements[54](index=54&type=chunk) - New tax law (One, Big, Beautiful, Bill Act) signed on July 4, 2025, is not expected to have a material impact on consolidated financial statements[59](index=59&type=chunk) [3. Acquisitions](index=15&type=section&id=3.%20Acquisitions) This section details the company's recent acquisitions of Grab Green and 8Greens in early 2025, including their cash consideration and related transaction costs - On February 10, 2025, the Company acquired Grab Green, an eco-friendly cleaning products company, for **$2.2 million** in cash[60](index=60&type=chunk)[61](index=61&type=chunk) - On March 10, 2025, the Company acquired 8Greens, a healthy effervescent tablets and gummies company, for **$0.6 million** in cash[62](index=62&type=chunk)[64](index=64&type=chunk) - Acquisition-related transaction costs for both acquisitions totaled **$0.6 million** and were expensed[64](index=64&type=chunk) [4. Fair Value Measurements and Fair Value of Financial Instruments](index=16&type=section&id=4.%20Fair%20Value%20Measurements%20and%20Fair%20Value%20of%20Financial%20Instruments) This section describes the company's fair value measurements for financial instruments, classifying them into a three-level hierarchy and detailing valuation methods - The Company classifies financial instruments measured at fair value into a three-level hierarchy based on input observability[67](index=67&type=chunk) - Earn-Out Shares, Public Warrants, and Private Placement Warrants are classified as Level 3 liabilities and valued using Black-Scholes or Monte Carlo models[71](index=71&type=chunk)[72](index=72&type=chunk)[76](index=76&type=chunk) Fair Value of Financial Liabilities (Amounts in thousands) | Financial Liabilities | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Earn-Out Shares | $1,060 | $1,257 | | Public Warrants | $0 | $9 | | Private Placement Warrants | $0 | $8 | | Total | $1,060 | $1,274 | - The change in fair value of these liabilities for the six months ended June 30, 2025, resulted in a gain of **$214 thousand**[77](index=77&type=chunk) [5. Other Financial Statement Information](index=18&type=section&id=5.%20Other%20Financial%20Statement%20Information) This section provides details on accrued expenses and intangible assets, including their net values and estimated amortization for future periods Accrued Expenses (Amounts in thousands) | Accrued Expense Category | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Inventory purchases | $4,504 | $1,657 | | Compensation and benefits | $1,039 | $4,149 | | Advertising costs | $440 | $558 | | Fulfillment costs | $830 | $540 | | Sales taxes | $847 | $1,106 | | Other accrued expenses | $3,784 | $3,536 | | Total accrued expenses | $11,444 | $11,546 | Intangible Assets, Net (Amounts in thousands) | Intangible Asset | June 30, 2025 (Net) | December 31, 2024 (Net) | | :-------------------- | :------------------ | :---------------------- | | Customer relationships | $1,027 | $0 | | Trademarks | $839 | $56 | | Grove.com domain name | $656 | $656 | | Total Intangible Assets, net | $2,522 | $712 | - The estimated annual amortization of intangible assets for the next five years totals **$1.866 million**[79](index=79&type=chunk) [6. Debt](index=20&type=section&id=6.%20Debt) This section details the Siena Revolver, including its extended maturity date, interest rate structure, outstanding balance, and additional borrowing capacity - The Siena Revolver maturity date was extended to April 10, 2028, and the financial covenant was eliminated via Siena Amendment No. 3 on May 8, 2025[82](index=82&type=chunk) - Interest rates for the Siena Revolver are based on a fluctuating rate, either Base Rate plus **3.25%** or Term SOFR plus **4.25%**[82](index=82&type=chunk) - As of June 30, 2025, the outstanding principal balance under the Siena Revolver was **$7.5 million** with an interest rate of **8.58%**, and additional borrowing capacity was **$0.4 million**[85](index=85&type=chunk) [7. Commitments and Contingencies](index=21&type=section&id=7.%20Commitments%20and%20Contingencies) This section outlines the company's merchandise purchase commitments, letters of credit, and ongoing legal investigation by the California Autorenewal Task Force Merchandise Purchase Commitments (Amounts in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Merchandise Purchase Commitments | $9.2 | $9.1 | Letters of Credit (Amounts in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Standby Letters of Credit | $1.8 | $2.1 | - The Company is under investigation by the California Autorenewal Task Force regarding compliance with California's Automatic Renewal Law, Unfair Competition Law, and False Advertising Law, and it is probable a loss will be incurred, though the amount is not yet estimable[90](index=90&type=chunk) [8. Common Stock and Warrants](index=21&type=section&id=8.%20Common%20Stock%20and%20Warrants) This section details changes in common stock, outstanding warrants, Earn-Out Shares, and the Amended Standby Equity Purchase Agreement with Yorkville - In February 2025, all outstanding Class B Common Stock automatically converted into Class A Common Stock, and the Class B Common Stock was retired in April 2025[93](index=93&type=chunk) - **2,602,412** Earn-Out Shares remain unvested as of June 30, 2025, with vesting contingent on Class A common stock reaching **$62.50** and **$75.00** per share thresholds within ten years[95](index=95&type=chunk)[97](index=97&type=chunk) Outstanding Warrants (as-converted basis) | Warrant Type | Shares | Exercise Price | | :---------------------- | :---------- | :------------- | | Public Warrants | 1,460,146 | $57.50 | | Private Placement Warrants | 1,340,000 | $57.50 | - The Company entered into an Amended Standby Equity Purchase Agreement (SEPA) with Yorkville on July 8, 2025, extending the term to August 1, 2027, and amending the purchase price for Class A common stock[106](index=106&type=chunk)[135](index=135&type=chunk) - As of June 30, 2025, **6,363,567** shares were available to be sold to Yorkville under the Exchange Cap, with **147,965** shares already sold for **$2.4 million** gross proceeds[106](index=106&type=chunk) Shares Reserved for Future Issuance (as-if converted basis) | Category | June 30, 2025 (Class A Common Stock) | December 31, 2024 (Class A Common Stock) | | :---------------------------------------- | :----------------------------------- | :--------------------------------------- | | Private Placement Warrants | 1,340,000 | 1,340,000 | | Public Warrants | 1,460,146 | 1,460,146 | | Backstop Warrants | 775,005 | 775,005 | | Shares issuable upon conversion of redeemable convertible preferred stock | 12,500,097 | 12,500,097 | | Other outstanding common stock warrants | 473,895 | 362,000 | | Outstanding stock options | 1,649,627 | 930,956 | | Outstanding restricted stock units | 4,938,665 | 4,656,655 | | Shares available for issuance under 2022 Equity Incentive Plan | 5,869,921 | 5,182,186 | | Shares available for issuance under 2022 Employee Stock Purchase Plan | 1,104,661 | 846,157 | | Total shares of common stock reserved | 30,112,017 | 28,053,202 | [9. Redeemable Convertible Preferred Stock](index=24&type=section&id=9.%20Redeemable%20Convertible%20Preferred%20Stock) This section details the Series A and Series A' Preferred Stock issuances, their associated rights, cumulative dividends, and classification as temporary equity - The Company issued Series A Preferred Stock (**$10.0 million**) in August 2023 and Series A' Preferred Stock (**$15.0 million**) in September 2024 to Volition Capital Fund IV, L.P[109](index=109&type=chunk)[110](index=110&type=chunk) - In connection with the Series A' issuance, Volition Warrants and Volition Penny Warrants were canceled, and Series A Preferred Stock redemption terms were modified[110](index=110&type=chunk) - Holders of Preferred Stock are entitled to cumulative dividends at **6%** per annum, with total undeclared dividends of **$1.8 million** as of June 30, 2025[114](index=114&type=chunk) - Preferred Stock has liquidation preferences and voting rights equivalent to Class A Common Stock on an as-converted basis[115](index=115&type=chunk)[116](index=116&type=chunk) - The Preferred Stock is classified as temporary equity due to deemed liquidation rights that are contingent redemption features not solely within the Company's control[120](index=120&type=chunk) [10. Stock-Based Compensation](index=26&type=section&id=10.%20Stock-Based%20Compensation) This section details stock option and restricted stock unit activity, along with the associated stock-based compensation expense and unrecognized compensation expense Stock Option Activity (Amounts in thousands, except share and per share amounts) | Metric | Number of Options | Weighted-Average Exercise Price | | :-------------------------- | :---------------- | :------------------------------ | | Balance – December 31, 2024 | 1,707,450 | $7.34 | | Cancelled/forfeited | (57,823) | $7.06 | | Balance – June 30, 2025 | 1,649,627 | $7.35 | | Options vested and exercisable – June 30, 2025 | 1,446,194 | $5.74 | Restricted Stock Units (RSUs) Activity | Metric | Number of Shares | Weighted-Average Grant Date Fair Value Per Share | | :------------------------ | :--------------- | :----------------------------------------------- | | Unvested – December 31, 2024 | 4,657,655 | $2.62 | | Granted | 2,769,300 | $1.52 | | Vested | (1,598,724) | $2.88 | | Forfeited | (889,566) | $3.03 | | Balance – June 30, 2025 | 4,938,665 | $1.85 | Stock-Based Compensation Expense (Amounts in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total | $1.4 | $3.4 | $2.3 | $6.5 | - As of June 30, 2025, total unrecognized compensation expense for unvested options and RSUs was **$6.5 million**, to be recognized over an estimated weighted average period of **2.3 years**[128](index=128&type=chunk) [11. Segments](index=27&type=section&id=11.%20Segments) This section confirms the company operates as a single segment, with the CEO as CODM, using net loss to evaluate performance - The Company operates in one operating segment, with the Chief Executive Officer as the chief operating decision maker (CODM)[129](index=129&type=chunk) - The CODM uses net loss to evaluate the Company's return on assets and investment decisions[131](index=131&type=chunk) Segment Revenue, Significant Expenses and Net Loss (Amounts in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue, net | $44,026 | $52,099 | $87,573 | $105,644 | | Cost of goods sold | $19,631 | $24,036 | $40,114 | $47,841 | | Gross profit | $24,395 | $28,063 | $47,459 | $57,803 | | Fulfillment costs | $10,147 | $11,132 | $20,026 | $23,135 | | Advertising | $2,722 | $2,439 | $5,529 | $4,492 | | Product development and other SG&A expenses | $13,150 | $15,605 | $25,689 | $26,508 | | Consolidated net loss | $(3,626) | $(10,061) | $(7,173) | $(13,452) | [12. Net Loss Per Share Attributable to Common Stockholders](index=29&type=section&id=12.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) This section details potentially dilutive shares excluded from EPS calculations for the three and six months ended June 30, 2025 and 2024 Potentially Dilutive Shares Excluded from EPS Calculation | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Redeemable convertible preferred stock | 12,500,097 | 4,739,336 | 12,500,097 | 4,739,336 | | Restricted stock units | 4,938,665 | 5,132,111 | 4,938,665 | 5,132,111 | | Public Warrants and Private Placement Warrants | 2,800,146 | 2,800,146 | 2,800,146 | 2,800,146 | | Earn-Out Shares | 2,602,412 | 2,602,412 | 2,602,412 | 2,602,412 | | Options | 1,649,627 | 1,712,021 | 1,649,627 | 1,712,021 | | Common Stock Warrants | 473,895 | 2,596,673 | 473,895 | 2,596,673 | | ESPP Shares | 43,804 | 31,597 | 43,804 | 31,597 | | Total | 25,008,646 | 19,614,296 | 25,008,646 | 19,614,296 | - These shares were excluded from diluted net loss per share calculations because their inclusion would have been anti-dilutive[36](index=36&type=chunk)[134](index=134&type=chunk) [13. Subsequent Events](index=29&type=section&id=13.%20Subsequent%20Events) This section reports the amendment of the Standby Equity Purchase Agreement with Yorkville on July 8, 2025, extending its term - On July 8, 2025, the Company and Yorkville amended the Standby Equity Purchase Agreement (SEPA) to extend the commitment period to August 1, 2027, and modify the purchase price for Class A common stock[135](index=135&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, covering key performance factors, operating metrics, non-GAAP measures, liquidity, and critical accounting estimates [Overview](index=31&type=section&id=Overview) This overview describes Grove as a sustainability-oriented DTC consumer products company, its exit from retail, and accumulated deficit - Grove is a sustainability-oriented consumer products company operating primarily through an online direct-to-consumer (DTC) platform[143](index=143&type=chunk)[144](index=144&type=chunk) - The Company decided to exit the brick-and-mortar retail channel in Q4 2024, expecting improved profitability with insignificant revenue impact, to be completed in H2 2025[144](index=144&type=chunk) - As of June 30, 2025, the Company has an accumulated deficit of **$655.7 million**[145](index=145&type=chunk) - New tax legislation (OBBB) signed July 4, 2025, is not expected to have a material impact on the Company's consolidated financial statements[146](index=146&type=chunk) [Key Factors Affecting Our Operating Performance](index=32&type=section&id=Key%20Factors%20Affecting%20Our%20Operating%20Performance) This section discusses factors impacting performance, including brand awareness, product innovation, customer acquisition, profitability, and e-commerce platform migration - Future business growth depends on increasing brand awareness by highlighting natural, sustainable, and effective product qualities and marketing efforts[148](index=148&type=chunk) - Continued product innovation, especially in environmentally responsible packaging, is integral to future growth, despite reduced investment in recent periods[149](index=149&type=chunk) - Cost-efficient acquisition and retention of customers on the DTC platform are crucial, facing challenges from increasing online advertising costs and privacy changes[150](index=150&type=chunk)[151](index=151&type=chunk) - The Company aims for profitable growth by re-investing to expand its DTC business and achieve scale, acknowledging that recent profitability gains may not be sustainable short-term[153](index=153&type=chunk) - The migration of the e-commerce platform to third-party providers has caused and is expected to continue causing disruptions, impacting user experience, inventory, fulfillment, and payment processing[154](index=154&type=chunk)[155](index=155&type=chunk) [Key Operating and Financial Metrics](index=33&type=section&id=Key%20Operating%20and%20Financial%20Metrics) This section presents key operating metrics, including DTC Total Orders, Active Customers, and Net Revenue Per Order, with explanations for their changes Key Operating Metrics (Amounts in thousands, except DTC Net Revenue Per Order) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | DTC Total Orders | 640 | 732 | 1,262 | 1,505 | | DTC Active Customers | 664 | 745 | 664 | 745 | | DTC Net Revenue Per Order | $65 | $68 | $66 | $67 | - DTC Total Orders decreased in Q2 and H1 2025 due to lower advertising spend in prior periods, fewer new customer acquisitions, and temporary e-commerce platform migration disruptions[158](index=158&type=chunk) - DTC Active Customers decreased in Q2 and H1 2025, primarily due to reduced advertising spend in prior years leading to fewer new customer acquisitions and repeat orders[159](index=159&type=chunk) - DTC Net Revenue Per Order decreased in Q2 and H1 2025 due to an increase in lower-value recurring orders and the elimination of certain customer fees, partially offset by improved promotional strategies[160](index=160&type=chunk) [Non-GAAP Financial Measures: Adjusted EBITDA and Adjusted EBITDA Margin](index=34&type=section&id=Non-GAAP%20Financial%20Measures%3A%20Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) This section defines Adjusted EBITDA as a non-GAAP measure used by management to evaluate operating performance, providing a reconciliation to net loss - Adjusted EBITDA is a non-GAAP measure used by management to evaluate operating performance, excluding items like stock-based compensation, depreciation, changes in derivative fair value, interest, restructuring costs, and transaction costs[162](index=162&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (Amounts in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3,626) | $(10,061) | $(7,173) | $(13,452) | | Stock-based compensation | 1,378 | 3,397 | 2,347 | 6,510 | | Depreciation and amortization | 488 | 2,426 | 866 | 4,627 | | Changes in fair value of derivative liabilities | (70) | (8) | (214) | (206) | | Interest income | (109) | (993) | (281) | (2,079) | | Interest expense | 305 | 4,117 | 651 | 8,246 | | Restructuring and severance related costs | — | 2,170 | — | (715) | | Transaction related costs | 712 | — | 1,275 | — | | Provision for income taxes | 10 | 10 | 19 | 20 | | Total Adjusted EBITDA | $(912) | $1,058 | $(2,510) | $2,951 | | Adjusted EBITDA margin (loss) | (2.1)% | 2.0% | (2.9)% | 2.8% | [Components of Results of Operations](index=35&type=section&id=Components%20of%20Results%20of%20Operations) This section details revenue sources, cost of goods sold, gross margin drivers, operating expenses (advertising, product development, SG&A), and non-operating expenses - Revenue is primarily generated from DTC sales of Grove Brands and third-party products, recognized net of discounts, sales tax, credits, and estimated refunds[165](index=165&type=chunk) - Cost of goods sold includes product costs, inbound freight, vendor allowances, inventory shrinkage, and write-offs[167](index=167&type=chunk) - Gross margin is generally higher for Grove Brands and fluctuates based on promotional activity, product mix, and inbound transportation rates[168](index=168&type=chunk) - Operating expenses include advertising (expensed as incurred), product development (personnel, platform support, innovation), and selling, general and administrative (corporate functions, fulfillment, marketing, environmental offsets)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - Non-operating expenses include interest expense (decreased due to debt extinguishment), changes in fair value of derivative liabilities (fluctuates with stock price), and other income (primarily interest income)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of revenue, cost of goods sold, gross profit, operating expenses, and non-operating expenses for the three and six months ended June 30, 2025 and 2024 Revenue, Net Comparison (Amounts in thousands, except percentages) | Metric | June 30, 2025 | June 30, 2024 | Change Amount | Change % | | :---------- | :------------ | :------------ | :------------ | :------- | | **Three Months Ended** | | | | | | Revenue, net | $44,026 | $52,099 | $(8,073) | (15)% | | **Six Months Ended** | | | | | | Revenue, net | $87,573 | $105,644 | $(18,071) | (17)% | - Revenue decreased primarily due to lower DTC Total Orders from reduced advertising in prior periods, temporary e-commerce platform migration disruptions, and decreases in DTC Net Revenue Per Order[180](index=180&type=chunk) Cost of Goods Sold and Gross Profit Comparison (Amounts in thousands, except percentages) | Metric | June 30, 2025 | June 30, 2024 | Change Amount | Change % | | :-------------- | :------------ | :------------ | :------------ | :------- | | **Three Months Ended** | | | | | | Cost of goods sold | $19,631 | $24,036 | $(4,405) | (18)% | | Gross profit | $24,395 | $28,063 | $(3,668) | (13)% | | Gross margin | 55% | 54% | 1.55 pp | | | **Six Months Ended** | | | | | | Cost of goods sold | $40,114 | $47,841 | $(7,727) | (16)% | | Gross profit | $47,459 | $57,803 | $(10,344) | (18)% | | Gross margin | 54% | 55% | (0.52) pp | | - Cost of goods sold decreased due to lower DTC Total Orders; gross margin increased in Q2 2025 but decreased in H1 2025 due to various factors[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) Operating Expenses Comparison (Amounts in thousands, except percentages) | Metric | June 30, 2025 | June 30, 2024 | Change Amount | Change % | | :------------------ | :------------ | :------------ | :------------ | :------- | | **Three Months Ended** | | | | | | Advertising | $2,722 | $2,439 | $283 | 12% | | Product development | $2,207 | $5,436 | $(3,229) | (59)% | | Selling, general and administrative | $22,956 | $27,124 | $(4,168) | (15)% | | **Six Months Ended** | | | | | | Advertising | $5,529 | $4,492 | $1,037 | 23% | | Product development | $3,986 | $9,062 | $(5,076) | (56)% | | Selling, general and administrative | $44,942 | $51,718 | $(6,776) | (13)% | - Advertising expenses increased due to higher online and television advertising; product development expenses decreased significantly due to lower amortization, severance, and salaries[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Selling, general and administrative expenses decreased due to lower fulfillment costs, stock-based compensation, corporate salaries, and depreciation, partially offset by acquisition support fees[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) Non-Operating Expenses (Income), Net Comparison (Amounts in thousands, except percentages) | Metric | June 30, 2025 | June 30, 2024 | Change Amount | Change % | | :------------------ | :------------ | :------------ | :------------ | :------- | | **Three Months Ended** | | | | | | Interest expense | $305 | $4,117 | $(3,812) | (93)% | | Changes in fair value of derivative liabilities | $(70) | $(8) | $(62) | ** | | Other income, net | $(109) | $(994) | $885 | (89)% | | **Six Months Ended** | | | | | | Interest expense | $651 | $8,246 | $(7,595) | (92)% | | Changes in fair value of derivative liabilities | $(214) | $(206) | $(8) | ** | | Other income, net | $(281) | $(2,077) | $1,796 | (86)% | - Interest expense decreased significantly due to the extinguishment of the term debt facility in 2024; other income decreased due to lower on-hand cash[191](index=191&type=chunk)[193](index=193&type=chunk) [Liquidity, Capital Resources and Requirements](index=42&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Requirements) This section discusses the company's cash position, accumulated deficit, debt, borrowing capacity, NYSE compliance, and future capital needs - As of June 30, 2025, the Company had **$10.0 million** in unrestricted cash and cash equivalents and incurred negative cash flows from operating activities of **$5.9 million** for the six months ended June 30, 2025[194](index=194&type=chunk) - The Company has an accumulated deficit of **$655.7 million** and total outstanding indebtedness of **$7.5 million** as of June 30, 2025[194](index=194&type=chunk) - The Siena Revolver provides **$0.4 million** in additional borrowing capacity as of June 30, 2025, with its maturity extended to April 10, 2028[197](index=197&type=chunk) - The NYSE accepted the Company's business plan to regain compliance with the minimum market capitalization and stockholders' equity standard by August 5, 2025[198](index=198&type=chunk) - The Amended SEPA with Yorkville, extended to August 1, 2027, allows the Company to sell up to **$100.0 million** of common stock, with approximately **$8.7 million** in additional gross proceeds available as of July 31, 2025, subject to the Exchange Cap and stock price[199](index=199&type=chunk) - Management believes current resources are sufficient for at least one year, but additional capital may be required for strategic initiatives and future operations[200](index=200&type=chunk) [Contractual Obligations and Other Commitments](index=43&type=section&id=Contractual%20Obligations%20and%20Other%20Commitments) This section details the company's merchandise purchase commitments and the outstanding principal and borrowing capacity of the Siena Revolver - As of June 30, 2025, the Company had **$9.2 million** in enforceable and legally binding inventory purchase commitments, predominantly due within one year[202](index=202&type=chunk) - The Siena Revolver has an outstanding principal of **$7.5 million** as of June 30, 2025, with **$0.4 million** additional borrowing capacity, maturing on April 10, 2028[203](index=203&type=chunk)[204](index=204&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities, highlighting changes and their primary drivers for H1 2025 Cash Flow Summary (Amounts in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change % | | :------------------------------------ | :----------------------------- | :----------------------------- | :------- | | Net cash used in operating activities | $(5,885) | $(10,769) | (45.4)% | | Net cash used in investing activities | $(3,820) | $(906) | 321.6% | | Net cash used in financing activities | $(648) | $(554) | 17.0% | | Net decrease in cash, cash equivalents and restricted cash | $(10,353) | $(12,229) | | - Net cash used in operating activities decreased by **45.4%** in H1 2025, primarily due to lower net loss and favorable changes in operating assets and liabilities[206](index=206&type=chunk)[207](index=207&type=chunk) - Net cash used in investing activities increased significantly by **321.6%** in H1 2025, mainly due to cash paid for strategic acquisitions (**$2.8 million**) and property and equipment purchases[208](index=208&type=chunk) - Net cash used in financing activities remained relatively stable in H1 2025, primarily consisting of payments related to stock-based awards offset by ESPP proceeds[209](index=209&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company confirms it has no off-balance sheet financing arrangements as of June 30, 2025 - The Company does not have any off-balance sheet financing arrangements as of June 30, 2025[210](index=210&type=chunk) [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) This section states there have been no significant changes to the company's critical accounting policies since December 31, 2024 - There have been no significant changes to the Company's critical accounting policies since December 31, 2024[211](index=211&type=chunk) [Emerging Growth Company Status](index=45&type=section&id=Emerging%20Growth%20Company%20Status) The Company, as an 'emerging growth company,' utilizes JOBS Act exemptions, potentially affecting comparability with other public companies - The Company is an 'emerging growth company' under the JOBS Act and utilizes exemptions from certain reporting requirements, including auditor attestation and reduced executive compensation disclosures[212](index=212&type=chunk) - The Company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with other public companies[356](index=356&type=chunk) [Smaller Reporting Company Status](index=45&type=section&id=Smaller%20Reporting%20Company%20Status) The Company qualifies as a 'smaller reporting company,' allowing for reduced disclosure obligations due to its market value - The Company is a 'smaller reporting company' with a market value of stock held by non-affiliates less than **$250 million**, allowing for reduced disclosure obligations[213](index=213&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Grove Collaborative Holdings, Inc. is exempt from market risk disclosures - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[214](index=214&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures as of June 30, 2025, with no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=46&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The Company's Certifying Officers concluded that disclosure controls and procedures were effective as of June 30, 2025 - The Company's Certifying Officers concluded that disclosure controls and procedures were effective as of June 30, 2025[216](index=216&type=chunk) [Changes in Internal Control over Financial Reporting](index=46&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025 - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[217](index=217&type=chunk) [Limitations on the Effectiveness of Controls](index=46&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) This section acknowledges that disclosure controls and procedures provide only reasonable, not absolute, assurance due to inherent limitations - Disclosure controls and procedures provide only reasonable, not absolute, assurance and have inherent limitations[218](index=218&type=chunk) Part II - OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 7 for details regarding legal proceedings and contingencies - Refer to Note 7, Commitments and Contingencies, for information on legal proceedings[220](index=220&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section outlines material risks impacting the company's business, operating results, financial condition, and ownership of its securities [Summary of Risk Factors](index=47&type=section&id=Summary%20of%20Risk%20Factors) This summary highlights that an investment in the company's securities is speculative and risky, not covering all potential risks - An investment in the Company's securities is speculative and risky, and this summary does not cover all potential risks[222](index=222&type=chunk) [Risks Related to Our Business](index=47&type=section&id=Risks%20Related%20to%20Our%20Business) This section details risks related to business operations, including macroeconomic conditions, product claims, growth, platform disruptions, and competition - The Company's business relies on consumer discretionary spending, which is vulnerable to adverse macroeconomic conditions like high unemployment, inflation, and economic uncertainty[226](index=226&type=chunk) - Advertising inaccuracies or product mislabeling, especially regarding 'natural,' 'organic,' or 'sustainable' claims, could lead to lawsuits, recalls, regulatory actions, and harm to brand reputation[227](index=227&type=chunk)[228](index=228&type=chunk)[232](index=232&type=chunk) - After years of rapid growth, the Company has experienced revenue declines and may struggle to achieve sustainable profitable growth, particularly if investments in growth initiatives are insufficient or ineffective[233](index=233&type=chunk)[234](index=234&type=chunk) - Outsourcing the e-commerce platform to third-party providers has caused and may continue to cause disruptions in operations, user experience, inventory management, and payment processing, potentially harming financial results[235](index=235&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) - Quarterly operating results fluctuate due to various factors, including seasonality, product launches, marketing effectiveness, and platform disruptions, which could lead to stock price declines[240](index=240&type=chunk)[241](index=241&type=chunk) - The Company has incurred significant losses since inception and expects future losses, requiring substantial revenue growth to achieve and maintain profitability[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Additional financing may be required, and failure to obtain it on acceptable terms could force delays or reductions in strategic initiatives, adversely impacting future growth[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) - The Company operates in rapidly evolving and intensely competitive markets, facing competitors with longer histories, larger infrastructures, and greater resources, which could adversely affect its business[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - Failure to cost-effectively acquire new customers or retain existing ones, due to rising marketing costs, changes in advertising platforms, or ineffective new strategies, could adversely affect operating results[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) - Reductions in advertising and marketing spending to achieve profitability may harm brand awareness and market position[258](index=258&type=chunk) - Real or perceived issues with product quality, safety, efficacy, or environmental impact could diminish brand reputation, lead to recalls, regulatory actions, and loss of sales[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - Failure to introduce new products that meet customer expectations or are more costly than anticipated could harm the business and impair growth potential[262](index=262&type=chunk)[263](index=263&type=chunk) - Evolving government regulations of the Internet and e-commerce, including consumer protection, privacy, and sales practices, could increase costs, limit growth, and expose the Company to legal actions[264](index=264&type=chunk) - Selling consumer products involves inherent product liability risks, including claims of personal injury, illness, or environmental damage, which could lead to recalls, lawsuits, and harm to reputation and liquidity[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - The Company is subject to a broad range of federal, state, local, and foreign laws and regulations (e.g., OSHA, FDA, CPSC, USDA, FTC, EPA), and non-compliance or changes in these laws could result in fines, sanctions, recalls, and increased operating costs[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk) - Acquisitions, a part of the Company's strategy, involve risks such as integration difficulties, potential impairment charges, assumption of liabilities, and challenges in retaining key relationships, which could harm the business[273](index=273&type=chunk) - Damage or destruction to distribution centers from natural disasters or man-made events could disrupt operations, reduce inventory value, and harm the business[274](index=274&type=chunk) - The Company's success depends on its management team, and the loss of key employees could harm the business and hinder the timely implementation of its business plan[275](index=275&type=chunk) - Labor-related matters, including potential unionization or work stoppages, could disrupt operations and increase labor costs[276](index=276&type=chunk) - Reliance on a limited number of third-party suppliers and manufacturers, especially international ones, exposes the Company to price fluctuations, supply disruptions, quality control issues, and increased costs from tariffs[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) - Failure of third-party suppliers and manufacturers to comply with ethical business practices or applicable laws could harm the Company's reputation and expose it to litigation and enforcement actions[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) - Ineffective optimization, operation, or management of warehouse fulfillment centers could lead to excess or insufficient capacity, increased costs, and harm to customer relationships[287](index=287&type=chunk)[288](index=288&type=chunk) - Dependence on third-party shipping vendors means changes in arrangements, interruptions, or rising costs could negatively impact operating results and customer experience[289](index=289&type=chunk) - Outsourcing fulfillment and technology functions to third-party service providers, including those in foreign countries, creates risks of service failures, increased costs, and operational disruptions[290](index=290&type=chunk) - Risks associated with online payment methods, including reliance on third-party processors, potential for increased fees, compliance with industry standards (PCI-DSS), and fraud, could materially impact operations and financial performance[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk) - Inability to adequately obtain, maintain, protect, defend, and enforce intellectual property rights (patents, trademarks, copyrights, trade secrets) could allow competitors to mimic products and diminish brand value[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) - Claims that employees or contractors have wrongfully used or disclosed confidential information or trade secrets of third parties could lead to litigation, loss of intellectual property, or key personnel[308](index=308&type=chunk) - Indemnity provisions in agreements could expose the Company to substantial, potentially uncapped, liability for intellectual property infringement claims, harming financial condition and relationships[309](index=309&type=chunk)[310](index=310&type=chunk) - Failure to successfully maintain, scale, and upgrade information technology systems could lead to business disruptions and increased operating costs[311](index=311&type=chunk)[312](index=312&type=chunk) - Inability to protect against or mitigate cybersecurity attacks, service interruptions, or data corruption could disrupt operations, harm reputation, and incur significant remediation costs and legal claims[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) - Actual or perceived failure to comply with evolving privacy and data protection laws (e.g., CCPA, CPRA) and industry standards could increase compliance costs, liability, and negatively impact business[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) - Changes in existing laws or regulations, or adoption of new ones (e.g., Endorsement Guides, Green Guides, MOCRA, tariff policies), could increase costs, restrict marketing, and adversely affect business[327](index=327&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk) - Failure by partners, suppliers, or manufacturers to comply with product safety, environmental, or other laws could disrupt supply, harm reputation, and lead to lawsuits or regulatory actions[334](index=334&type=chunk) - The Company's status as a public benefit corporation and Certified B Corporation may not yield anticipated benefits and could lead to reputational harm if standards are not met or if the focus shifts from public benefit[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) - As a public benefit corporation, the duty to balance various stakeholder interests may result in actions that do not maximize stockholder value, potentially affecting stock price[338](index=338&type=chunk)[339](index=339&type=chunk) - Increased derivative litigation concerning the duty to balance stockholder and public benefit interests could arise, diverting management attention and impacting financial condition[340](index=340&type=chunk) - The Company and its directors/executive officers may face litigation for various claims, which could harm reputation, divert resources, and adversely affect financial condition[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) [Risks Related to Ownership of Our Securities](index=68&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Securities) This section covers risks related to securities ownership, including stock price volatility, dilution from warrants, delisting, and anti-takeover provisions - The price of the Company's Class A Common Stock and warrants may be volatile due to industry changes, operating performance, analyst reports, key personnel changes, regulatory changes, and macroeconomic conditions[344](index=344&type=chunk)[345](index=345&type=chunk) - Exercise of outstanding warrants (Public, Private Placement, Legacy Grove, Backstop) and issuance of additional shares could dilute existing stockholders and negatively affect market prices[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk) - Public Warrants may expire worthless if the stock price does not exceed the exercise price, and their terms can be amended adversely with **65%** holder approval[351](index=351&type=chunk) - The Company may redeem unexpired Public Warrants at a disadvantageous time for holders, potentially making them worthless[353](index=353&type=chunk)[354](index=354&type=chunk) - As an 'emerging growth company,' the Company's use of disclosure exemptions may make its securities less attractive to investors and complicate performance comparisons with other public companies[355](index=355&type=chunk)[356](index=356&type=chunk) - Future acquisitions or strategic alliances may involve incurring debt, assuming contingent liabilities, or issuing equity, which could dilute stockholders or impose business restrictions[357](index=357&type=chunk) - Future sales, or the perception of future sales, of Class A Common Stock by the Company or its stockholders in the public market could cause the market price to decline[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk) - The NYSE may delist the Company's securities if it fails to meet listing standards, which could limit trading, reduce liquidity, and trigger adverse consequences[361](index=361&type=chunk)[362](index=362&type=chunk) - The Company has no current plans to pay cash dividends on Class A Common Stock, meaning holders may only receive a return on investment through stock appreciation[363](index=363&type=chunk) - The Series A Preferred Stock and Series A' Preferred Stock have rights, preferences, and privileges (e.g., liquidation preference, voting restrictions) that could limit business flexibility or reduce Class A Common Stock value[364](index=364&type=chunk) - Covenants in loan agreements (e.g., Siena Revolver) restrict business operations, and failure to manage them or insufficient cash flow for repayment could adversely affect financial condition[365](index=365&type=chunk) - Lack of research or negative reports from securities analysts could cause the stock price and trading volume to decline[366](index=366&type=chunk) - As a public company, the Company faces significant expenses and administrative burdens, potentially impacting business and financial results[367](index=367&type=chunk) - Inability to maintain effective internal control over financial reporting could lead to loss of investor confidence, inaccurate reporting, and a decline in stock price[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk) - Delaware law and governing documents contain anti-takeover provisions (e.g., classified board, preferred stock issuance, advance notice procedures) that could delay or discourage takeover attempts[371](index=371&type=chunk)[372](index=372&type=chunk) - The Certificate of Incorporation designates Delaware courts as the exclusive forum for most disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[373](index=373&type=chunk)[374](index=374&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reports no unregistered sales of equity securities or use of proceeds - No unregistered sales of equity securities or use of proceeds to report[376](index=376&type=chunk) [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reports no defaults upon senior securities - No defaults upon senior securities to report[377](index=377&type=chunk) [Item 4. Mine Safety Disclosures](index=75&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company reports no mine safety disclosures - No mine safety disclosures to report[378](index=378&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205.%20Other%20Information) The Company reports no other information - No other information to report[379](index=379&type=chunk) [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including merger agreements, corporate governance, and warrant agreements - Exhibits include the Agreement and Plan of Merger, Certificate of Incorporation, Amended and Restated Bylaws, Warrant Agreements, Subscription Agreements, and Certifications[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) [Signatures](index=80&type=section&id=Signatures) This section contains the official signatures for the report, confirming its submission by the Interim Chief Financial Officer - The report is signed by Tom Siragusa, Interim Chief Financial Officer, on August 7, 2025[389](index=389&type=chunk)

[Executive Summary & Company Overview](index=1&type=section&id=executive-summary-company-overview) Grove Collaborative, a certified B Corporation and plastic-neutral retailer, demonstrated Q2 2025 sequential growth and positive cash flow, projecting year-over-year revenue growth by Q4 2025 [Company Introduction](index=1&type=section&id=Company%20Introduction) Grove Collaborative Holdings, Inc. (NYSE: GROV) is a certified B Corporation and Public Benefit Corporation, recognized as the world's first plastic neutral retailer and a leading sustainable consumer products company - Grove Collaborative is the **world's first plastic neutral retailer**, a **leading sustainable consumer products company**, **certified B Corporation**, and **Public Benefit Corporation**[2](index=2&type=chunk) [CEO Letter to Shareholders](index=1&type=section&id=CEO%20Letter%20to%20Shareholders) CEO Jeff Yurcisin highlighted progress and setbacks in Q2 2025, noting encouraging signs of recovery with sequential revenue and order growth despite challenges from an e-commerce platform migration - Grove experienced **sequential revenue and order growth** in Q2 2025, despite challenges from an e-commerce platform migration[3](index=3&type=chunk) - The company delivered **positive cash flow** and made structural improvements aimed at consistent profitability[3](index=3&type=chunk) - Grove expects to return to **year-over-year revenue growth in Q4 2025**, a significant milestone since 2022[3](index=3&type=chunk) - Strategic focus includes **deepening customer connection** with customers who care about their health, homes, and the planet through a more guided experience and educational content[4](index=4&type=chunk) [Second Quarter 2025 Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance) Grove Collaborative reported Q2 2025 revenue of $44.0 million, a significant improvement in net loss, and positive operating cash flow, despite a decline in Adjusted EBITDA [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Q2 2025 saw revenue of $44.0 million, a 15.5% YoY decline but a 1.1% sequential increase, with Net Loss improving significantly to $3.6 million and positive operating cash flow of $1.0 million **Q2 2025 Key Financial Highlights:** | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Revenue | $44.0 million | $52.1 million | -15.5% | | Net Loss | $(3.6) million | $(10.1) million | +64.3% | | Adjusted EBITDA | $(0.9) million | $1.1 million | -181.8% | | Operating Cash Flow | $1.0 million | N/A | N/A | | Total Cash Flow | $0.4 million | N/A | N/A | - Revenue increased **1.1% sequentially** compared to Q1 2025[5](index=5&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) Grove's Q2 2025 detailed financial results show a 150 basis point improvement in Gross Margin to 55.4%, driven by promotional efficiency, and a 20.3% YoY decrease in Operating Expenses [Revenue and Gross Margin](index=1&type=section&id=Revenue%20and%20Gross%20Margin) Revenue declined 15.5% YoY due to reduced advertising investment and e-commerce platform migration disruptions, but increased 1.1% sequentially, while Gross Margin improved by 150 basis points to 55.4% **Revenue and Gross Margin Performance:** | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Revenue | $44.0 million | $52.1 million | -15.5% | | Gross Margin | 55.4% | 53.9% | +150 bps | - Year-over-year revenue decline primarily reflects lagging effects of reduced advertising investment in 2024 and prior years, leading to a smaller active subscriber base, and temporary disruptions associated with e-commerce platform migration[5](index=5&type=chunk) - Gross Margin improvement was driven by improved promotional efficiency, including lower discounting activity and higher third-party vendor funding, offset by the elimination of certain customer fees[7](index=7&type=chunk) [Operating Expenses and Profitability](index=2&type=section&id=Operating%20Expenses%20and%20Profitability) Operating Expenses decreased by 20.3% YoY to $27.9 million, leading to a significant improvement in Net Loss to $3.6 million, though Adjusted EBITDA declined to negative $0.9 million **Operating Expenses and Profitability:** | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Operating Expenses | $27.9 million | $35.0 million | -20.3% | | Net Loss | $(3.6) million | $(10.1) million | +64.3% | | Net Loss Margin | (8.2)% | (19.3)% | +11.1 pp | | Adjusted EBITDA | $(0.9) million | $1.1 million | -181.8% | | Adjusted EBITDA Margin | (2.1)% | 2.0% | -4.1 pp | - The decline in operating expenses was driven by lower stock-based compensation, reduced depreciation and amortization, lower fulfillment costs, and ongoing cost optimization initiatives[8](index=8&type=chunk) - The year-over-year improvement in Net Loss resulted from lower interest expense and operating expenses[8](index=8&type=chunk) [Cash Flow and Liquidity](index=2&type=section&id=Cash%20Flow%20and%20Liquidity) Operating Cash Flow was positive $1.0 million for the quarter, mainly due to a reduction in working capital from improved inventory management, increasing cash to $14.0 million **Cash Flow and Liquidity:** | Metric | Q2 2025 | Q1 2025 | Change | | :----- | :------ | :------ | :----- | | Operating Cash Flow | $1.0 million | N/A | N/A | | Cash, Cash Equivalents, and Restricted Cash (End of Period) | $14.0 million | $13.5 million | +$0.5 million | - Positive Operating Cash Flow was primarily driven by a reduction in working capital resulting from improvement in inventory management[9](index=9&type=chunk) [Key Operating Metrics](index=2&type=section&id=Key%20Operating%20Metrics) Key operating metrics show a year-over-year decline in DTC orders and active customers, alongside an improvement in plastic intensity, reflecting strategic adjustments and sustainability efforts [Direct-to-Consumer (DTC) Metrics](index=2&type=section&id=Direct-to-Consumer%20%28DTC%29%20Metrics) DTC Total Orders declined 12.6% YoY to 640,000 but improved 3.4% QoQ, while DTC Active Customers decreased 10.9% YoY to 664,000, and DTC Net Revenue Per Order was $65.22 **DTC Key Metrics:** | Metric | Q2 2025 | Q2 2024 | YoY Change | QoQ Change (vs Q1) | | :----- | :------ | :------ | :--------- | :----------------- | | DTC Total Orders | 640,000 | 732,000 | -12.6% | +3.4% | | DTC Active Customers | 664,000 | 745,000 | -10.9% | N/A | | DTC Net Revenue Per Order | $65.22 | $68.00 | -3.7% | N/A | - Year-over-year declines in DTC orders and active customers were primarily due to lower advertising spend and temporary operational disruptions from Grove's e-commerce platform migration[11](index=11&type=chunk)[12](index=12&type=chunk) - The decrease in DTC Net Revenue Per Order reflects a temporary increase in low-value shipments and the removal of select customer fees[13](index=13&type=chunk) [Sustainability Metrics](index=2&type=section&id=Sustainability%20Metrics) Plastic Intensity, measured as pounds of plastic per $100 in net revenue, improved to 0.93 pounds in Q2 2025 from 1.02 pounds in Q2 2024 **Plastic Intensity:** | Metric | Q2 2025 | Q2 2024 | Improvement | | :----- | :------ | :------ | :---------- | | Plastic Intensity (lbs per $100 revenue) | 0.93 | 1.02 | 0.09 lbs | - Plastic intensity improved, demonstrating the company's commitment to reducing plastic use relative to revenue[13](index=13&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) Grove Collaborative maintains its full-year 2025 revenue guidance for a mid-single-digit to low-double-digit decline, narrowing Adjusted EBITDA expectations to negative low single-digit millions to breakeven [Full-Year 2025 Guidance](index=3&type=section&id=Full-Year%202025%20Guidance) Grove maintains its full-year revenue guidance, expecting a mid-single-digit to low-double-digit percentage decline year-over-year, with Adjusted EBITDA now expected to be negative low single-digit millions to breakeven **Full-Year 2025 Financial Guidance:** | Metric | Full-Year 2025 Outlook | Notes | | :----- | :--------------------- | :---- | | Revenue | Decline approximately mid-single-digit to low-double-digit percentage points year-over-year | Q1 expected lowest, Q3 improvement, Q4 slight YoY growth | | Adjusted EBITDA | Negative low single-digit millions to breakeven | Narrowed to lower end of previously provided range | - The company's strategic decision is to continue investing in advertising to drive top-line growth, while accepting modest Adjusted EBITDA losses, to build long-term shareholder value[15](index=15&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section provides details on the Q2 2025 earnings webcast, an overview of Grove Collaborative's mission, disclosures on forward-looking statements and non-GAAP financial measures, and investor contacts [Webcast and Conference Call Information](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Information) Grove hosted an investor conference call and webcast on August 7, 2025, at 5:00 pm ET / 2:00 pm PT to discuss financial results, with replay information and webcast access details provided - Investor conference call and webcast held on August 7, 2025, at 5:00 pm ET / 2:00 pm PT[16](index=16&type=chunk) - Webcast accessible at https://investors.grove.co/; conference call by calling 877-413-7205. Replay available until September 6, 2025[16](index=16&type=chunk) [About Grove Collaborative Holdings, Inc.](index=3&type=section&id=About%20Grove%20Collaborative%20Holdings%2C%20Inc.) Grove Collaborative is an online destination for everyday essentials promoting a healthier home and planet, offering thousands of vetted products meeting high standards for health, sustainability, and performance - Grove Collaborative is a one-stop online destination for everyday essentials that create a healthier home and planet, offering thoughtfully vetted products for various categories[17](index=17&type=chunk) - As a B Corp and Public Benefit Corporation, Grove ensures every order is carbon neutral, supports plastic waste cleanup initiatives, and allows customers to see and track the positive impact of their choices[17](index=17&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements regarding future revenue and Adjusted EBITDA expectations, subject to various risks and uncertainties, including e-commerce platform migration disruptions, market conditions, and regulatory matters - Statements regarding future revenue expectations (e.g., Q1 being the lowest, Q3 improvement, Q4 YoY growth) and full-year Adjusted EBITDA guidance are forward-looking[18](index=18&type=chunk)[19](index=19&type=chunk) - These statements involve risks and uncertainties, including disruptions relating to e-commerce platform migration, changes in business/market conditions, and legal/regulatory matters[20](index=20&type=chunk) - Grove assumes no obligation to update any forward-looking statement, except as may be required under applicable securities laws[20](index=20&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The report uses non-GAAP financial measures like Adjusted EBITDA and Adjusted EBITDA margin, presented as additions to, not substitutes for, GAAP measures, used by management and investors for trend analysis and comparison - Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures, presented as additions to, not substitutes for, GAAP measures[21](index=21&type=chunk) - These non-GAAP measures provide useful information to management and investors for trend analyses, budgeting, planning, and comparing financial measures with other similar companies[21](index=21&type=chunk) - Adjusted EBITDA is calculated as net loss, adjusted to exclude stock-based compensation, depreciation and amortization, changes in fair values of derivative liabilities, interest income/expense, restructuring/severance costs, transaction costs, and provision for income taxes[22](index=22&type=chunk)[23](index=23&type=chunk) [Investor and Media Contacts](index=5&type=section&id=Investor%20and%20Media%20Contacts) Contact information for investor relations (ir@grove.co) and media relations (Ryan.Zimmerman@grove.co) is provided - Investor Relations Contact: ir@grove.co[24](index=24&type=chunk) - Media Relations Contact: Ryan.Zimmerman@grove.co[24](index=24&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents Grove Collaborative's consolidated balance sheets, statements of operations, cash flows, and a reconciliation of non-GAAP financial measures for the reported periods [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $57.8 million, down from $65.0 million at December 31, 2024, with total liabilities decreasing to $47.1 million and stockholders' deficit widening to $(14.0) million **Consolidated Balance Sheets Highlights (in thousands):** | Metric | June 30, 2025 | December 31, 2024 | Change | | :----- | :------------ | :---------------- | :----- | | Total Assets | $57,826 | $65,010 | $(7,184) | | Total Liabilities | $47,062 | $48,787 | $(1,725) | | Total Stockholders' Deficit | $(14,008) | $(8,549) | $(5,459) | | Cash and cash equivalents | $10,049 | $19,627 | $(9,578) | | Inventory | $20,734 | $19,351 | $1,383 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, net revenue was $44.0 million, down from $52.1 million in Q2 2024, while operating loss improved to $(3.5) million and net loss attributable to common stockholders improved to $(4.0) million **Consolidated Statements of Operations Highlights (Three Months Ended June 30, in thousands):** | Metric | Q2 2025 | Q2 2024 | Change | | :----- | :------ | :------ | :----- | | Revenue, net | $44,026 | $52,099 | $(8,073) | | Cost of goods sold | $19,631 | $24,036 | $(4,405) | | Gross profit | $24,395 | $28,063 | $(3,668) | | Operating loss | $(3,490) | $(6,936) | $3,446 | | Net loss | $(3,626) | $(10,061) | $6,435 | | Net loss attributable to common stockholders | $(4,001) | $(10,211) | $6,210 | | Net loss per share (basic and diluted) | $(0.10) | $(0.28) | $0.18 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities improved to $(5.9) million, while cash, cash equivalents and restricted cash at period-end decreased to $14.0 million **Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands):** | Metric | H1 2025 | H1 2024 | Change | | :----- | :------ | :------ | :----- | | Net cash used in operating activities | $(5,885) | $(10,769) | $4,884 | | Net cash used in investing activities | $(3,820) | $(906) | $(2,914) | | Net cash used in financing activities | $(648) | $(554) | $(94) | | Net decrease in cash, cash equivalents and restricted cash | $(10,353) | $(12,229) | $1,876 | | Cash, cash equivalents and restricted cash at end of period | $13,951 | $82,634 | $(68,683) | [Non-GAAP Financial Measures Reconciliation](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) For the three months ended June 30, 2025, Adjusted EBITDA was $(0.9) million, compared to $1.1 million in Q2 2024, with the Adjusted EBITDA margin at (2.1)% **Reconciliation of Net Loss to Adjusted EBITDA (in thousands):** | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----- | :------ | :------ | :------ | :------ | | Net loss | $(3,626) | $(10,061) | $(7,173) | $(13,452) | | Stock-based compensation | $1,378 | $3,397 | $2,347 | $6,510 | | Depreciation and amortization | $488 | $2,426 | $866 | $4,627 | | Interest expense | $305 | $4,117 | $651 | $8,246 | | Total Adjusted EBITDA | $(912) | $1,058 | $(2,510) | $2,951 | | Adjusted EBITDA margin (loss) | (2.1)% | 2.0% | (2.9)% | 2.8% |

Core Viewpoint - HumanCo Investments advocates for Grove Collaborative Holdings, Inc. to explore strategic alternatives, including a potential sale or merger, to unlock its full value, which could be valued at approximately 0.70x - 0.90x of 2025 estimated revenue, translating to a share price of about $2.25 - $2.90, representing a 90 - 140% premium over the current share price of $1.19 [1][9][10]. Company Overview - Grove Collaborative Holdings, Inc. is positioned as a leading online marketplace for non-toxic household and personal care products, with a strong competitive moat developed over more than 10 years [3][6]. - The company has a highly engaged consumer base, with 700,000 active customers and an expected annual revenue of approximately $185 million [7][16]. Financial Performance - Grove has reached profitability and has been cash flow positive in three of the last four quarters, with minimal debt and no near-term solvency issues [3][7]. - Despite its strong fundamentals, Grove's enterprise value is currently around $75 million, reflecting a significant decline from its initial public valuation of $1.5 billion [7][8]. Market Dynamics - The clean-living trend is gaining momentum, with 69% of consumers more likely to purchase from companies with strong health and wellness offerings, and nearly 50% seeking products with safety precautions [12][15]. - Sustainable products accounted for approximately 33% of all consumer packaged goods growth, despite representing less than 20% of market share [15]. Strategic Recommendations - HumanCo Investments suggests that Grove should pursue strategic partnerships or acquisitions to leverage its competitive advantages and achieve long-term growth [10][19]. - The company is encouraged to form a Strategic Review Committee and engage an investment bank to assess potential acquirers [23]. Competitive Advantages - Grove possesses unique assets, including a trusted brand, extensive customer relationships, and significant investments in supply chain and logistics, which would be difficult for competitors to replicate [14][16]. - The company has developed a strong reputation for rigorous product standards, resulting in an industry-leading Net Promoter Score (NPS) of 65 [16].

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 was negative $1,600,000, reflecting a margin of negative 3.7%, compared to positive $1,900,000 or a 3.5% margin in Q1 of the previous year [11][26] - Revenue for Q1 was $43,500,000, down 18.7% year over year, primarily due to lower repeat order volume and the e-commerce platform transition [20][21] - Gross margin was 53%, a decline of 260 basis points, influenced by the absence of certain customer fees and lower inventory sell-through benefits [22] Business Line Data and Key Metrics Changes - Total orders for the quarter were 622,000, a decline of 20% year over year, driven by a smaller active customer base and disruptions during the e-commerce platform migration [20][22] - Active customers totaled 678,000 at quarter end, down 16% compared to the prior year, reflecting the impact of reduced advertising spend [22] - DTC net revenue per order was $66.49, a slight increase of 0.3%, driven by a change in order mix to include higher-priced items [22] Market Data and Key Metrics Changes - The company experienced a revenue impact of $2,000,000 to $3,000,000 in Q1 due to the e-commerce platform migration [7][21] - The company is navigating a macroeconomic environment with newly implemented tariffs, taking steps to protect margins through pricing adjustments and supplier renegotiations [9][10] Company Strategy and Development Direction - The company is focused on four strategic pillars: sustained profitability, balance sheet strength, revenue growth, and environmental and human health [5][12] - The e-commerce platform migration is seen as a foundational shift to enhance flexibility and infrastructure for future growth [6][8] - The company aims to expand its product assortment, particularly in clean beauty, personal care, and wellness, to drive improvements in net revenue per order and order frequency [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q1 results but noted internal progress, including stronger first order conversion rates [5][32] - The company expects Q1 to be the lowest revenue quarter of 2025, with revenue anticipated to improve in the second and third quarters, leading to slight year-over-year growth in Q4 [29][30] - Management remains committed to transparency and executing strategies for long-term sustainable growth despite the challenges faced [30] Other Important Information - The company amended its asset-based loan facility, extending its maturity to April 2028 and increasing availability under the facility [12][28] - The company has rolled out new educational content to help consumers make healthier, more sustainable choices, enhancing customer trust [17][18] Q&A Session Summary Question: Marketing and Customer Acquisition - Management noted that marketing efforts have driven new customer growth, with advertising spend at 6.4% of sales for the quarter, and they are seeing better returns on new customer acquisition [38] Question: E-commerce Platform Transition - Management confirmed that they are through the most challenging parts of the platform transition and are seeing week-over-week progress [40] Question: Sales Trajectory for Brands - Management indicated a steady improvement in sales trajectory, guiding towards year-over-year growth in Q4, with a stable gross margin despite a decrease in owned brands as a percentage of revenue [42]