[Q2 2025 Earnings Release Summary](index=1&type=section&id=Q2%202025%20Earnings%20Release%20Summary) [Second Quarter 2025 Highlights & CEO Commentary](index=1&type=section&id=Second%20Quarter%202025%20Highlights%20%26%20CEO%20Commentary) The company reported a net loss that exceeded expectations for Q2 2025, but saw a 120 basis point improvement in Adjusted EBITDA margin year-over-year. Strong demand for the new Rejuvenate 2.0 collection and progress with the Mattress Firm rollout are key positive developments, with Q3 revenue-to-date showing mid-single-digit growth - Net loss exceeded expectations, but the **Adjusted EBITDA margin improved by 120 basis points** compared to the previous year[1](index=1&type=chunk) - Demand for the new Rejuvenate 2.0 mattress collection in the Direct-to-Consumer (DTC) channel was **more than double** that of the Rejuvenate 1.0 launch[1](index=1&type=chunk) - The CEO highlighted strong validation of the company's brand and innovation strategy, led by the Rejuvenate 2.0 collection which incorporates new DreamLayer grid technology[2](index=2&type=chunk) - The nationwide rollout with Mattress Firm is progressing on schedule, and relationships with partners like Walmart and Costco are deepening[2](index=2&type=chunk) - Third quarter revenue-to-date has increased in the **mid-single digits range** compared to the same period last year[2](index=2&type=chunk) [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) In Q2 2025, net revenue fell 12.6% to $105.1 million due to shipment delays and e-commerce softness. Gross margin decreased by 480 basis points to 35.9%, impacted by tariff costs and launch expenses. However, operating expenses were reduced by 18.2% through cost management, leading to an improved Adjusted EBITDA of $(2.4) million compared to $(4.1) million in the prior year Q2 2025 vs Q2 2024 Key Financials | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $105.1M | $120.3M | -12.6% | | Gross Profit | $37.7M | $48.9M | -22.9% | | Gross Margin | 35.9% | 40.7% | -480 bps | | Operating Expenses | $51.9M | $63.5M | -18.2% | | Net Loss | $(17.3)M | $0.0M | N/A | | Adjusted EBITDA | $(2.4)M | $(4.1)M | +41.5% | - The revenue decline was attributed to delays in Rejuvenate 2.0 shipments, lapping wholesale door count reductions from 2024, and softness in e-commerce[3](index=3&type=chunk) - Gross margin was negatively impacted by costs related to tariffs and the ramp-up for both the Mattress Firm rollout and the Rejuvenate 2.0 launch[4](index=4&type=chunk) - The **18.2% decrease in operating expenses** was largely driven by reduced advertising spend and benefits from previous restructuring and cost-saving initiatives[5](index=5&type=chunk) [Balance Sheet Summary](index=1&type=section&id=Balance%20Sheet%20Summary) As of June 30, 2025, the company's cash and cash equivalents increased to $34.2 million from $29.0 million at year-end 2024. Net inventories stood at $60.9 million, representing a 12.6% decrease year-over-year but a 7.1% increase since the end of 2024 Balance Sheet Highlights | Metric | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Cash & Cash Equivalents | $34.2M | $29.0M | N/A | | Net Inventories | $60.9M | $56.9M | ~$69.7M | - Cash and cash equivalents increased by **$5.2 million** from December 31, 2024, to June 30, 2025[7](index=7&type=chunk) - Net inventories decreased by **12.6%** compared to June 30, 2024, and increased by **7.1%** compared to December 31, 2024[7](index=7&type=chunk) [2025 Outlook](index=2&type=section&id=2025%20Outlook) The company reaffirms its full-year 2025 guidance, projecting net revenue between $465 million and $485 million and Adjusted EBITDA to be in the range of flat to positive $10 million. Growth is expected to accelerate in the second half of the year Full Year 2025 Guidance | Metric | 2025 Outlook | | :--- | :--- | | Net Revenue | $465M - $485M | | Adjusted EBITDA | $0M - $10M | - The company anticipates sequential growth in the second half of the year, driven by the successful launch of Rejuvenate 2.0 and the expanded partnership with Mattress Firm[8](index=8&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $303.8 million, a slight decrease from $307.8 million at year-end 2024. Total liabilities increased to $319.4 million from $287.6 million, primarily due to increases in related party debt and warrant liabilities. This resulted in a total stockholders' deficit of $(15.6) million, a significant shift from the $20.2 million equity at the end of 2024 Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $125,931 | $126,368 | | Total assets | $303,788 | $307,845 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $84,436 | $101,003 | | Total liabilities | $319,367 | $287,636 | | Total stockholders' equity (deficit) | $(15,579) | $20,209 | | Total liabilities and stockholders' equity (deficit) | $303,788 | $307,845 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported a net loss of $(17.4) million, or $(0.16) per share, compared to a net loss of $(0.009) million in the same period of 2024. The increased loss was driven by lower revenues and gross profit, despite a reduction in operating expenses. For the six-month period, the net loss was $(36.5) million Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | | Three Months Ended June 30, | | Six Months Ended June 30, | | | :--- | :--- | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | Revenues, net | $105,100 | $120,271 | $209,271 | $240,304 | | Gross profit | $37,683 | $48,940 | $78,729 | $90,660 | | Operating loss | $(14,239) | $(14,540) | $(28,718) | $(37,676) | | Net loss | $(17,371) | $(9) | $(36,537) | $(50,277) | | Net loss per share, basic & diluted | $(0.16) | $(0.00) | $(0.34) | $(0.47) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $(27.1) million, a slight increase from $(25.7) million in the prior year period. Net cash used in investing activities was stable at $(5.1) million. Net cash provided by financing activities was $37.4 million, primarily from a $39.0 million related party loan. This resulted in a net increase in cash of $5.2 million for the period Condensed Consolidated Statements of Cash Flows (in thousands) | | Six Months Ended June 30, | | | :--- | :--- | :--- | | | **2025** | **2024** | | Net cash used in operating activities | $(27,062) | $(25,730) | | Net cash used in investing activities | $(5,144) | $(5,253) | | Net cash provided by financing activities | $37,443 | $27,534 | | **Net increase (decrease) in cash** | **$5,237** | **$(3,449)** | | Cash and cash equivalents, end of period | $34,248 | $23,408 | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) [Reconciliation of GAAP Net Income (Loss) to Non-GAAP EBITDA and Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20(Loss)%20to%20Non-GAAP%20EBITDA%20and%20Adjusted%20EBITDA) The company's Adjusted EBITDA improved to $(2.4) million for Q2 2025 from $(4.1) million in Q2 2024. This improvement was achieved despite a GAAP net loss of $(17.4) million. Key adjustments included a $(4.4) million change in fair value of warrant liability and $4.1 million in restructuring charges Reconciliation of GAAP Net Loss to Adjusted EBITDA (in thousands) | | Three Months Ended June 30, | | | :--- | :--- | :--- | | | **2025** | **2024** | | GAAP net loss | $(17,371) | $(9) | | EBITDA | $(5,030) | $10,592 | | **Adjusted EBITDA** | **$(2,364)** | **$(4,143)** | - Major adjustments from EBITDA to Adjusted EBITDA in Q2 2025 included change in fair value of warrant liability (**$(4.4)M**), restructuring charges (**$4.1M**), and strategic alternative costs (**$1.1M**)[29](index=29&type=chunk) [Reconciliation of GAAP Operating Expenses to non-GAAP Adjusted Operating Expenses](index=8&type=section&id=Reconciliation%20of%20GAAP%20Operating%20Expenses%20to%20non-GAAP%20Adjusted%20Operating%20Expenses) Adjusted operating expenses for Q2 2025 were $47.8 million, a significant decrease from $63.5 million in Q2 2024. The adjustment from GAAP operating expenses of $51.9 million was due to excluding $4.1 million in restructuring, impairment, and other related charges Reconciliation of Adjusted Operating Expenses (in thousands) | | Three Months Ended June 30, | | | :--- | :--- | :--- | | | **2025** | **2024** | | Total operating expenses (GAAP) | $51,922 | $63,480 | | Restructuring, impairment and other related charges | $(4,137) | — | | **Adjusted operating expenses (Non-GAAP)** | **$47,785** | **$63,480** | [Reconciliation of GAAP Net Loss to non-GAAP Adjusted Net Loss and Adjusted Net Loss per Diluted Share](index=10&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20non-GAAP%20Adjusted%20Net%20Loss%20and%20Adjusted%20Net%20Loss%20per%20Diluted%20Share) For Q2 2025, the company reported an adjusted net loss of $(11.7) million, or $(0.11) per diluted share, compared to an adjusted net loss of $(13.8) million, or $(0.13) per diluted share, in Q2 2024. This non-GAAP measure adjusts for items like warrant liability changes, restructuring costs, and applies a normalized tax rate Reconciliation of Adjusted Net Loss and EPS (in thousands, except per share amounts) | | Three Months Ended June 30, | | | :--- | :--- | :--- | | | **2025** | **2024** | | Net loss (GAAP) | $(17,371) | $(9) | | **Adjusted net loss (Non-GAAP)** | **$(11,685)** | **$(13,818)** | | Net loss per share, diluted (GAAP) | $(0.16) | $(0.00) | | **Adjusted net loss per share, diluted (Non-GAAP)** | **$(0.11)** | **$(0.13)** | - The calculation of adjusted net loss involves removing the impact of non-recurring items such as changes in warrant fair value, restructuring charges, and strategic alternative costs, and then applying an estimated effective tax rate of **25.9%**[32](index=32&type=chunk)[33](index=33&type=chunk)

Core Insights - Purple Innovation, Inc. reported a net loss of $17.3 million for Q2 2025, which exceeded expectations, while adjusted EBITDA improved to $(2.4) million, an improvement from $(4.1) million in the previous year [1][6][5] - The company experienced a 12.6% decline in net revenue to $105.1 million compared to $120.3 million in Q2 2024, attributed to shipment delays and reduced wholesale door counts [3][4] - The launch of the Rejuvenate 2.0 collection has seen strong demand, more than doubling the initial launch of Rejuvenate 1.0, contributing to a positive outlook for the second half of 2025 [2][8] Financial Performance - Gross profit for Q2 2025 decreased to $37.7 million, with a gross margin of 35.9%, down 480 basis points year-over-year, impacted by tariffs and costs associated with new product launches [4] - Operating expenses were reduced by 18.2% to $51.9 million, primarily due to lower advertising spend and previous restructuring efforts [5] - The company maintains a cash position of $34.2 million as of June 30, 2025, an increase from $29.0 million at the end of 2024 [7] Strategic Initiatives - The company is on track with its expansion plans with Mattress Firm and is seeing increased interest from partners like Walmart and Costco, which is expected to drive future growth [2][8] - Purple Innovation is reiterating its full-year 2025 revenue outlook in the range of $465 to $485 million, with adjusted EBITDA expected to be flat to positive $10 million [8]

Company Overview - Purple Innovation, Inc. is a comfort innovation company specializing in mattresses designed to provide "less pain, better sleep" [1] - The company is recognized as a leader in sleep technology, utilizing its patented GelFlex Grid® material to relieve pressure and enhance sleep quality [4] Upcoming Financial Results - Purple will report its second-quarter 2025 financial results on July 29, 2025, at approximately 4:05 p.m. ET [1] - A conference call to discuss these results will take place on the same day at 4:30 p.m. ET, with participation details provided for investors and analysts [2] Product Offerings - Purple's product range includes mattresses, pillows, cushions, frames, sheets, and more, available online and through various retail channels [5] - The GelFlex Grid® technology adapts to movement, balances temperature, relieves pressure, and provides support, contributing to a deeper sleep experience [5]

Financial Performance - Purple Innovation reported a quarterly loss of $0.11 per share, better than the Zacks Consensus Estimate of a loss of $0.14, and an improvement from a loss of $0.19 per share a year ago, representing an earnings surprise of 21.43% [1] - The company posted revenues of $104.17 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.13%, and down from $120.03 million in the same quarter last year [2] - Over the last four quarters, Purple Innovation has surpassed consensus EPS estimates three times [2] Stock Performance - Purple Innovation shares have declined approximately 14.9% since the beginning of the year, compared to a decline of 3.9% for the S&P 500 [3] - The current Zacks Rank for Purple Innovation is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $112.75 million, and for the current fiscal year, it is -$0.30 on revenues of $471.52 million [7] - The trend of estimate revisions for Purple Innovation is mixed, which could change following the recent earnings report [6] Industry Context - Purple Innovation operates within the Consumer Products - Staples industry, which is currently ranked in the bottom 27% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Data and Key Metrics Changes - First quarter revenue was $104.2 million, down 13% year-over-year, aligning with expectations [6][24] - Adjusted EBITDA improved by $8 million, a 650 basis point increase compared to last year [8][27] - Adjusted gross margins exceeded 40% for the fourth consecutive quarter, improving by 550 basis points year-over-year [7][20] Business Line Data and Key Metrics Changes - Showroom revenue grew by 7%, marking the fifth consecutive period of growth, with comparable sales up 11% [6][25] - Direct-to-consumer (DTC) net revenue was $63.4 million, with showroom sales increasing by 7.4% [24][25] - E-commerce sales declined by 8.2%, reflecting challenges in conversion and messaging [17][25] - Wholesale segment revenue decreased by 24.2% to $40.8 million due to reduced door counts and overall volume declines [25] Market Data and Key Metrics Changes - The company reported a gross profit of $41 million, with a gross margin rate of 39.4%, an improvement of 460 basis points year-over-year [25] - Cash and cash equivalents at the end of the quarter were $21.6 million, down from $29 million at the end of the previous year [28] Company Strategy and Development Direction - The company announced a significant expansion of its partnership with Mattress Firm, increasing distribution slots from 5,000 to 12,000, expected to generate over $70 million in incremental net revenue [9][10] - The strategic focus remains on three pillars: pioneering new technologies, promoting differentiation, and prioritizing gross margin through operational improvements [10][20] - The launch of the new Rejuvenate 2.0 mattress line is seen as a key product innovation [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about consumer sentiment and macroeconomic conditions impacting the second quarter [39][40] - The company reaffirmed its full-year revenue guidance of $465 million to $485 million, with adjusted EBITDA expected to be flat to up $10 million [23][31] - Ongoing tariff impacts are anticipated, with a potential annual cost impact of approximately $10 million [22][32] Other Important Information - The company is actively reevaluating its digital strategy to improve e-commerce conversion rates [17][14] - The partnership with Sherwood Bedding will enhance manufacturing capabilities while maintaining proprietary technology [10][65] Q&A Session Summary Question: Can you elaborate on the $70 million from the Mattress Firm partnership? - The number is based on current productivity projections for the additional slots, considering some potential cannibalization [35][37] Question: What are the trends in the second quarter? - Concerns were raised about consumer sentiment, with expectations of cautious spending [39][41] Question: How did the new agreement with Omni Group come about? - The relationship developed over time, focusing on driving traffic and improving margins for Mattress Firm [46][48] Question: Will the new partnership change the distribution model? - The company aims for a balanced distribution model, maintaining strong showroom performance while expanding wholesale [50][51] Question: How will tariffs impact the P&L? - Tariffs will start impacting in the second quarter, with adjustments being made to mitigate costs [53][54] Question: What is the expected contribution from Mattress Firm for the rest of 2025? - The ramp-up is expected to be later in the year, with some offsetting headwinds from tariffs and economic uncertainty [75][76]

Financial Data and Key Metrics Changes - First quarter revenue was $104.2 million, down 13% year-over-year, aligning with expectations [5][23] - Adjusted EBITDA improved by $8 million, with a margin increase of 650 basis points compared to last year [6][26] - Adjusted gross margins exceeded 40% for the fourth consecutive quarter, improving by 550 basis points year-over-year [6][25] Business Line Data and Key Metrics Changes - Showroom channel revenue grew by 7%, marking the fifth consecutive period of growth, with comparable sales up 11% [5][24] - Direct-to-consumer (DTC) net revenue was $63.4 million, with showroom sales increasing by 7.4% [23][24] - E-commerce sales declined by 8.2%, reflecting challenges in conversion and messaging [15][24] - Wholesale segment revenue decreased by 24.2% to $40.8 million due to reduced door counts and overall volume declines [24] Market Data and Key Metrics Changes - The overall consumer sentiment remains cautious, impacting spending patterns [38][41] - Brand awareness reached 77%, indicating strong recognition but highlighting the need for better communication of product benefits [14] Company Strategy and Development Direction - The company announced a significant expansion of its partnership with Mattress Firm, increasing distribution slots from 5,000 to 12,000, expected to generate over $70 million in incremental revenue [7][9] - The strategy focuses on three pillars: pioneering new technologies, promoting differentiation, and prioritizing gross margin through operational improvements [9][10] - The launch of the new Rejuvenate 2.0 mattress line aims to enhance product offerings and drive sales [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the consumer psyche and macroeconomic uncertainties affecting the second quarter [38][39] - The company reaffirmed its full-year revenue guidance of $465 million to $485 million, anticipating some headwinds from tariffs [21][30] - Management remains focused on executing strategic priorities while navigating industry challenges [31] Other Important Information - The company entered into an amendment to borrow an additional $20 million to support the expanded distribution agreement and ongoing investments [9][28] - The impact of tariffs is being closely monitored, with an estimated annual cost impact of approximately $10 million [20] Q&A Session Summary Question: Can you elaborate on the $70 million from the Mattress Firm partnership? - The number is based on current productivity and projected incremental slots, considering some cannibalization but expecting overall growth [34][36] Question: What are the trends in the second quarter? - There are concerns about consumer sentiment, with cautious spending observed [38][41] Question: How did the new agreement with Omni Group come about? - The relationship developed due to mutual benefits in driving traffic and improving margins for Mattress Firm [46][48] Question: Will tariffs impact the P&L? - Tariffs will start impacting in the second quarter, and the company is working on strategies to mitigate these costs [54] Question: Is there exclusivity in the new partnership with Mattress Firm? - There is no exclusivity; the focus is on serving all wholesale partners effectively [69] Question: How does the expanded partnership affect guidance for 2025? - The ramp-up from the partnership is still being finalized, but there are expected tailwinds in the latter part of the year [76][77]

[Management Commentary & Strategic Priorities](index=1&type=section&id=Management%20Commentary%20%26%20Strategic%20Priorities) Purple Innovation's Q1 2025 performance reflects progress in stabilizing the business, with strategic focus on innovation and operational optimization - The company's strategic priorities include stabilizing the business, with a future focus on growth through continued innovation (e.g., Rejuvenate 2.0 collection), promoting its **Gel Grid differentiation**, and further operational optimization[2](index=2&type=chunk) - Management acknowledges that while the current economic environment remains uncertain, including potential tariff impacts, **structural improvements** and **investments in innovation and partnerships** position the company to handle near-term pressures[2](index=2&type=chunk) [First Quarter 2025 Financial Performance](index=1&type=section&id=First%20Quarter%202025%20Financial%20Performance) Q1 2025 saw a net revenue decline but significant improvements in gross margins, reduced operating expenses, and a narrowed net loss and Adjusted EBITDA Q1 2025 Key Financial Metrics vs. Q1 2024 | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $104.2 million | $120.0 million | -13.2% | | GAAP Gross Margin | 39.4% | 34.8% | +460 bps | | Adjusted Gross Margin | 40.3% | 34.8% | +550 bps | | Operating Expenses | $55.5 million | $64.9 million | -14.4% | | Net Loss Attributable to PRPL | ($19.1) million | ($50.2) million | Improvement | | Adjusted EBITDA | ($4.7) million | ($13.2) million | Improvement | [Balance Sheet Highlights](index=1&type=section&id=Balance%20Sheet%20Highlights) As of March 31, 2025, the company reported decreased cash and cash equivalents, alongside a notable reduction in inventories year-over-year Key Balance Sheet Items (as of March 31, 2025) | Account | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $21.6 million | $29.0 million | N/A | | Inventories | $60.2 million | $56.9 million | $72.1 million (approx.) | [2025 Outlook](index=2&type=section&id=2025%20Outlook) The company reaffirmed its full-year 2025 guidance, projecting net revenue and Adjusted EBITDA ranges, factoring in wholesale expansion and tariff impacts Full Year 2025 Financial Outlook | Metric | Guidance Range | | :--- | :--- | | Net Revenue | $465 million to $485 million | | Adjusted EBITDA | $0 to $10 million | - The guidance incorporates expected contributions from expanded wholesale distribution and anticipated impacts from recently announced tariffs, though the outlook is subject to change due to uncertainty[8](index=8&type=chunk) [Key Business Developments](index=2&type=section&id=Key%20Business%20Developments) Key developments include a significant expansion of the Mattress Firm partnership and securing additional financing to support growth and mitigate market uncertainty [Mattress Firm Update](index=2&type=section&id=Mattress%20Firm%20Update) Purple will significantly expand its retail presence in Mattress Firm stores, with Tempur Sherwood exclusively assembling certain products while Purple retains IP - The company will expand its retail footprint in Mattress Firm stores from **~5,000 to a minimum of 12,000 mattress slots**[9](index=9&type=chunk) - Tempur Sherwood, LLC, a Tempur Sealy subsidiary, will have **exclusive rights to assemble certain Purple product lines** sold to Mattress Firm[9](index=9&type=chunk) - Purple will maintain production of its **proprietary grid technology** and retain all related intellectual property[9](index=9&type=chunk) [Term Loan Amendment](index=2&type=section&id=Term%20Loan%20Amendment) Purple secured an additional **$20 million** through a Term Loan amendment to fund Mattress Firm expansion costs and provide a financial buffer - Successfully borrowed an incremental **$20 million** through a Term Loan amendment[10](index=10&type=chunk) - The funds will support costs for the **Mattress Firm expansion** and provide a financial cushion[10](index=10&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section provides the unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Income, and Statements of Cash Flows for Q1 2025 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, the company reported total assets of **$293.8 million** and a significant decrease in total stockholders' equity from year-end 2024 Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $113,401 | $126,368 | | Total assets | $293,772 | $307,845 | | Total current liabilities | $83,613 | $101,003 | | Total liabilities | $292,442 | $287,636 | | Total stockholders' equity | $1,330 | $20,209 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2025 net revenues declined to **$104.2 million**, but the company significantly narrowed its net loss to **($19.1) million** compared to the prior year Q1 2025 vs. Q1 2024 Income Statement (in thousands, except per share) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues, net | $104,171 | $120,033 | | Gross profit | $41,046 | $41,720 | | Operating loss | $(14,479) | $(23,136) | | Net loss attributable to Purple | $(19,137) | $(50,217) | | Net loss per share (Diluted) | $(0.18) | $(0.47) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw net cash outflows from operating and investing activities, partially offset by financing, leading to a decrease in cash and cash equivalents Q1 2025 vs. Q1 2024 Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(23,070) | $(16,814) | | Net cash used in investing activities | $(2,144) | $(3,100) | | Net cash provided by financing activities | $17,830 | $27,534 | | **Net (decrease) increase in cash** | **$(7,384)** | **$7,620** | | **Cash at end of period** | **$21,627** | **$34,477** | [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section reconciles non-GAAP measures like Adjusted EBITDA, Adjusted Gross Profit, and Adjusted Net Loss to GAAP, providing insights into core operating performance [Reconciliation of GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20Non-GAAP%20EBITDA%20and%20Adjusted%20EBITDA) Adjusted EBITDA for Q1 2025 improved to **($4.7) million**, calculated by adjusting GAAP net loss for non-cash and non-recurring items Adjusted EBITDA Reconciliation Summary (Q1 2025, in thousands) | Metric | Amount | | :--- | :--- | | GAAP net loss | $(19,166) | | EBITDA | $(9,380) | | Key Adjustments (Restructuring, Severance, etc.) | $4,654 | | **Adjusted EBITDA** | **$(4,726)** | [Reconciliation of GAAP Gross Profit to Adjusted Gross Profit](index=8&type=section&id=Reconciliation%20of%20GAAP%20Gross%20Profit%20to%20Adjusted%20Gross%20Profit) Q1 2025 adjusted gross margin significantly improved to **40.3%** by excluding restructuring charges from the cost of revenues Adjusted Gross Profit Reconciliation (Q1 2025, in thousands) | Metric | Amount | | :--- | :--- | | Revenues, net | $104,171 | | Adjusted cost of revenues | $62,207 | | **Adjusted gross profit** | **$41,964** | | **Adjusted gross profit %** | **40.3%** | [Reconciliation of GAAP Net Loss to non-GAAP Adjusted Net Loss and Adjusted Net Loss per Diluted Share](index=8&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20non-GAAP%20Adjusted%20Net%20Loss%20and%20Adjusted%20Net%20Loss%20per%20Diluted%20Share) Q1 2025 adjusted net loss improved to **($11.9) million**, or **($0.11) per diluted share**, after adjusting GAAP net loss for specific non-recurring items Adjusted Net Loss and EPS (Q1 2025) | Metric | Amount | | :--- | :--- | | Adjusted net loss | $(11,946) thousand | | Adjusted net income per share, diluted | $(0.11) |

Financial Performance - Total revenues for the three months ended March 31, 2025, were $104,171,000, a decrease of 13.2% compared to $120,033,000 for the same period in 2024[12]. - Gross profit for the first quarter of 2025 was $41,046,000, slightly down from $41,720,000 in the prior year, resulting in a gross margin of 39.4%[12]. - The net loss for the three months ended March 31, 2025, was $19,166,000, compared to a net loss of $50,268,000 for the same period in 2024, indicating a significant improvement[12]. - The company reported a basic net loss per share of $0.18 for the first quarter of 2025, an improvement from a loss of $0.47 per share in the prior year[12]. - The company reported a net loss of $19.1 million for the three months ended March 31, 2025, compared to a net loss of $50.2 million for the same period in 2024, resulting in a basic and diluted net loss per share of $0.18[136]. - Net revenues decreased by $15.9 million, or 13.2%, to $104.2 million for the three months ended March 31, 2025, compared to $120.0 million for the same period in 2024[203]. - Gross profit decreased by $0.7 million, or 1.6%, to $41.0 million, with a gross profit percentage increase to 39.4% from 34.8% year-over-year[204]. - Operating expenses for the first quarter of 2025 were $55,525,000, down from $64,856,000 in the same period of 2024, reflecting a reduction in marketing and administrative costs[12]. - Operating expenses decreased by $9.3 million, or 14.4%, to $55.5 million, driven by reductions in employee-related expenses and legal fees[205]. - Other expense, net decreased by $22.4 million, or 82.8%, to $4.6 million, with a net loss attributable to Purple Inc. of $19.1 million, down from $50.2 million in the prior year[206]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $21,627,000 as of March 31, 2025, from $29,011,000 at the end of 2024, reflecting a cash outflow of $7,384,000 during the quarter[17]. - Cash flows from operating activities resulted in a net cash outflow of $23,070,000 for the first quarter of 2025, compared to an outflow of $16,814,000 in the same period of 2024[17]. - The company expects to have sufficient liquidity to fund its operations for at least one year from the date of the quarterly report[29]. - The company has taken additional cost-saving initiatives in the first quarter of 2025 to maintain liquidity to support its operations and strategies[28]. Assets and Liabilities - Total current assets decreased to $113,401,000 as of March 31, 2025, down from $126,368,000 at December 31, 2024, primarily due to reductions in cash and accounts receivable[10]. - Total liabilities increased to $292,442,000 as of March 31, 2025, compared to $287,636,000 at December 31, 2024, driven by an increase in related party debt[10]. - The company’s total stockholders' equity attributable to Purple Innovation, Inc. decreased to $1,340,000 as of March 31, 2025, from $20,198,000 at December 31, 2024, primarily due to the net loss incurred[10]. - The Related Party Loan increased to $93.4 million as of March 31, 2025, up from $70.7 million at the end of 2024, with a total debt net of issuance costs at $72.7 million[69][70]. Restructuring and Operational Changes - The company recognized total restructuring, impairment, and other related charges of $39.2 million, including $2.9 million during the three months ended March 31, 2025[40]. - The restructuring plan includes the permanent closure of two manufacturing facilities in Utah and a headcount reduction at the Utah headquarters, aimed at improving operational efficiencies[38]. - The company implemented a Restructuring Plan in August 2024 to consolidate manufacturing operations and create efficiencies, with expected completion of facility closures by the end of Q2 2025[38]. - The company expects to incur an additional $1.4 million in restructuring-related charges through the second quarter of 2025[204]. - The closure of two Utah manufacturing facilities is projected to be completed in Q2 2025, consolidating production in Georgia[178]. Revenue Streams - Direct-to-consumer (DTC) e-commerce revenue was $45.4 million, down 8.4% from $49.5 million in the prior year, while showroom revenue increased by 7.4% to $18.0 million[57]. - Wholesale revenue decreased significantly by 24.2% to $40.8 million from $53.8 million year-over-year[57]. - The showrooms channel net revenue increased by $1.2 million, or 7.4%, representing an 11.0% year-over-year increase for stores open for 13 months or more[203]. - Q1 2025 revenue decreased due to softness in e-commerce and wholesale channels, while showroom revenue increased for the second consecutive quarter[175]. Inventory and Costs - Total inventories increased to $60.2 million as of March 31, 2025, compared to $56.9 million at the end of 2024, with finished goods rising to $37.8 million[59]. - The cost of revenues for the same period was $62.207 million, down from $78.313 million, reflecting a reduction of 20.5%[154]. - Approximately 15% of the company's cost of goods is tied to overseas products, with an estimated annual cost impact of $10 million due to current tariff rates[202]. Legal and Compliance Matters - The Company is involved in various legal proceedings, including a class action lawsuit alleging website accessibility violations under the ADA[109][110]. - The Company intends to vigorously defend against claims related to unpaid salaries and tax distributions, with potential damages of $500,000 and $3 million respectively[103][104]. Stock and Equity - The Company has 210 million shares of Class A common stock authorized, with 108 million shares outstanding as of March 31, 2025[114]. - The Company has 90 million shares of Class B common stock authorized, with 0.2 million shares outstanding as of March 31, 2025[115]. - The company issued 20.0 million warrants to lenders and an additional 6.2 million warrants in connection with the 2025 Amendment, each warrant allowing the purchase of one share of Class A common stock at a price of $1.50[126]. - The effective interest rate for the Related Party Loan and First Incremental Loan was 14.68% for Q1 2025, down from 15.68% in Q1 2024[83]. Future Outlook - The company plans to expand its product inventory across Mattress Firm's national store network from approximately 5,000 to a minimum of 12,000 mattress slots[28]. - The company expects to generate approximately $70 million in incremental net revenue starting in 2026 from the expansion of product inventory in Mattress Firm stores from 5,000 to 12,000 slots[177]. - The new Rejuvenate 2.0 line will be launched in Q2 2025, featuring innovative grid technology for enhanced comfort[176]. - The new Rejuvenate 2.0 collection is set to launch in Q2 2025, with a full wholesale rollout expected by Q3 2025[208].

Core Viewpoint - Purple Innovation, Inc. has entered into a significant agreement with Somnigroup International, Inc. to expand its presence in Mattress Firm stores nationwide, enhancing its retail footprint and strategic supply support from Tempur Sherwood [1][3][4] Expanded Distribution - Mattress Firm will increase the number of Purple mattress slots from approximately 5,000 to a minimum of 12,000 across its national store network, showcasing Purple's premium mattress lines [4][6] - The expanded distribution is expected to generate at least $70 million in incremental annual revenue for Purple starting in 2026 [7] Strategic Supply Support - Sherwood will have the exclusive right to assemble certain product lines sold to Mattress Firm, while Purple retains the manufacturing of its GelFlex Grid technology and all related intellectual property [8][6] Substantial New Financing - Purple has secured an additional $20 million in debt financing, increasing its total principal commitment to $100 million, which will support ongoing investments in product innovation and advertising [9]

Company Overview - Purple Innovation, Inc. is recognized for creating the "World's First No Pressure™ Mattress" and is a leader in comfort innovation [1] - The company specializes in premium mattresses featuring the GelFlex® Grid technology, which is designed to enhance restorative sleep and reduce aches and pains [4] Financial Results Announcement - Purple will report its first quarter 2025 financial results on May 6, 2025, at approximately 4:05 p.m. ET [1] - A conference call to discuss these results will take place on the same day at 4:30 p.m. ET [1] Participation Details - Investors and analysts can join the conference call by dialing 800-715-9871 (domestic) or 646-307-1963 (international) using Conference ID 7609054 [2] - A live webcast of the call will also be available on the company's investor relations website [2] Replay Information - A telephone replay of the conference call will be accessible until May 13, 2025, by calling 800-770-2030 and entering the Conference ID [3] - A webcast replay will be available on the investor relations section of the company's website for 30 days following the call [3] Product Availability - Purple's products, including mattresses, pillows, cushions, frames, and sheets, are available online at Purple.com, in 55 Purple stores, and over 3,000 retailers nationwide [4]