Financial Data and Key Metrics Changes - The company's second quarter revenue reached $105 million, representing a 12.6% decrease from the prior year but a slight increase compared to the previous quarter [5][26] - Adjusted EBITDA improved by $1.8 million and 120 basis points year-over-year, indicating strong profitability improvements [6] - Gross margin for the second quarter was 35.9%, a decline of 480 basis points compared to last year, attributed to tariff-related costs and ramp-up costs for new product launches [28][21] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) net revenue for the quarter was $58.9 million, with showroom revenue decreasing by 13.3% due to supply constraints from the Rejuvenate 2.0 launch [27] - E-commerce revenue saw an 11.5% decline during the second quarter, reflecting ongoing softness in that channel [27] - Wholesale revenue was down 13.4% year-over-year, totaling $46.2 million, but showed signs of recovery as the company prepares for significant expansion with Mattress Firm [27][18] Market Data and Key Metrics Changes - The company is experiencing mid-single-digit revenue growth in the current quarter compared to the same period last year, driven by the success of the Rejuvenate 2.0 launch and the Mattress Firm expansion [8][43] - The expansion of the Mattress Firm partnership is expected to significantly increase the company's distribution footprint, with a target of approximately 12,000 slots by mid-August [19][64] Company Strategy and Development Direction - The company is focused on a "path to premium sleep" strategy, emphasizing innovation, product differentiation, and gross margin improvement [10][21] - The recent launch of the Rejuvenate 2.0 mattress collection incorporates new technology aimed at enhancing customer comfort and is expected to drive higher average selling prices [10][12] - The marketing strategy is evolving to focus on brand messaging that highlights the unique benefits of the company's products, moving away from traditional discounting tactics [13][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, anticipating a return to positive adjusted EBITDA driven by new product launches and improved operational efficiencies [7][31] - The company is reaffirming its full-year revenue guidance of $465 million to $485 million, despite a cautious consumer environment [23][31] - Management noted that tariff impacts are being actively managed, with expectations of reduced cost exposure in 2025 compared to previous estimates [22] Other Important Information - The company is currently engaged in a review of strategic alternatives to maximize shareholder value, including potential mergers or sales [25] - Cash and cash equivalents at the end of the quarter were $34.2 million, up from $29 million at the end of the previous year [30] Q&A Session Summary Question: Can you discuss the cadence of sales in the quarter and expectations for acceleration in the second half? - Management noted that April was the slowest month, but sales improved throughout the quarter, with expectations for stronger performance in the second half due to catching up on demand and the Mattress Firm expansion [34][36] Question: How much of the gross margin pressure is one-time in nature? - Management indicated that while some gross margin pressure was due to tariffs and ramp-up costs, they expect to see gradual improvement in gross margin as these costs are mitigated [37][72] Question: What are the expectations for the additional Mattress Firm distribution? - The distribution is expected to generate significant revenue in the back half of the year, with a premium luxe line anticipated to launch early next year [64][65] Question: How is the fulfillment capacity looking going forward? - Management confirmed that fulfillment capacity is improving, with expectations to catch up on demand by mid-August [53][54] Question: What are the priorities for cash generation moving into 2026? - The company plans to focus on expanding its store footprint and investing in internal capital projects to generate the best returns [58][59]

[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]