Purple(PRPL) - 2025 Q1 - Quarterly Results

Management Commentary & Strategic Priorities 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] - 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] First Quarter 2025 Financial Performance 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 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 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] Key Business Developments 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 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] - Tempur Sherwood, LLC, a Tempur Sealy subsidiary, will have exclusive rights to assemble certain Purple product lines sold to Mattress Firm[9] - Purple will maintain production of its proprietary grid technology and retain all related intellectual property[9] Term Loan Amendment 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] - The funds will support costs for the Mattress Firm expansion and provide a financial cushion[10] Financial Statements 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 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 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 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 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 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 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 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) |