Purple(PRPL)2025-05-06 20:01Financial 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].