Grove laborative (GROV) - 2025 Q2 - Quarterly Results

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