Purple Innovation Reports Third Quarter 2024 Results

Core Insights - Purple Innovation, Inc. reported a 15.3% decline in net revenue for Q3 2024, totaling $118.6 million, primarily due to industry-wide demand softness and reduced advertising spend [3][10] - The company achieved a GAAP gross margin of 29.7%, down 410 basis points from the previous year, but the adjusted gross margin improved by 340 basis points to 40.5% [4][27] - Adjusted EBITDA loss narrowed significantly to $(6.4) million from $(16.3) million in the prior year, indicating improved operational efficiency [7][10] Financial Performance - Q3 2024 net revenue was $118.6 million, down from $140.0 million in Q3 2023, with DTC net revenues decreasing by 11.7% and wholesale net revenues by 20.1% [3][18] - Operating expenses increased to $82.0 million, up 2.6% from $79.9 million in Q3 2023, driven by $19.8 million in restructuring-related charges [5][29] - Net loss attributable to Purple for Q3 2024 was $(39.2) million, or $(0.36) per diluted share, compared to a net loss of $(36.0) million, or $(0.34) per diluted share, in Q3 2023 [6][30] Restructuring and Operational Efficiency - The company initiated a restructuring plan in August 2024, which includes consolidating manufacturing operations and reducing headcount, expected to yield annual EBITDA savings of $15 to $20 million starting in 2025 [8][10] - Total restructuring, impairment, and related charges for Q3 2024 amounted to $32.7 million, with additional charges of $9.9 million anticipated through Q2 2025 [8][10] - The restructuring plan aims to enhance operational efficiencies and position the company to capitalize on market improvements [3][8] Balance Sheet and Cash Flow - As of September 30, 2024, cash and cash equivalents were $23.4 million, down from $26.9 million at the end of 2023, while inventories decreased by 10.5% to $59.9 million [9][10] - The company expects to be at the lower end of its guidance range for net revenue of $490 million to $510 million for the full year 2024 [10][10] Market Outlook - Despite challenges in Q3, the company remains optimistic about its Path to Premium Sleep strategy and anticipates positive adjusted EBITDA in the fourth quarter of 2024 [2][10] - The company is focused on operational improvements and aims to build on its momentum into 2025 [3][10]