Financial Data and Key Metrics Changes - Revenue for Q4 2025 increased approximately 9% year-over-year to $140.7 million, with full-year revenue at $468.7 million, reflecting a 3.9% decline compared to the prior year [5][20][24] - Adjusted EBITDA for Q4 was approximately $8.8 million, a significant improvement from $2.9 million in the previous year, while full-year adjusted EBITDA was $1.9 million compared to a loss of $20.8 million in 2024 [5][23][26] - Gross margin for Q4 was approximately 41.9%, down 100 basis points year-over-year, but up nearly 870 basis points over a two-year period [22][26] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) net revenue for Q4 was $71.9 million, down 9.9% year-over-year, with showroom revenue increasing approximately 4.5% [21][24] - Wholesale revenue surged approximately 39.8% in Q4, driven by expanded partnerships with Mattress Firm and Costco [8][20] - E-commerce revenue declined 15.3% in Q4, reflecting mixed performance throughout the year [21][24] Market Data and Key Metrics Changes - Comparable sales in showrooms increased 8.8% in Q4, with over 80% of showrooms being four-wall profitable for the full year [7][21] - The company experienced a mixed performance across wholesale partners, with some showing growth while others lagged [68] Company Strategy and Development Direction - The company is focused on three strategic priorities: understanding consumer needs, enhancing product experience, and executing financial discipline [8][9] - The launch of the Purple Royale collection is expected to complement the Rejuvenate 2.0 collection, with initial placements exceeding expectations [12][18] - The company aims to expand its distribution presence, particularly through partnerships with Mattress Firm and Costco, while also exploring new channels like Walmart and Sam's Club [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with improved stability and a stronger operating model, expecting revenue between $500 million and $520 million and adjusted EBITDA of $20 million to $30 million [17][18] - The company highlighted that its profitability improvements were driven by structural changes rather than a recovery in the broader market [6][18] - Management acknowledged ongoing strategic reviews to maximize shareholder value, including potential mergers or sales [18][30] Other Important Information - The company ended Q4 with cash and cash equivalents of $24.3 million, down from $29 million a year prior, but extended debt maturities to April 2027, enhancing financial flexibility [26][27] - The company expects to achieve positive free cash flow in 2026, supported by improved EBITDA profitability [68] Q&A Session Summary Question: Recent trends and Q1 outlook - Management noted that Q1 is typically the weakest quarter, but they expect momentum to build throughout the year despite a slower start in January due to inventory dynamics [34][35] Question: Flow-through margin expectations - Management indicated a healthy flow-through margin, with expectations of approximately 30% flow-through on increased sales due to improved cost structure and margin expansion [38] Question: Exposure to raw material price pressures - Management acknowledged mixed exposure to petrochemical prices but indicated that tariff savings would offset potential increases in raw material costs [39][40] Question: Seasonality and revenue growth expectations - Management expects consistent revenue growth throughout 2026, particularly with the launch of new products and seasonal trends [51] Question: Cash flow expectations for 2026 - Management anticipates positive free cash flow for 2026, supported by improved EBITDA and a stable cash position [68] Question: Showroom profitability and demand trends - Management reported strong comp growth in showrooms, attributing success to improved product mix and sales execution, with plans to enhance profitability in underperforming locations [69]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 increased approximately 9% year-over-year to $140.7 million, driven primarily by wholesale growth [4][19] - Full-year 2025 net revenue was $468.7 million, reflecting a 3.9% decline compared to the prior year [22] - Adjusted EBITDA for Q4 was approximately $8.8 million, a significant improvement from $2.9 million in the previous year [4][22] - Full-year adjusted EBITDA was $1.9 million, compared to an adjusted EBITDA loss of $20.8 million in 2024 [25] - Gross margin for Q4 was approximately 41.9%, down 100 basis points from last year but well above the 40% target [20][22] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) net revenue for Q4 was $71.9 million, down 9.9% year-over-year, with showroom revenue increasing approximately 4.5% [19][22] - Wholesale revenue increased approximately 39.8% in Q4, driven by expanded partnerships with Mattress Firm and Costco [19][22] - E-commerce revenue declined by 15.3% in Q4, reflecting mixed performance throughout the year [19][22] Market Data and Key Metrics Changes - Comparable sales in showrooms increased 8.8% in Q4, with over 80% of showrooms being four-wall profitable for the full year [6][19] - The overall market remains challenging, with the broader market down low single digits [4][6] Company Strategy and Development Direction - The company is focused on three priorities: deepening consumer understanding, enhancing product experience, and executing with financial discipline [8][12] - The launch of the Purple Royale collection is a significant step in the premium strategy, complementing the Rejuvenate 2.0 collection [11][12] - The company aims to expand its distribution presence, particularly through partnerships with Mattress Firm and Costco, which have exceeded initial expectations [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with improved stability and a structurally stronger operating model, expecting revenue between $500 million and $520 million [16][27] - The company anticipates adjusted EBITDA of $20 million to $30 million for 2026, driven by operational efficiencies and ongoing restructuring actions [16][27] - Management acknowledged ongoing strategic alternatives review to maximize shareholder value, including potential mergers or sales [17][28] Other Important Information - The company ended Q4 with cash and cash equivalents of $24.3 million, down from $29 million a year prior, but extended debt maturities to April 2027 [25][26] - The company achieved profitability levels not seen since 2021, driven by structural changes and cost management initiatives [28][30] Q&A Session Summary Question: Recent trends and Q1 outlook - Management noted a strong Q4 but indicated that January showed a step back due to inventory dynamics and expected Q1 to be historically weak [33][34] Question: Flow-through margin expectations - Management expects a healthy flow-through margin, with guidance indicating a revenue increase of $30 million to $50 million and improved EBITDA [36][37] Question: Exposure to raw material price pressures - Management acknowledged mixed exposure to petrochemical prices but indicated that tariff savings could offset potential increases [38][40] Question: Seasonality and revenue growth expectations - Management expects consistent revenue growth throughout the year, with a boost from the Purple Royale launch in Q2 [45][49] Question: Drivers of flow-through and restructuring actions - Management confirmed that actions taken previously will benefit operating expenses and gross margins, with no additional actions planned [50][51] Question: Demand trends from retail partners - Management reported mixed growth across wholesale partners, with some performing well while others lagged [61] Question: Cash flow expectations for 2026 - Management anticipates positive free cash flow for 2026, supported by improved EBITDA profitability [63][64] Question: Showroom channel performance - Management highlighted strong comp growth in showrooms, attributing it to positive product mix and operational discipline [65][66]

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 - The fourth quarter net revenue was $129 million, down 11.6% from $145.9 million in the prior year, but showed sequential improvement from the third quarter [24][25] - Gross margin reached 42.9%, an improvement of 970 basis points compared to the previous year, with adjusted gross margin at 44.9%, up 810 basis points [27][19] - Adjusted EBITDA for the fourth quarter was $2.9 million, an improvement from a negative $9.8 million last year, indicating successful restructuring initiatives [29][5] - Full year net revenue was $487.9 million, down 4.4% compared to $510.5 million in the prior year, impacted by industry softness [30] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) net revenue for the quarter was $79.8 million, down 2.9% year-over-year, with showroom revenue increasing by 4.2% [25][30] - E-commerce revenue decreased by 5.3% for the quarter, while wholesale revenue was $49.2 million, down 23% compared to the previous year [26][30] - Showroom profitability improved with four quarters of sequential revenue growth and full-year four-wall profitability for the first time since 2021 [8][9] Market Data and Key Metrics Changes - The company noted challenges in consumer demand and increased industry consolidation, impacting overall market conditions [7][22] - The partnership with Costco has exceeded expectations, contributing positively to revenue growth [10][22] Company Strategy and Development Direction - The company is focused on a path to premium sleep strategy, emphasizing new technology, product differentiation, and prioritizing gross margins [10][11] - The launch of the new Rejuvenate 2.0 mattress line is a significant step in maintaining competitive advantage and expanding market presence [12][10] - The company aims to enhance operational efficiency through manufacturing consolidation and cost-saving initiatives [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, expecting total sales between $465 million and $485 million, with adjusted EBITDA flat to up $10 million [21][35] - The company is closely monitoring macroeconomic conditions and consumer behavior, noting a softening in demand at the start of 2025 [69][70] - Management remains confident in the company's ability to navigate challenges and capitalize on market opportunities [34][21] Other Important Information - The company has initiated a review of strategic alternatives to maximize shareholder value, establishing a special committee for this purpose [37][38] - Tariff exposure is limited, with potential impacts estimated between $2 million and $5 million, allowing for manageable adjustments in supply chain [22][85] Q&A Session Summary Question: Can you clarify the cost savings for 2025? - The cost savings are estimated at $25 million to $30 million, with $7 million to $10 million related to cost of sales and the remainder from operating expenses [41][42] Question: How will the REJUVENATE product launch affect revenue seasonality? - The REJUVENATE line will launch on April 15, with a phased rollout expected to take several months for wholesale partners [44][46] Question: What is the current state of consumer demand? - Management noted a softening in demand, with consumers appearing hesitant in early 2025 [69][70] Question: What is the outlook for gross margins? - Gross margins are expected to continue improving due to manufacturing consolidation and sourcing efficiencies [75][76] Question: What is the status of the relationship with Mattress Firm? - The company is committed to growing a profitable business with Mattress Firm and anticipates discussions regarding contract extensions soon [82][84]