Grove laborative (US:GROV)2025-05-14 22:00Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $43.5 million, down 18.7% year over year, primarily due to lower repeat order volume and disruptions from the e-commerce platform transition [20][21] - Adjusted EBITDA for Q1 was negative $1.6 million, reflecting a margin of negative 3.7%, compared to positive $1.9 million or a 3.5% margin in Q1 2024 [11][26] - Gross margin was 53%, a decline of 260 basis points, influenced by the absence of certain customer fees and reduced inventory sell-through benefits [22] Business Line Data and Key Metrics Changes - Total orders for the quarter were 622,000, a decline of 20% year over year, driven by a smaller active customer base and short-term disruptions during the e-commerce platform migration [20][22] - Active customers totaled 678,000 at quarter end, down 16% compared to the prior year, reflecting the impact of reduced advertising spend in previous years [22] - DTC net revenue per order was $66.49, a slight increase of 0.3%, driven by a change in order mix to include higher-priced items [22] Market Data and Key Metrics Changes - The company is navigating a macroeconomic environment with newly implemented tariffs, taking steps to protect margins through pricing adjustments and supplier renegotiations [9][10] - The transition to a new e-commerce platform is expected to have a long-term positive impact, despite short-term revenue headwinds [6][9] Company Strategy and Development Direction - The company is focused on four strategic pillars: sustained profitability, balance sheet strength, revenue growth, and environmental and human health [5][12] - The e-commerce platform migration is seen as a foundational shift, providing enhanced flexibility and infrastructure for future growth [6][8] - The company aims to expand its product assortment, particularly in clean beauty, personal care, and wellness, to drive improvements in net revenue per order and order frequency [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q1 results but noted internal progress, including stronger first-order conversion rates and order economics [5][32] - The company expects Q1 to be the lowest revenue quarter of 2025, with revenue improving through the second and third quarters, leading to slight year-over-year growth in Q4 [29][30] - Management remains committed to transparency and accountability while executing strategies for long-term sustainable growth [30] Other Important Information - The company amended its asset-based loan facility, extending its maturity to April 2028 and increasing availability under the facility [12][28] - The company completed asset acquisitions of third-party brands Grab Green and Eat Greens, integrating them into operations and migrating customers to the Grove website [14][15] Q&A Session Summary Question: Marketing efforts and customer acquisition - Management noted that marketing has helped drive new customers to the platform, with advertising spend at 6.4% of sales for the quarter, and they are seeing better returns on new customer acquisition [36][38] Question: Status of the platform transition - Management indicated that they are through the most challenging parts of the platform transition and are seeing week-over-week progress [39][40] Question: Sales trajectory for third-party and owned brands - Management expects a steady improvement in sales, guiding towards year-over-year growth in Q4, with owned brands' revenue percentage decreasing but not significantly impacting margins [41][42]