Grove laborative (US:GROV)2025-05-14 22:02Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 was negative $1,600,000, reflecting a margin of negative 3.7%, compared to positive $1,900,000 or a 3.5% margin in Q1 of the previous year [11][26] - Revenue for Q1 was $43,500,000, down 18.7% year over year, primarily due to lower repeat order volume and the e-commerce platform transition [20][21] - Gross margin was 53%, a decline of 260 basis points, influenced by the absence of certain customer fees and lower 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 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 [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 experienced a revenue impact of $2,000,000 to $3,000,000 in Q1 due to the e-commerce platform migration [7][21] - The company is navigating a macroeconomic environment with newly implemented tariffs, taking steps to protect margins through pricing adjustments and supplier renegotiations [9][10] 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 to enhance 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 [5][32] - The company expects Q1 to be the lowest revenue quarter of 2025, with revenue anticipated to improve in the second and third quarters, leading to slight year-over-year growth in Q4 [29][30] - Management remains committed to transparency and executing strategies for long-term sustainable growth despite the challenges faced [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 has rolled out new educational content to help consumers make healthier, more sustainable choices, enhancing customer trust [17][18] Q&A Session Summary Question: Marketing and Customer Acquisition - Management noted that marketing efforts have driven new customer growth, with advertising spend at 6.4% of sales for the quarter, and they are seeing better returns on new customer acquisition [38] Question: E-commerce Platform Transition - Management confirmed that they are through the most challenging parts of the platform transition and are seeing week-over-week progress [40] Question: Sales Trajectory for Brands - Management indicated a steady improvement in sales trajectory, guiding towards year-over-year growth in Q4, with a stable gross margin despite a decrease in owned brands as a percentage of revenue [42]