CORRECTING and REPLACING Grove Announces Fiscal Second Quarter 2022 Financial Results
Raises Full-Year Guidance
The updated release reads:
GROVE ANNOUNCES FISCAL SECOND QUARTER 2022 FINANCIAL RESULTS
Raises Full-Year Guidance
Fiscal Second Quarter 2022 Financial Highlights:
Our financial highlights represent the beginnings of our efforts to eliminate unprofitable revenue and drive improved margins, on a sequential basis, in order to be profitable in 2024
-
Net revenue of
, down$79.3 million 12% from the first quarter of 2022, and down20% year-over-year -
Gross margin of
49.1% , up 190 basis points from the first quarter of 2022, and down 40 basis points year-over-year - Net loss margin of (44.5)%, an improvement from (52.4)% in the first quarter of 2022. This is compared to net loss margin of (28.8)% in the second quarter of 2021
- Adjusted EBITDA margin(1) of (26.6)%, an improvement from (43.8)% in the first quarter of 2022. This is compared to Adjusted EBITDA margin of (21.2)% in the second quarter of 2021
(1) |
|
Adjusted EBITDA margin is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information. A reconciliation to the most comparable GAAP measure can be found in the tables at the end of this press release. |
Landesberg continued, “As we look ahead, we see a clear path to sustainable profitable growth despite near-term uncertainty in the macro environment. Change in the CPG industry is inevitable, and Grove is in pole position to lead that change. Our disruptive and innovative brand has a tremendously loyal following, we are just beginning to bring our products to the retail channel where over
Fiscal Second Quarter 2022 Key Business Highlights:
-
DTC net revenue per order was
in the second quarter of 2022, up$58.28 3% year-over-year from in the second quarter of 2021$56.43 -
Grove Brand products represented
48.2% of net revenue in the second quarter of 2022, an increase of 30 basis points from47.9% in the second quarter of 2021 -
In the second quarter,
60% of Grove Brands net revenue came from either zero-plastic, re-usable or refillable and zero plastic waste products, determined as meeting the Company’s Beyond Plastic™ standard, up significantly from47% in the second quarter of 2021 as Grove’s no- and low-plastic assortment grows and continues to be adopted by customers -
Grove believes that publishing plastic intensity (pounds of plastic sold per
in revenue) enables the Company to hold itself accountable for the pace at which it decouples revenue from its use of plastic$100 -
Across the Grove.co site and through retail partners, plastic intensity was 1.07 pounds of plastic per
in revenue in the second quarter of 2022 as compared to 1.34 in the second quarter of 2021, following the intended trajectory$100 -
Across all Grove Brands, plastic intensity was 0.87 pounds of plastic per
in revenue in the second quarter of 2022 as compared to 1.18 pounds in the second quarter of 2021, as Grove Brands are designed for sustainability$100
-
Across the Grove.co site and through retail partners, plastic intensity was 1.07 pounds of plastic per
Fiscal Second Quarter 2022 Operational Highlights:
-
Implemented four-pronged value creation plan, encompassing:
-
Improved marketing efficiency
-
Partnered with
Drew Barrymore , Grove investor and first-everGlobal Brand and Sustainability Advocate , and launched first multi-channel brand campaign, “Wish-cycling”, to build brand awareness - Began roll out of new marketing technology stack
-
Partnered with
-
Omni-channel expansion
- Expanded retail footprint in the second quarter with entry into three retail partners – Kohl’s, Giant Eagle, and Meijer – and more than doubled product assortment at Target compared to the second quarter last year
-
Net revenue management
- Implemented net revenue management processes in all functions and conducted analyses on pricing, maximizing category mix, and enhancing promotional sell through
-
Operating expense discipline
- Initiated full vendor audit, evaluating ways to reduce fixed expenses such as real estate, and reduced hiring plans for the balance of 2022 and 2023
-
Improved marketing efficiency
-
Completed business combination with
Virgin Group Acquisition Corp. II and began trading on theNew York Stock Exchange -
Strengthened leadership team with the appointment of
Sergio Cervantes as Chief Financial Officer -
Enhanced Board of Directors with the addition of
Virgin Group Investment DirectorRayhan Arif , former eBay Chief Strategy OfficerKristine Miller , and GitHub Chief of Staff Naytri Shroff Sramek - Published annual Plastic Scorecard and sustainability report, which can be found at grove.co/plasticscorecard and grove.co/sustainabilityreport2021
Subsequent Events:
On
Financial Outlook:
“We believe that the performance of the DTC business will solidify in the second half of 2022 on the back of more efficient advertising spend and higher average order value for existing customers. Additionally, our guidance reflects the implementation of our value creation plan, which will result in significant improvement in profitability in the back half of the year as compared to the front half,” said
Based on performance to date and current expectations, Grove is raising guidance as follows:
For the 12-month period ending
-
Net revenue of
to$302.5 , up from$312.5 million to$300 previously$310 million - Adjusted EBITDA margin(1) of (27.5)% to (30.5)%, up from (29)% to (32)% previously
(1) |
|
Adjusted EBITDA margin is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information. |
Conference Call Information:
The Company will host a conference call to discuss second quarter 2022 financial results and other business updates today,
About
Launched in 2016 as a
Every product Grove offers — from its flagship brand of sustainably powerful home care essentials,
For more information, visit www.grove.com.
Caution Concerning Forward-Looking Statements
This press release contains "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the acceleration of the DTC business in the second half of 2022, the efficiency of our advertising spend, the anticipated increase in the average order volume of our DTC business, and our or our management team’s expectations, hopes, beliefs, intentions, plans, prospects or strategies regarding the future, including revenue growth and financial performance, profitability, product expansion and services. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this press release are based on our current expectations and beliefs made by our management in light of their experience and their perception of historical trends, current conditions and expected future developments and their potential effects on the Company as well as other factors they believe are appropriate in the circumstances. There can be no assurance that future developments affecting the Company will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including changes in domestic and foreign business, market, financial, political and legal conditions; risks relating to the uncertainty of the projected financial information with respect to Grove; Grove’s ability to successfully expand its business; competition; the uncertain effects of the COVID-19 pandemic; risks relating to growing inflation and rising interest rates; and those factors discussed in documents of Grove filed, or to be filed, with the
Non-GAAP Financial Measures
Some of the financial information and data contained in this press release, such as adjusted EBITDA and adjusted EBITDA margin, have not been prepared in accordance with
We calculate adjusted EBITDA as net loss, adjusted to exclude: (1) stock-based compensation expense; (2) depreciation and amortization; (3) remeasurement of convertible preferred stock warrant liability; (4) changes in fair values of Additional Shares, Earn-out Shares and Public and Private Placement Warrant liabilities; (5) transaction costs allocated to derivative liabilities upon Business Combination; (6) interest expense; (7) provision for income taxes, (8) restructuring expenses and (9) loss on extinguishment on debt. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
|
|||||||
|
|
|
|
||||
|
(Unaudited) |
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
132,393 |
|
|
$ |
78,376 |
|
Inventory, net |
|
53,494 |
|
|
|
54,453 |
|
Prepaid expenses and other current assets |
|
7,491 |
|
|
|
8,104 |
|
Total current assets |
|
193,378 |
|
|
|
140,933 |
|
Property and equipment, net |
|
15,831 |
|
|
|
15,932 |
|
Operating lease right-of-use assets |
|
19,581 |
|
|
|
21,214 |
|
Other long-term assets |
|
1,249 |
|
|
|
4,394 |
|
Total assets |
$ |
230,039 |
|
|
$ |
182,473 |
|
Liabilities, Convertible Preferred Stock and Stockholders’ Deficit |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
17,714 |
|
|
$ |
21,346 |
|
Accrued expenses |
|
40,830 |
|
|
|
20,651 |
|
Deferred revenue |
|
12,575 |
|
|
|
11,267 |
|
Operating lease liabilities, current |
|
3,788 |
|
|
|
3,550 |
|
Other current liabilities |
|
854 |
|
|
|
1,650 |
|
Debt, current |
|
22,708 |
|
|
|
10,750 |
|
Total current liabilities |
|
98,469 |
|
|
|
69,214 |
|
Debt, noncurrent |
|
43,694 |
|
|
|
56,183 |
|
Operating lease liabilities, noncurrent |
|
18,106 |
|
|
|
20,029 |
|
Derivative liabilities |
|
76,686 |
|
|
|
— |
|
Other long-term liabilities |
|
1,562 |
|
|
|
5,408 |
|
Total liabilities |
|
238,517 |
|
|
|
150,834 |
|
Commitments and contingencies |
|
|
|
||||
Convertible preferred stock |
|
— |
|
|
|
487,918 |
|
Stockholders’ deficit: |
|
|
|
||||
Common stock |
|
16 |
|
|
|
1 |
|
Additional paid-in capital |
|
564,343 |
|
|
|
33,863 |
|
Accumulated deficit |
|
(572,837 |
) |
|
|
(490,143 |
) |
Total stockholders’ deficit |
|
(8,478 |
) |
|
|
(456,279 |
) |
Total liabilities, convertible preferred stock and stockholders’ deficit |
$ |
230,039 |
|
|
$ |
182,473 |
|
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
2022 |
|
2021
|
|
2022 |
|
2021
|
||||||||
Revenue, net |
$ |
79,279 |
|
|
$ |
99,023 |
|
|
|
169,758 |
|
|
|
201,243 |
|
Cost of goods sold |
|
40,322 |
|
|
|
49,957 |
|
|
|
88,064 |
|
|
|
99,985 |
|
Gross profit |
|
38,957 |
|
|
|
49,066 |
|
|
|
81,694 |
|
|
|
101,258 |
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Advertising |
|
17,898 |
|
|
|
22,516 |
|
|
|
50,691 |
|
|
|
58,152 |
|
Product development |
|
5,922 |
|
|
|
5,688 |
|
|
|
12,162 |
|
|
|
10,850 |
|
Selling, general and administrative |
|
57,895 |
|
|
|
46,971 |
|
|
|
108,865 |
|
|
|
94,509 |
|
Operating loss |
|
(42,758 |
) |
|
|
(26,109 |
) |
|
|
(90,024 |
) |
|
|
(62,253 |
) |
|
|
|
|
|
|
|
|
||||||||
Interest expense |
|
2,285 |
|
|
|
1,096 |
|
|
|
4,372 |
|
|
|
2,059 |
|
Loss on extinguishment on debt |
|
— |
|
|
|
1,027 |
|
|
|
— |
|
|
|
1,027 |
|
Change in fair value of Additional Shares liability |
|
2,015 |
|
|
|
— |
|
|
|
2,015 |
|
|
|
— |
|
Change in fair value of Earn-Out liability |
|
(17,345 |
) |
|
|
— |
|
|
|
(17,345 |
) |
|
|
— |
|
Change in fair value of Public and Private Placement Warrants liability |
|
(1,180 |
) |
|
|
— |
|
|
|
(1,180 |
) |
|
|
— |
|
Other expense, net |
|
6,775 |
|
|
|
268 |
|
|
|
4,783 |
|
|
|
1,044 |
|
Interest and other expense (income), net |
|
(7,450 |
) |
|
|
2,391 |
|
|
|
(7,355 |
) |
|
|
4,130 |
|
Loss before provision for income taxes |
|
(35,308 |
) |
|
|
(28,500 |
) |
|
|
(82,669 |
) |
|
|
(66,383 |
) |
Provision for income taxes |
|
2 |
|
|
|
16 |
|
|
|
25 |
|
|
|
28 |
|
Net loss |
$ |
(35,310 |
) |
|
$ |
(28,516 |
) |
|
$ |
(82,694 |
) |
|
$ |
(66,411 |
) |
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(1.06 |
) |
|
$ |
(3.38 |
) |
|
$ |
(3.86 |
) |
|
$ |
(8.17 |
) |
Weighted-average shares used in computing net loss per share attributable to
|
|
33,384,292 |
|
|
|
8,446,353 |
|
|
|
21,419,222 |
|
|
|
8,125,747 |
|
|
|||||||
|
Six Months Ended |
||||||
|
2022 |
|
2021 |
||||
Cash Flows from Operating Activities |
|
|
|
||||
Net loss |
$ |
(82,694 |
) |
|
$ |
(66,411 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Remeasurement of convertible preferred stock warrant liability |
|
(1,616 |
) |
|
|
1,308 |
|
Stock-based compensation |
|
24,534 |
|
|
|
7,269 |
|
Depreciation and amortization |
|
2,864 |
|
|
|
2,337 |
|
Changes in fair value of derivative liabilities |
|
(16,510 |
) |
|
|
— |
|
Transaction costs allocated to derivative liabilities upon Business Combination |
|
6,673 |
|
|
|
— |
|
Non-cash interest expense |
|
312 |
|
|
|
313 |
|
Inventory reserve |
|
1,693 |
|
|
|
1,719 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
1,027 |
|
Other non-cash expenses |
|
139 |
|
|
|
387 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Inventory |
|
(734 |
) |
|
|
(11,320 |
) |
Prepaids and other assets |
|
613 |
|
|
|
(3,059 |
) |
Accounts payable |
|
(3,495 |
) |
|
|
(3,426 |
) |
Accrued expenses |
|
525 |
|
|
|
7,327 |
|
Deferred revenue |
|
1,308 |
|
|
|
1,788 |
|
Operating lease right-of-use assets and liabilities |
|
(52 |
) |
|
|
45 |
|
Other liabilities |
|
302 |
|
|
|
(1,103 |
) |
Net cash used in operating activities |
|
(66,138 |
) |
|
|
(61,799 |
) |
|
|
|
|
||||
Cash Flows from Investing Activities |
|
|
|
||||
Purchase of property and equipment |
|
(2,610 |
) |
|
|
(2,845 |
) |
Net cash used in investing activities |
|
(2,610 |
) |
|
|
(2,845 |
) |
|
|
|
|
||||
Cash Flows from Financing Activities |
|
|
|
||||
Proceeds from issuance of common stock upon Closing of Business Combination |
|
97,100 |
|
|
|
— |
|
Proceeds from issuance of contingently redeemable convertible common stock |
|
27,500 |
|
|
|
— |
|
Payment of transaction costs related to the Closing of the Business Combination and convertible preferred stock issuance costs |
|
(1,267 |
) |
|
|
(340 |
) |
Proceeds from the issuance of debt |
|
— |
|
|
|
25,000 |
|
Repayment of debt |
|
(562 |
) |
|
|
(21,165 |
) |
Payment of debt extinguishment |
|
— |
|
|
|
(2,499 |
) |
Payment of debt issuance costs |
|
(211 |
) |
|
|
(375 |
) |
Proceeds from exercise of stock options, net of withholding taxes paid related to common stock issued to employees |
|
237 |
|
|
|
525 |
|
Repurchase of common stock |
|
(32 |
) |
|
|
(297 |
) |
Net cash provided by financing activities |
|
122,765 |
|
|
|
849 |
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents |
|
54,017 |
|
|
|
(63,795 |
) |
Cash and cash equivalents at beginning of period |
|
78,376 |
|
|
|
176,523 |
|
Cash and cash equivalents at end of period |
$ |
132,393 |
|
|
$ |
112,728 |
|
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Reconciliation of Net Loss to Adjusted EBITDA |
|
|
|
|
|
|
|
||||||||
Net loss |
$ |
(35,310 |
) |
|
$ |
(28,516 |
) |
|
$ |
(82,694 |
) |
|
$ |
(66,411 |
) |
Stock-based compensation |
|
20,074 |
|
|
|
3,809 |
|
|
|
24,534 |
|
|
|
7,269 |
|
Depreciation and amortization |
|
1,454 |
|
|
|
1,209 |
|
|
|
2,864 |
|
|
|
2,337 |
|
Remeasurement of convertible preferred stock warrant liability |
|
270 |
|
|
|
376 |
|
|
|
(1,616 |
) |
|
|
1,308 |
|
Change in fair value of Additional Shares liability |
|
2,015 |
|
|
|
— |
|
|
|
2,015 |
|
|
|
— |
|
Change in fair value of Earn-Out liability |
|
(17,345 |
) |
|
|
— |
|
|
|
(17,345 |
) |
|
|
— |
|
Change in fair value of Public and Private Placement Warrants liability |
|
(1,180 |
) |
|
|
— |
|
|
|
(1,180 |
) |
|
|
— |
|
Transaction costs allocated to derivative liabilities upon Business Combination |
|
6,673 |
|
|
|
— |
|
|
|
6,673 |
|
|
|
— |
|
Interest expense |
|
2,285 |
|
|
|
1,096 |
|
|
|
4,372 |
|
|
|
2,059 |
|
Restructuring expenses |
|
— |
|
|
|
— |
|
|
|
1,636 |
|
|
|
— |
|
Loss on extinguishment on debt |
|
— |
|
|
|
1,027 |
|
|
|
— |
|
|
|
1,027 |
|
Provision for income taxes |
|
2 |
|
|
|
16 |
|
|
|
25 |
|
|
|
28 |
|
Total Adjusted EBITDA |
$ |
(21,062 |
) |
|
$ |
(20,983 |
) |
|
$ |
(60,716 |
) |
|
$ |
(52,383 |
) |
Net loss margin |
|
(44.5 |
) % |
|
|
(28.8 |
) % |
|
|
(48.7 |
) % |
|
|
(33.0 |
) % |
Adjusted EBITDA margin |
|
(26.6 |
) % |
|
|
(21.2 |
) % |
|
|
(35.8 |
) % |
|
|
(26.0 |
) % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005115/en/
Investor Relations Contact:
ir@grove.co
Media Relations Contact:
meika@grove.co
Source: