Purple Innovation Reports First Quarter 2024 Results
Purple Innovation, Inc. reports first quarter 2024 results in line with guidance. Net revenue increased by 12.5% to $120.0 million, with wholesale revenue up by 33.1%. Gross margin decreased to 34.8%, and operating expenses were $64.9 million. Adjusted net loss was $(20.4) million, or $(0.19) per diluted share. EBITDA was $(43.7) million, with cash and cash equivalents at $34.5 million. Purple remains confident in its innovative sleep technology for future growth.
Net revenue increased by 12.5% to $120.0 million in the first quarter of 2024.
Wholesale revenue saw a significant 33.1% increase.
Adjusted net loss improved to $(20.4) million, or $(0.19) per diluted share.
Cash and cash equivalents increased to $34.5 million by the end of March 2024.
Purple Innovation is confident in its future growth potential with innovative sleep technology.
Gross margin decreased to 34.8% compared to the year ago period.
Operating loss for the first quarter was $(23.1) million.
Net loss increased to $(50.2) million compared to the first quarter of 2023.
Adjusted EBITDA was $(13.2) million, showing a decline from the previous year.
The company recognized significant expenses related to refinancing its credit agreement.
Insights
First Quarter Financial Summary (Comparisons versus First Quarter 2023)1
- Net revenue increased
12.5% to$120.0 million $106.7 million - Wholesale revenue increased
33.1% and Direct-to-Consumer (DTC) revenue was consistent with the year ago period.
- Wholesale revenue increased
- Gross margin was
34.8% compared to38.0% . - Operating expenses were
$64.9 million 54.0% of net revenue compared to$65.2 million 61.1% of net revenue. - Operating loss was
$(23.1) million $(24.6) million - In connection with refinancing our credit agreement in January, we recognized a loss of
$23.6 million $3.4 million $4.5 million - Net loss was
$(50.2) million $(25.9) million - Adjusted net loss was
$(20.4) million $(0.19) $(14.0) million $(0.14)
- Adjusted net loss was
- EBITDA was
$(43.7) million $(19.0) million - Adjusted EBITDA was
$(13.2) million $(7.1) million
- Adjusted EBITDA was
- Cash and cash equivalents were
$34.5 million
Chief Executive Officer, Rob DeMartini, said "We are encouraged by our start to the year as our first quarter performance was in-line with our guidance despite continued industry softness. Momentum in our business has been accelerating since the mid-2023 launch of our new product portfolio and brand repositioning, leading to market share gains and a return to growth. We are making important progress executing the key initiatives that we believe will deliver sequential top-line improvement as 2024 unfolds and allow us to generate positive adjusted EBITDA in the second half of the year. Longer-term, we are confident that Purple's innovative and differentiated sleep technology combined with the team and strategies that we have in place will fuel profitable growth and increased shareholder value."
____________________________ |
1 Reconciliations for non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the "RECONCILIATION OF GAAP TO NON-GAAP MEASURES" tables at the end of this press release. |
First Quarter 2024 Review
First quarter 2024 net revenue increased
Gross margin for the first quarter 2024 decreased to
Operating expenses were
Operating loss was
Net loss was
EBITDA for the first quarter 2024 was
Balance Sheet
As of March 31, 2024, the Company had cash and cash equivalents, of
Inventories as of March 31, 2024 totaled
2024 Outlook
The Company is reiterating its 2024 outlook for full year net revenue to be in the range of
Conference Call and Webcast Information
Purple Innovation, Inc. will host a live conference call to discuss financial results on May 7, 2024 at 4:30 p.m. Eastern Time. To access the call dial (8880 396-8049 (domestic) or (416) 764-8646 (international). The call is also being webcast and can be accessed on the investor relations section of the Company's website, investors.purple.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.
About Purple
Purple, the leading premium mattress company with the #1 Gel Grid technology in the world, the GelFlex® Grid, thoughtfully engineers products that make restorative sleep effortless for every kind of sleeper. The result of over 30 years of innovation and in comfort technologies, Purple's GelFlex Grid is the most significant advancement in mattresses in decades and is proven to reduce aches and pains. It instantly adapts as you move, balances temperature, relieves pressure and offers support in all the right places. Purple products, including mattresses, pillows, cushions, frames, sheets, and more, can be found online at Purple.com, in 60 Purple stores and over 3,000 retailers nationwide. Sleep Better. Live Purple.
Forward Looking Statements
Certain statements made in this release that are not historical facts are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company's expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Factors that could influence the realization of forward-looking statements include, among others: changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices and cost of labor; the financial condition of our customers and suppliers; competitive pressures, including the need for technology improvement, successful new product development and introduction; changes in consumer demand, including pullbacks in consumer spending; disruptions to our manufacturing processes; and the risk factors outlined in the "Risk Factors" section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2024, and in our other filings made with the SEC. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per diluted share are non-GAAP financial measures that remove the impact of certain non-cash and non-recurring costs. Management believes that the use of such non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. Refer to the attached table for the reconciliation of such non-GAAP financial measures to the most comparable GAAP financial measure.
With respect to the Company's Adjusted EBITDA outlook for the second quarter and full year 2024, a quantitative reconciliation to the corresponding GAAP information cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted, including but not limited to warrant liabilities and stock based compensation. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.
Investor Contact:
Brendon Frey, ICR
brendon.frey@icrinc.com
203-682-8200
PURPLE INNOVATION, INC. | ||||||||
March 31, | December 31, | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 34,477 | $ | 26,857 | ||||
Accounts receivable, net | 27,742 | 37,802 | ||||||
Inventories | 72,028 | 66,878 | ||||||
Prepaid expenses | 8,480 | 8,536 | ||||||
Other current assets | 1,069 | 1,737 | ||||||
Total current assets | 143,796 | 141,810 | ||||||
Property and equipment, net | 122,468 | 128,661 | ||||||
Operating lease right-of-use assets | 92,643 | 95,767 | ||||||
Intangible assets, net | 21,206 | 22,196 | ||||||
Other long-term assets | 2,015 | 2,191 | ||||||
Total assets | $ | 382,128 | $ | 390,625 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 39,948 | $ | 49,831 | ||||
Accrued compensation | 9,788 | 5,064 | ||||||
Customer prepayments | 3,994 | 5,718 | ||||||
Accrued rebates and allowances | 8,526 | 13,243 | ||||||
Accrued warranty liabilities – current portion | 8,644 | 9,793 | ||||||
Operating lease obligations – current portion | 14,986 | 14,843 | ||||||
Other current liabilities | 10,020 | 12,490 | ||||||
Total current liabilities | 95,906 | 110,982 | ||||||
Debt, net of current portion | 41,941 | 26,909 | ||||||
Accrued warranty liabilities, net of current portion | 27,315 | 25,798 | ||||||
Operating lease obligations, net of current portion | 105,618 | 109,094 | ||||||
Warrant liabilities | 43,170 | — | ||||||
Other long-term liabilities | 2,462 | 2,235 | ||||||
Total liabilities | 316,412 | 275,018 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Stockholders' equity: | ||||||||
Class A common stock; | 11 | 11 | ||||||
Class B common stock; | — | — | ||||||
Additional paid-in capital | 591,724 | 591,380 | ||||||
Accumulated deficit | (526,186) | (475,969) | ||||||
Total stockholders' equity attributable to Purple Innovation, Inc. | 65,549 | 115,422 | ||||||
Noncontrolling interest | 167 | 185 | ||||||
Total stockholders' equity | 65,716 | 115,607 | ||||||
Total liabilities and stockholders' equity | $ | 382,128 | $ | 390,625 | ||||
PURPLE INNOVATION, INC. | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Revenues, net | $ | 120,033 | $ | 106,727 | ||||
Cost of revenues | 78,313 | 66,149 | ||||||
Gross profit | 41,720 | 40,578 | ||||||
Operating expenses: | ||||||||
Marketing and sales | 41,462 | 38,173 | ||||||
General and administrative | 19,728 | 23,667 | ||||||
Research and development | 3,666 | 3,372 | ||||||
Total operating expenses | 64,856 | 65,212 | ||||||
Operating loss | (23,136) | (24,634) | ||||||
Other income (expense): | ||||||||
Interest expense | (4,474) | (202) | ||||||
Other income, net | 4,394 | 73 | ||||||
Loss on extinguishment of debt | (3,394) | (1,217) | ||||||
Change in fair value – warrant liabilities | (23,599) | — | ||||||
Total other expense, net | (27,073) | (1,346) | ||||||
Net loss before income taxes | (50,209) | (25,980) | ||||||
Income tax benefit (expense) | (59) | (72) | ||||||
Net loss | (50,268) | (26,052) | ||||||
Net loss attributable to noncontrolling interest | (51) | (119) | ||||||
Net loss attributable to Purple Innovation, Inc. | $ | (50,217) | $ | (25,933) | ||||
Net loss per share: | ||||||||
Basic | $ | (0.47) | $ | (0.26) | ||||
Diluted | $ | (0.47) | $ | (0.26) | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 106,022 | 98,404 | ||||||
Diluted | 106,022 | 98,852 | ||||||
PURPLE INNOVATION, INC. | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (50,268) | $ | (26,052) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 6,382 | 6,883 | ||||||
Non-cash interest | 1,563 | 270 | ||||||
Paid-in-kind interest | 1,850 | — | ||||||
Change in fair value – warrant liabilities | 23,599 | — | ||||||
Loss on extinguishment of debt | 3,394 | 1,217 | ||||||
Stock-based compensation | 492 | 1,192 | ||||||
Loss on disposal of property and equipment | 112 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 10,060 | 20,124 | ||||||
Inventories | (5,150) | (14,484) | ||||||
Prepaid expenses and other assets | 66 | 903 | ||||||
Operating leases, net | (209) | 1,076 | ||||||
Accounts payable | (7,043) | 1,223 | ||||||
Accrued compensation | 4,724 | 2,889 | ||||||
Customer prepayments | (1,724) | (1,599) | ||||||
Accrued rebates and allowances | (4,717) | (6,822) | ||||||
Accrued warranty liabilities | 368 | 1,898 | ||||||
Other accrued liabilities | (313) | (2,221) | ||||||
Net cash used in operating activities | (16,814) | (13,503) | ||||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (3,038) | (2,943) | ||||||
Investment in intangible assets | (62) | (155) | ||||||
Net cash used in investing activities | (3,100) | (3,098) | ||||||
Cash flows from financing activities: | ||||||||
Payments on term loan | (25,000) | (24,656) | ||||||
Payments on revolving line of credit | (5,000) | — | ||||||
Proceeds from related party loan | 61,000 | — | ||||||
Payments for debt issuance costs | (3,466) | (2,898) | ||||||
Proceeds from stock offering | — | 60,300 | ||||||
Payments for public offering costs | — | (3,100) | ||||||
Tax receivable agreement payments | — | (269) | ||||||
Net cash provided by financing activities | 27,534 | 29,377 | ||||||
Net increase (decrease) in cash | 7,620 | 12,776 | ||||||
Cash, cash equivalents and restricted cash, beginning of the year | 26,857 | 41,754 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 34,477 | $ | 54,530 | ||||
PURPLE INNOVATION, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands, except per share amounts)(unaudited)
Management believes that the use of the following non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. These non-GAAP financial measures are EBITDA and adjusted EBITDA. Other companies may calculate these non-GAAP measures differently than we do. These non-GAAP measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for our financial results prepared in accordance with GAAP.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP EBITDA and Adjusted EBITDA
A reconciliation of GAAP net income (loss) to the non-GAAP measures of EBITDA and adjusted EBITDA is provided below. EBITDA represents net income (loss) before interest expense, income tax expense, net other income and depreciation and amortization. Adjusted EBITDA represents EBITDA excluding costs incurred due to changes in the fair value of the warrant liability, debt extinguishment, stock-based compensation, vendor separation fees, certain nonrecurring legal fees, Board special committee costs, executive interim and search costs, severance costs and showroom opening costs. We believe EBITDA and Adjusted EBITDA provide additional useful information with respect to the impact of various adjustments and provide meaningful measures of our operating performance.
Three Months Ended | ||||||||
2024 | 2023 | |||||||
GAAP net loss | $ | (50,268) | (26,052) | |||||
Interest expense | 4,474 | 202 | ||||||
Income tax (benefit) expense | 59 | 72 | ||||||
Other (income) expense, net | (4,394) | (73) | ||||||
Depreciation and amortization | 6,382 | 6,883 | ||||||
EBITDA | (43,747) | (18,968) | ||||||
Adjustments: | ||||||||
Change in fair value - warrant liability | 23,599 | — | ||||||
Loss on extinguishment of debt | 3,394 | 1,217 | ||||||
Stock-based compensation expense | 492 | 1,192 | ||||||
Vendor separation fee | — | 1,050 | ||||||
Legal fees | 837 | 1,350 | ||||||
Board special committee fees | — | 5,862 | ||||||
Executive interim and search costs | 1,448 | 789 | ||||||
Severance costs | 780 | 319 | ||||||
Showroom opening costs | 1 | 57 | ||||||
Adjusted EBITDA | $ | (13,196) | $ | (7,132) | ||||
Reconciliation of GAAP Net Income to non-GAAP Adjusted Net Income and Adjusted Net Income per Diluted Share
Our presentation of adjusted net income assumes that all net income is attributable to Purple Innovation, Inc. (i.e. there is no allocation of net income or loss to noncontrolling interests), which assumes the full exchange at the beginning of the period of all outstanding Paired Securities for shares of Class A common stock of Purple Innovation, Inc., adjusted for certain nonrecurring items that we do not believe directly reflect our core operations. Adjusted net income per share, diluted, is calculated by dividing adjusted net income by the total shares of Class A common stock outstanding plus any dilutive warrants, options and restricted stock as calculated in accordance with GAAP and assuming the full exchange of all outstanding Paired Securities as of the beginning of each period presented. Adjusted net income and adjusted net income per diluted share, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net income and earnings per share, as calculated in accordance with GAAP. We believe adjusted net income and adjusted net income per diluted share, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of net income (loss), the most directly comparable GAAP measure, to adjusted net income and the computation of adjusted net income per diluted share, are set forth below:
Three Months Ended | |||||||||||||||
2024 | 2023 | ||||||||||||||
Net loss | $ | (50,268) | $ | (26,052) | |||||||||||
Income tax (benefit) expense, as reported | 59 | 72 | |||||||||||||
Change in fair value – warrant liabilities | 23,599 | — | |||||||||||||
Loss on extinguishment of debt | 3,394 | 1,217 | |||||||||||||
Proceeds from insurance settlement | (4,300) | — | |||||||||||||
Board special committee fees | — | 5,862 | |||||||||||||
Adjusted net loss before income taxes | (27,516) | (18,901) | |||||||||||||
Adjusted income taxes(1) | 7,127 | 4,895 | |||||||||||||
Adjusted net loss | $ | (20,389) | $ | (14,006) | |||||||||||
Adjusted net income per share, diluted | $ | (0.19) | $ | (0.14) | |||||||||||
Adjusted weighted-average shares outstanding, diluted(2) | 106,227 | 98,852 | |||||||||||||
(1) Represents the estimated effective tax rate of |
(2) Assumes dilutive warrants, options and restricted stock calculated in accordance with GAAP and the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. |
A reconciliation of net loss per share, diluted, to adjusted net loss per share, diluted is set forth below for the three months ended March 31, 2024 and 2023:
For the Three Months Ended | ||||||||||||||||||||||||
March 31, 2024 | March 31, 2023 | |||||||||||||||||||||||
Net | Weighted | Net Loss | Net | Weighted | Net Loss | |||||||||||||||||||
Net loss attributable to Purple | $ | (50,217) | 106,022 | $ | (0.47) | $ | (25,933) | 98,852 | $ | (0.26) | ||||||||||||||
Assumed exchange of shares(2) | (51) | 205 | (119) | — | ||||||||||||||||||||
Net loss | (50,268) | (26,052) | ||||||||||||||||||||||
Adjustments to arrive at adjusted | 22,752 | 7,151 | ||||||||||||||||||||||
Adjusted loss before taxes | (27,516) | (18,901) | ||||||||||||||||||||||
Adjusted income taxes(4) | 7,127 | 4,895 | ||||||||||||||||||||||
Adjusted net loss | $ | (20,389) | 106,227 | $ | (0.19) | $ | (14,006) | 98,852 | $ | (0.14) | ||||||||||||||
(1) Represents net income attributable to Purple Innovation, Inc. and the associated weighted average dilutive shares, of Class A common stock outstanding. |
(2) Assumes the addition of net income attributable to noncontrolling interests corresponding with the assumed exchange of the Paired Securities for shares of Class A common stock. For the three months ended March 31, 2023, the assumed full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period was included in the calculation of the Weighted Average Shares, Diluted on the previous line as the effect was dilutive. |
(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes. Also assumes the dilutive warrants, options and restricted stock as calculated in accordance with GAAP. |
(4) Represents the estimated effective tax rate of |
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SOURCE Purple Innovation, Inc.
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