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Purple Innovation Reports Third Quarter 2024 Results

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Purple Innovation (NASDAQ: PRPL) reported Q3 2024 results with net revenue declining 15.3% to $118.6 million. The company posted a GAAP gross margin of 29.7% and adjusted gross margin of 40.5%, up 340bps year-over-year. Net loss was $(39.2) million or $(0.36) per share, while adjusted EBITDA loss narrowed to $(6.4) million from $(16.3) million last year. The company's restructuring plan, including closure of Utah facilities and consolidation to Georgia, is expected to yield annual EBITDA savings of $15-20 million starting in 2025. Purple expects full-year 2024 revenue at the lower end of $490-510 million guidance range.

Purple Innovation (NASDAQ: PRPL) ha riportato i risultati del terzo trimestre 2024, con un fatturato netto in calo del 15,3% a 118,6 milioni di dollari. L'azienda ha registrato un margine lordo GAAP del 29,7% e un margine lordo rettificato del 40,5%, in aumento di 340 punti base rispetto all'anno precedente. La perdita netta è stata di $(39,2) milioni o $(0,36) per azione, mentre la perdita EBITDA rettificata si è ridotta a $(6,4) milioni, rispetto ai $(16,3) milioni dell'anno scorso. Il piano di ristrutturazione dell'azienda, che include la chiusura degli stabilimenti in Utah e la consolidazione in Georgia, dovrebbe portare a risparmi annuali di EBITDA tra i 15 e i 20 milioni di dollari a partire dal 2025. Purple prevede che il fatturato totale per il 2024 si attesti nella parte bassa dell'intervallo di guidance di 490-510 milioni di dollari.

Purple Innovation (NASDAQ: PRPL) reportó los resultados del tercer trimestre de 2024, con ingresos netos que disminuyeron un 15.3% a 118.6 millones de dólares. La compañía registró un margen bruto GAAP del 29.7% y un margen bruto ajustado del 40.5%, un aumento de 340 puntos básicos en comparación con el año anterior. La pérdida neta fue de $(39.2) millones o $(0.36) por acción, mientras que la pérdida de EBITDA ajustado se redujo a $(6.4) millones desde $(16.3) millones del año pasado. Se espera que el plan de reestructuración de la compañía, que incluye el cierre de instalaciones en Utah y la consolidación en Georgia, genere ahorros anuales de EBITDA de entre 15 y 20 millones de dólares a partir de 2025. Purple espera que los ingresos totales de 2024 se sitúen en el extremo inferior del rango de orientación de 490-510 millones de dólares.

퍼플 이노베이션 (NASDAQ: PRPL)은 2024년 3분기 실적을 발표하며 순매출이 15.3% 감소한 1억 1860만 달러라고 보고했습니다. 이 회사는 GAAP 총 마진 29.7% 및 조정 총 마진 40.5%를 기록했으며, 이는 전년 대비 340bp 상승한 수치입니다. 순손실은 $(3920)만 달러 또는 $(0.36) 주당으로 집계되었고, 조정 EBITDA 손실은 지난해 $(1630)만 달러에서 $(640)만 달러로 축소되었습니다. 유타 시설의 폐쇄 및 조지아로의 통합을 포함한 회사의 구조조정 계획은 2025년부터 연간 1500만에서 2000만 달러의 EBITDA 절감 효과를 얻을 것으로 예상됩니다. 퍼플은 2024년 전체 매출이 4억 9000만에서 5억 1000만 달러 범위의 하단에 있을 것으로 예상합니다.

Purple Innovation (NASDAQ: PRPL) a annoncé les résultats du troisième trimestre 2024, avec un chiffre d'affaires net en baisse de 15,3% à 118,6 millions de dollars. L'entreprise a affiché une marge brute GAAP de 29,7% et une marge brute ajustée de 40,5%, en hausse de 340 points de base par rapport à l'année précédente. La perte nette était de $(39,2) millions ou $(0,36) par action, tandis que la perte EBITDA ajustée a été réduite à $(6,4) millions contre $(16,3) millions l'année dernière. Le plan de restructuration de l'entreprise, qui comprend la fermeture des installations de l'Utah et la consolidation en Géorgie, devrait permettre d'économiser annuellement entre 15 et 20 millions de dollars à partir de 2025. Purple s'attend à ce que le chiffre d'affaires total pour 2024 soit situé dans la fourchette inférieure du guide de 490-510 millions de dollars.

Purple Innovation (NASDAQ: PRPL) berichtete über die Ergebnisse des dritten Quartals 2024, wobei sich der Nettoumsatz um 15,3% auf 118,6 Millionen Dollar verringerte. Das Unternehmen erzielte eine GAAP-Bruttomarge von 29,7% und eine angepasste Bruttomarge von 40,5%, was einem Anstieg von 340 Basispunkten im Jahresvergleich entspricht. Der Nettoverlust betrug $(39,2) Millionen oder $(0,36) pro Aktie, während der angepasste EBITDA-Verlust von $(16,3) Millionen im letzten Jahr auf $(6,4) Millionen gedrängt wurde. Der Umbauplan des Unternehmens, der die Schließung von Anlagen in Utah und die Konsolidierung nach Georgia umfasst, wird voraussichtlich jährliche EBITDA-Einsparungen von 15 bis 20 Millionen Dollar ab 2025 bringen. Purple erwartet, dass der Umsatz für das Gesamtjahr 2024 am unteren Ende der Prognose von 490-510 Millionen Dollar liegt.

Positive
  • Adjusted gross margin improved 340 basis points to 40.5%
  • Adjusted EBITDA loss improved by $9.9 million to $(6.4) million
  • Restructuring plan expected to generate $15-20 million annual EBITDA savings
  • Inventory reduced by 10.5% to $59.9 million
  • Adjusted operating expenses decreased by $10.9 million
Negative
  • Net revenue declined 15.3% to $118.6 million
  • Net loss increased to $(39.2) million from $(36.0) million
  • DTC revenue decreased 11.7%
  • Wholesale revenue decreased 20.1%
  • GAAP gross margin declined 410 basis points to 29.7%
  • Full-year guidance revised to lower end of range

Insights

Purple Innovation's Q3 results reveal significant operational challenges and transformation efforts. The $118.6 million revenue represents a concerning 15.3% decline, with weakness across both DTC and wholesale channels. However, the company's restructuring initiatives are showing promising signs through improved adjusted gross margins, up 340 basis points to 40.5%.

The consolidation of manufacturing facilities and corporate restructuring is expected to generate $15-20 million in annual EBITDA savings by 2025. While the $32.7 million restructuring charges impacted current results, the adjusted EBITDA loss narrowed to $6.4 million from $16.3 million last year, indicating progress in cost management. The company's guidance revision to the lower end of ranges suggests continued near-term pressure, but operational improvements and Q4 positive adjusted EBITDA expectations provide some optimism for recovery.

The mattress industry's broader challenges are evident in Purple's performance, with demand softness for home-related products impacting sales. The strategic shift to more profitable marketing, despite reduced advertising spend, shows a focus on sustainable growth over volume. The exit from certain wholesale customers, while impacting current revenues, aligns with the company's premium positioning strategy.

Inventory management has improved with a 10.5% reduction, suggesting better operational efficiency and working capital management. The Path to Premium Sleep strategy, combined with manufacturing consolidation, positions Purple to potentially capture market share when industry conditions improve, though near-term headwinds persist.

 Restructuring Initiatives are On Track and Delivering Significant Margin Improvement

GAAP Gross Margin of 29.7%; Adjusted Gross Margin Improved 340bps versus Last Year to 40.5%

Adjusted EBITDA Loss Narrowed Notably to $(6.4) Million versus $(16.3) Million Last Year

LEHI, Utah, Nov. 4, 2024 /PRNewswire/ -- Purple Innovation, Inc. (NASDAQ: PRPL) ("Purple"), a comfort innovation company known for creating the "World's First No Pressure™ Mattress," today announced results for the third quarter ended September 30, 2024.

"While our third quarter revenue was challenged, we are encouraged by both our year-to-date performance modestly exceeding the broader industry and the sustained improvements in our profitability," said CEO Rob DeMartini.

"The restructuring plan we announced earlier this quarter is on track to deliver meaningful cost savings in the new year as we improve our operational efficiencies and positions us to capitalize on tailwinds when the market improves. Looking forward, we remain confident in our Path to Premium Sleep strategy's ability to deliver long-term value and we look forward to building on this momentum into 2025."

Third Quarter 2024 Financial Results

Third quarter 2024 net revenue declined by 15.3% to $118.6 million, compared to $140.0 million in the third quarter of 2023. This decrease was primarily driven by industry-wide demand softness for home-related products, a reduction in advertising spend towards more profitable marketing, and the lapping of our successful launch of new premium mattresses in 2023. By channel, DTC net revenues decreased 11.7%, and wholesale net revenues decreased 20.1%. Within DTC, e-commerce net revenues decreased 15.7%, while showroom net revenues were approximately flat. In addition to the factors above, the decline in wholesale net revenues reflected the exit of certain customers.

Gross margin for the third quarter of 2024 decreased to 29.7% down 410 basis points compared to 33.8% in the prior year, negatively impacted by the $12.9 million of restructuring related charges offset in part by improved production efficiencies. The increase in production efficiencies was primarily due to supply chain initiatives and manufacturing efficiencies. We expect the restructuring plan will further streamline our operations and provide increased gross profits. Despite deleveraging from lower sales, adjusted gross margin, which excludes restructuring related charges during the quarter and launch costs in the prior year period, grew to 40.5%, an increase of 340 basis points compared to adjusted gross margin last year.

Operating expenses for the third quarter were $82.0 million, up 2.6% from $79.9 million in Q3 2023. This increase was driven by $19.8 million in restructuring related charges as part of the consolidation of our manufacturing operations to achieve significant operational efficiencies. Excluding all restructuring related charges this year and loss on impairment of goodwill last year, adjusted operating expenses were down by $10.9 million, primarily due to a $9.1 million reduction in advertising spend.

Net loss attributable to Purple Innovation, Inc. for the third quarter of 2024 was $(39.2) million or $(0.36) per diluted share, compared to a net loss of $(36.0) million or $(0.34) per diluted share in the third quarter 2023. Adjusted net loss, excluding restructuring related charges and certain non-cash and one-time items, was $(8.4) million or $(0.08) per diluted share, an improvement from $(19.4) million or $(0.18) per diluted share in the prior year.

EBITDA for the third quarter 2024 was $(27.4) million compared to $(29.7) million in the third quarter 2023.  Adjusted EBITDA was $(6.4) million, an improvement from $(16.3) million in the prior year.

Restructuring, Impairment and Other Related Charges

In August 2024, we initiated a restructuring plan to strategically realign our operational focus to achieve significant operational efficiencies. This plan includes the closure of our two Utah manufacturing facilities to consolidate mattress production to our Georgia plant, as well as a headcount reduction at our Utah headquarters.  As a result, we have a $32.7 million total restructuring, impairment and other related charges in the third quarter 2024. We expect to record additional restructuring and other related charges in the amount of $9.9 million through the second quarter of 2025. The supply chain consolidation and corporate restructure is expected to yield annual EBITDA savings of $15 to $20 million starting in 2025, and we plan to have positive cash flow and adjusted EBITDA next year.

Balance Sheet

Cash and cash equivalents were $23.4 million as of September 30, 2024, compared to $26.9 million as of December 31, 2023.

Inventories as of September 30, 2024 totaled $59.9 million, representing a decrease of 10.5%, or $7.0 million compared with December 31, 2023.

2024 Outlook

For the full year 2024, we expect to be at the lower end of our guidance range for net revenue of $490 million to $510 million, and also at the lower end of our guidance range for Adjusted EBITDA outlook of $(20) million to $(10) million. The company continues to prioritize and benefit from operational improvements and expects positive Adjusted EBITDA in the fourth quarter.

Conference Call and Webcast Information

Purple Innovation, Inc. will host a live conference call to discuss financial results today, November 4, 2024 at 4:30 p.m. Eastern Time.  To access the call dial 844-481-1976 (domestic) or 412-317-0642 (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 59 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 third 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:
Stacy Turnof, Edelman Smithfield
stacy.turnof@edelmansmithfield.com
917-362-2581

 

PURPLE INNOVATION, INC.
Condensed Consolidated Balance Sheets
(unaudited – in thousands, except for par value)




September 30,
2024



December 31,
2023


Assets







  Current assets:







     Cash and cash equivalents


$

23,399



$

26,857


     Accounts receivable, net



29,662




37,802


     Inventories



59,881




66,878


     Prepaid expenses



9,241




8,536


     Other current assets



1,005




1,737


Total current assets



123,188




141,810


Property and equipment, net



100,155




128,661


Operating lease right-of-use assets



74,254




95,767


Intangible assets, net



9,226




22,196


Other long-term assets



2,450




2,191


Total assets


$

309,273



$

390,625











Liabilities and Stockholders' Equity









Current liabilities:









       Accounts payable


$

30,393



$

49,831


       Accrued compensation



15,109




5,064


       Customer prepayments



3,778




5,718


       Accrued rebates and allowances



10,040




13,243


       Accrued warranty liabilities – current portion



7,634




9,793


       Operating lease obligations – current portion



16,157




14,843


       Other current liabilities



11,353




12,490


Total current liabilities



94,464




110,982


Related party debt



50,813





Long-term debt, net of current portion






26,909


Accrued warranty liabilities, net of current portion



27,336




25,798


Operating lease obligations, net of current portion



85,621




109,094


Warrant liabilities



19,682





Other long-term liabilities



3,344




2,235


Total liabilities



281,260




275,018


Commitments and contingencies (Note 14)









Stockholders' equity:









        Class A common stock; $0.0001 par value, 210,000 shares authorized; 107,516
           issued and outstanding at September 30, 2024 and 105,507 issued and
           outstanding at December 31, 2023



11




11


        Class B common stock; $0.0001 par value, 90,000 shares authorized; 192 issued
           and outstanding at September 30, 2024 and at December 31, 2023







       Additional paid-in capital



593,343




591,380


       Accumulated deficit



(565,387)




(475,969)


Total stockholders' equity attributable to Purple Innovation, Inc.



27,967




115,422


       Noncontrolling interest



46




185


Total stockholders' equity



28,013




115,607


Total liabilities and stockholders' equity


$

309,273



$

390,625


 

PURPLE INNOVATION, INC.
Condensed Consolidated Statements of Operations
(unaudited – in thousands, except per share amounts)




Three Months Ended
September 30,



Nine Months Ended
September 30,




2024



2023



2024



2023


Revenues, net


$

118,598



$

139,996



$

358,902



$

364,605


Cost of revenues:

















Cost of revenues



70,546




92,687




220,190




241,244


Cost of revenues - restructuring related charges



12,859







12,859





Total cost of revenues



83,405




92,687




233,049




241,244


Gross profit



35,193




47,309




125,853




123,361


Operating expenses:

















Marketing and sales



42,939




52,816




125,778




137,368


General and administrative



17,266




17,524




55,111




67,628


Research and development



2,920




2,704




10,572




9,001


Restructuring, impairment and other related charges



18,881







18,881





Loss on impairment of goodwill






6,879







6,879


Total operating expenses



82,006




79,923




210,342




220,876


Operating loss



(46,813)




(32,614)




(84,489)




(97,515)


Other income (expense):

















Interest expense



(4,394)




(594)




(13,029)




(1,148)


Other income, net



7,165




205




11,612




315


Change in fair value – warrant liabilities



4,795







(111)





Loss on extinguishment of debt






(3,114)




(3,394)




(4,331)


Total other income (expense), net



7,566




(3,503)




(4,922)




(5,164)


Net loss before income taxes



(39,247)




(36,117)




(89,411)




(102,679)


Income tax expense



(63)




(18)




(176)




(162)


Net loss



(39,310)




(36,135)




(89,587)




(102,841)


Net loss attributable to noncontrolling interest



(82)




(131)




(169)




(417)


Net loss attributable to Purple Innovation, Inc.


$

(39,228)



$

(36,004)



$

(89,418)



$

(102,424)



















Net loss per share:

















Basic


$

(0.36)



$

(0.34)



$

(0.84)



$

(0.99)


Diluted


$

(0.36)



$

(0.34)



$

(0.84)



$

(0.99)



















Weighted average common shares outstanding:

















Basic



107,508




105,326




107,008




102,962


Diluted



107,508




105,326




107,008




102,962


 

PURPLE INNOVATION, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)






Three Months Ended
September 30,



Nine Months Ended
September 30,




2024



2023



2024



2023


Cash flows from operating activities:

















Net loss


$

(39,310)



$

(36,135)



$

(89,587)



$

(102,841)


Adjustments to reconcile net loss to net cash used in
operating activities:

















Depreciation and amortization



14,627




6,073




27,448




18,963


Non-cash interest



1,931




234




5,303




920


Paid-in-kind interest



2,653







7,028





Non-cash restructuring, impairment and other related
charges



20,115







20,115





Loss on impairment of goodwill






6,879







6,879


Change in fair value – warrant liabilities



(4,795)







111





Loss on extinguishment of debt






3,114




3,394




4,331


Stock-based compensation



791




939




2,108




3,792


Loss on disposal of property and equipment



658







770





Changes in operating assets and liabilities:

















Accounts receivable



2,421




(10,002)




8,140




1,465


Inventories



5,750




5,757




2,971




696


Prepaid expenses and other assets



(4,287)




(4,156)




378




(1,204)


Operating leases, net



(765)




147




(2,105)




1,462


Accounts payable



(7,036)




(2,760)




(16,558)




544


Accrued compensation



5,923




1,908




10,045




(801)


Customer prepayments



(954)




(302)




(1,940)




723


Accrued rebates and allowances



1,405




2,748




(3,203)




(1,229)


Accrued warranty liabilities



(462)




2,360




(621)




7,422


Other accrued liabilities



2,454




5,441




1,592




3,070


Net cash provided by (used in) operating activities



1,119




(17,755)




(24,611)




(55,808)



















Cash flows from investing activities:

















Excess restricted cash returned to acquiree






(826)







(826)


Purchase of property and equipment



(1,018)




(3,326)




(6,160)




(8,769)


Investment in intangible assets



(110)




(208)




(221)




(588)


Net cash used in investing activities



(1,128)




(4,360)




(6,381)




(10,183)



















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





Proceeds from term loan






25,000







25,000


Payments for debt issuance costs






(3,228)




(3,466)




(6,126)


Proceeds from stock offering












60,300


Payments for public offering costs












(3,301)


Proportional Representation Preferred Linked Stock
redemption fee












(105)


Tax receivable agreement payments












(269)


Net cash provided by financing activities






21,772




27,534




50,843



















Net decrease in cash



(9)




(343)




(3,458)




(15,148)


Cash, beginning of the period



23,408




26,949




26,857




41,754


Cash, end of the period


$

23,399



$

26,606



$

23,399



$

26,606


PURPLE INNOVATION, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands)

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, adjusted EBITDA, adjusted net income, adjusted net income per diluted share and adjusted gross profit. 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 loss to the non-GAAP measures of EBITDA and adjusted EBITDA is provided below. EBITDA represents net loss before interest expense, income tax (benefit) expense, other (income) expense, net, 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 expense, restructuring related charges, vendor separation fees, loss on project write-off, impairment of goodwill, nonrecurring legal fees, Board special committee costs, acquisition expenses, executive interim and search costs, severance costs and showroom opening and closing 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

 September 30,



Nine Months Ended

September 30,




2024



2023



2024



2023















GAAP net loss


$

(39,310)




(36,135)




(89,587)




(102,841)


Interest expense



4,394




594




13,029




1,148


Income tax expense



63




18




176




162


Other income, net



(7,165)




(205)




(11,612)




(315)


Depreciation and amortization



14,627




6,073




27,448




18,963


EBITDA



(27,391)




(29,655)




(60,546)




(82,883)


Adjustments:

















Change in fair value - warrant liability



(4,795)







111





Loss on extinguishment of debt






3,114




3,394




4,331


Stock-based compensation expense



791




939




2,108




3,792


Restructuring related charges



23,669







23,669





Vendor separation fee












1,050


Loss on project write-off









1,355





Loss on impairment of goodwill






6,879







6,879


Legal fees



16




775




940




3,520


Board special committee costs












14,160


Acquisition expenses












65


Executive interim and search costs



409




1,456




3,383




3,258


Severance costs



202







1,086




586


Showroom opening and closing costs



724




242




782




338


Adjusted EBITDA


$

(6,375)



$

(16,250)



$

(23,718)



$

(44,904)


Reconciliation of GAAP Gross Margin to Adjusted Gross Margin 

A reconciliation of GAAP gross margin to the non-GAAP measures of adjusted gross margin is provided below. Adjusted gross margin represents adjusted net revenue less adjusted cost of revenue. Adjusted net revenue represents revenue adjusted for revenue deemed lost through discounts on products during our transition to our new product line in 2023. Adjusted cost of revenues represents cost of revenues excluding certain incremental costs incurred during our transition to our new product line in 2023 and restructuring charges recorded in cost of revenues in 2024. We believe adjusted gross margin provides additional useful information with respect to the impact of the restructuring and provides meaningful measures of our operating performance.

(in thousands)


Three Months Ended
September 30,



 Nine Months Ended
September 30,




2024



2023



2024



2023


    Revenues, net


$

118,598



$

139,996



$

358,902



$

364,605


    Discounts on new product transition






3,124







12,752


    Adjusted revenues, net



118,598




143,120




358,902




377,357



















Total cost of revenues



83,405




92,687




233,049




241,244


Cost of new product transition






(2,692)







(5,015)


Restructuring charges in cost of revenues



(12,859)







(12,859)





Adjusted cost of revenues



70,546




89,995




220,190




236,229



















Adjusted gross profit


$

48,052



$

53,125



$

138,712



$

141,128


Adjusted gross profit %



40.5 %




37.1 %




38.6 %




37.4 %


Reconciliation of GAAP Operating Expenses to Adjusted Operating Expenses 

A reconciliation of GAAP operating expenses to the non-GAAP measures of adjusted operating expenses is provided below. Adjusted operating expenses represents operating expenses adjusted for restructuring related charges in 2024 and loss on impairment of goodwill.in 2023. We believe adjusted operating expenses provides additional useful information with respect to the impact of the restructuring and provides meaningful measures of our operating performance.

(in thousands)


Three Months Ended
September 30,



 Nine Months Ended
September 30,




2024



2023



2024



2023


   Operating expenses


$

82,006



$

79,923



$

210,342



$

220,876


   Restructuring related charges in operating expenses



(19,832)







(19,832)





   Loss on impairment of goodwill






(6,879)







(6,879)


Adjusted operating expenses


$

62,174



$

73,044



$

190,510



$

213,997


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 loss and adjusted net loss per diluted share, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net loss and earnings per share, as calculated in accordance with GAAP. We believe adjusted net loss and adjusted net loss per diluted share, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of net loss, the most directly comparable GAAP measure, to adjusted net loss and the computation of adjusted net loss per diluted share, are set forth below:

(in thousands, except per share amounts)


Three Months Ended
September 30,



 Nine Months Ended
September 30,




2024



2023



2024



2023


Net loss


$

(39,310)



$

(36,135)



$

(89,587)



$

(102,841)


Income tax (benefit) expense, as reported



63




18




176




162


Loss on extinguishment of debt






3,114




3,394




4,331


Restructuring related charges



32,682







32,682





Loss on impairment of goodwill






6,879







6,879


Board special committee fees












14,160


Acquisition expenses












65


Change in fair value – warrant liabilities



(4,795)







111





Adjusted net loss before income taxes



(11,360)




(26,124)




(53,224)




(77,244)


Adjusted income tax benefit(1)



2,942




6,766




13,785




20,006


Adjusted net loss


$

(8,418)



$

(19,358)



$

(39,439)



$

(57,238)



















Adjusted net loss per share, diluted


$

(0.08)



$

(0.18)



$

(0.37)



$

(0.55)



















Adjusted weighted-average shares outstanding, diluted(2)



107,703




105,744




107,203




103,380















(1) Represents the estimated effective tax rate of 25.9% for the three and nine months ended September 30, 2024 and 2023, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates assuming no valuation allowance.


(2) Assumes options and restricted stock units 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 income (loss) per share, diluted, to adjusted net loss per diluted share is set forth below for the three and nine months ended September 30, 2024 and 2023:



For the Three Months Ended




September 30, 2024



September 30, 2023




Net
Income



Weighted
Average
 Shares,
 Diluted



Net
Income
per
Share,
Diluted



Net
Income



Weighted
Average
Shares,
Diluted



Net
Income
per Share,
Diluted


Net income (loss) attributable to Purple
      Innovation Inc.(1)


$

(39,228)




107,508



$

(0.36)



$

(36,004)




105,326



$

(0.34)


     Assumed exchange of shares(2)



(82)




195








(131)




418






      Net loss



(39,310)












(36,135)










 Adjustments to arrive at adjusted loss
   before taxes(3)



27,950












10,011










      Adjusted loss before taxes



(11,360)












(26,124)










      Adjusted income tax benefit(4)



2,942












6,766










     Adjusted net loss


$

(8,418)




107,703



$

(0.08)



$

(19,358)




105,744



$

(0.18)



(1) Represents net income (loss) attributable to Purple Innovation, Inc. and the associated weighted average diluted shares, of Class A common stock outstanding.


(2) Assumes the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. Also 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.


(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 25.9% for the three months ended September 30, 2024 and 2023, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates assuming no valuation allowance.

 



For the Nine Months Ended




September 30, 2024



September 30, 2023




Net
Income



Weighted
Average
 Shares,
 Diluted



Net
Income
per
Share,
Diluted



Net
Income



Weighted
Average
Shares,
Diluted



Net
Income
per Share,
Diluted


Net loss attributable to Purple
     Innovation Inc.(1)


$

(89,418)




107,008



$

(0.84)



$

(102,424)




102,962



$

(0.99)


     Assumed exchange of shares(2)



(169)




195








(417)




418






     Net loss



(89,587)












(102,841)










  Adjustments to arrive at adjusted loss
     before taxes(3)



36,363












25,597










     Adjusted loss before taxes



(53,224)












(77,244)










     Adjusted income tax benefit(4)



13,785












20,006










     Adjusted net loss


$

(39,439)




107,203



$

(0.37)



$

(57,238)




103,380



$

(0.55)



(1) Represents net loss attributable to Purple Innovation, Inc. and the associated weighted average diluted shares, of Class A common stock outstanding.


(2) Assumes the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. Also 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.


(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 25.9% for the nine months ended September 30, 2024 and 2023, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates assuming no valuation allowance.

 

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SOURCE Purple Innovation, LLC

FAQ

What was Purple Innovation's (PRPL) revenue in Q3 2024?

Purple Innovation reported Q3 2024 revenue of $118.6 million, representing a 15.3% decline from $140.0 million in Q3 2023.

How much cost savings will Purple's (PRPL) restructuring plan generate?

Purple's restructuring plan is expected to generate annual EBITDA savings of $15 to $20 million starting in 2025.

What is Purple Innovation's (PRPL) revenue guidance for 2024?

Purple expects full-year 2024 revenue to be at the lower end of its guidance range of $490 million to $510 million.

What was Purple's (PRPL) adjusted EBITDA in Q3 2024?

Purple reported an adjusted EBITDA loss of $(6.4) million in Q3 2024, improved from $(16.3) million in Q3 2023.

Purple Innovation, Inc.

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