Purple Innovation Reports Third Quarter 2024 Results
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.
- 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
- 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
The consolidation of manufacturing facilities and corporate restructuring is expected to generate
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
Restructuring Initiatives are On Track and Delivering Significant Margin Improvement
GAAP Gross Margin of
Adjusted EBITDA Loss Narrowed Notably to
"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
Gross margin for the third quarter of 2024 decreased to
Operating expenses for the third quarter were
Net loss attributable to Purple Innovation, Inc. for the third quarter of 2024 was
EBITDA for the third quarter 2024 was
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
Balance Sheet
Cash and cash equivalents were
Inventories as of September 30, 2024 totaled
2024 Outlook
For the full year 2024, we expect to be at the lower end of our guidance range for net revenue of
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. | ||||||||
September 30, | December 31, | |||||||
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; | 11 | 11 | ||||||
Class B common stock; | — | — | ||||||
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. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
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. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
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 | ||||||||||||||||
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 | 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 | — | — | — | (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 | Nine Months Ended | ||||||||||||||
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 | Nine Months Ended | ||||||||||||||
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 | Nine Months Ended | |||||||||||||||||||||
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 |
(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 | Weighted | Net | Net | Weighted | Net | |||||||||||||||||||
Net income (loss) attributable to Purple | $ | (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 | 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 |
For the Nine Months Ended | ||||||||||||||||||||||||
September 30, 2024 | September 30, 2023 | |||||||||||||||||||||||
Net | Weighted | Net | Net | Weighted | Net | |||||||||||||||||||
Net loss attributable to Purple | $ | (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 | 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 |
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SOURCE Purple Innovation, LLC
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