Grove Announces Fourth Quarter and Full Year 2023 Financial Results
-
Fourth Quarter Adjusted EBITDA of
$0.1 million , positive for the second quarter in a row -
Positive Fourth Quarter Operating Cash Flow of
$1.1M -
Record Net Revenue per Order of
$66.83 - Announces Fiscal 2024 Revenue and Adjusted EBITDA Guidance
Grove Collaborative’s fourth quarter 2023 financial results include several milestones for the Company, including its second consecutive quarter of positive Adjusted EBITDA, positive Operating Cash Flow, and a new record for Net Revenue per Order. These results reflect progress in improving bottom-line-results, and set the Company up to deliver profitable sequential revenue growth in the second half of 2024.
“I’m incredibly proud of the
Fourth Quarter 2023 Financial Results
Revenue, Net was
Gross Margin was 54.4%, improving 60 basis points from the third quarter of 2023 and 740 basis points year-over-year. The sequential and year-over-year improvements were mostly due to the sell-through of previously reserved inventory.
Operating Expenses were
Net Loss Margin was (15.8%), compared to (15.9%) in the third quarter of 2023 and (17.1%) in the fourth quarter of 2022.
Adjusted EBITDA Margin2 was 0.2%, positive for the second quarter in a row, down 10 basis points from the third quarter of 2023, but up 1,310 basis points from the fourth quarter of 2022.
The Company ended the fourth quarter of 2023 with
__________________ |
||
1 |
Direct to Consumer is defined as our website and mobile application. |
|
2 |
Adjusted EBITDA margin is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a description of adjusted EBITDA and a reconciliation of adjusted EBITDA to net loss in the table at the end of this press release. |
Fourth Quarter 2023 Key Business Highlights: |
|||||||
(in thousands, except DTC Net Revenue Per Order and percentages) |
Three Months Ended |
||||||
|
2023 |
|
|
|
2022 |
|
|
Financial and Operating Data |
|
|
|
||||
Grove Brands % Net Revenue |
|
44 |
% |
|
|
46 |
% |
DTC Total Orders |
|
864 |
|
|
|
1,132 |
|
DTC Active Customers |
|
920 |
|
|
|
1,377 |
|
DTC Net Revenue Per Order |
$ |
67 |
|
|
$ |
63 |
|
Grove Brands % of Net Revenue represented 44% of net revenue in the fourth quarter of 2023, down 30 basis points quarter-over-quarter and 70 basis points year-over-year. The sequential and year-over-year declines were largely due to a decrease in Grove Brand products in existing customer orders as we continued to expand our third-party product offering, especially our product selection in the Health and Wellness category, relative to Grove Brand products.
Direct to Consumer (DTC) Total Orders were 0.9 million, down 5.8% quarter-over-quarter and 23.7% year-over-year. The year-over-year and sequential declines were due to lower advertising spend throughout 2022 and 2023.
DTC Active Customers were 0.9 million, down 9.7% quarter-over-quarter and 33.2% year-over-year. The year-over-year and sequential declines were due to lower advertising spend.
DTC Net Revenue Per Order was
Plastic Intensity Score3
Plastic Intensity Across the Entire Grove Business - including both Grove Brands and third-party products through online sales and retail partners - was 1.07 pounds of plastic4 per
Plastic Intensity for Grove Brands Only across online and retail sales was 1.07 pounds of plastic per
-
Our
Grove Co. 100% Recycled Plastic Trash Bags are the primary driver of the year-over-year plastic intensity increase for our Grove Brands. Excluding this product category, Grove Brands plastic intensity was 0.57 pounds in the fourth quarter of 2023, an improvement from the third quarter of 2023 of 0.63 pounds but slightly up from 0.56 pounds in the fourth quarter of 2022. We are continuing to explore ways to reduce plastic in this category while providing customers with an effective product experience, but we see recycled plastic as the current, best available material.
_____________________ |
||
3 |
Grove defines plastic intensity as pounds of plastic used per |
|
4 |
To calculate plastic intensity, |
Fourth Quarter 2023 Operational Highlights
Our strategic pillars, which we announced in the third quarter of 2023 to drive continued success and work towards profitable growth, are our customer, sustainability, and profitability. We are excited to share the following related updates for Q4:
-
Customer-driven growth: Highlights from the fourth quarter related to our customer priorities include:
- Changing Our Growth Model: Began implementing a significant and transformative shift in our business model that more closely aligns with ecommerce best practices and first order customer experiences while creating incentives for customers to opt into a program that allows them to subscribe and save on individual products. The program is foundational to enabling customers to receive the most planet- and wallet-friendly box possible.
- Third-Party Category and Selection Expansion:Expanded our assortment of third-party brands to include selections from Ancient Nutrition, Compostic, The Honest Company, and WishGardens, as well as dozens of new products from existing third-party brands.
Grove Co. Product Innovation: Launched ourGrove Co. Bottle Wash Power Packs and streamlined our Grove Brands strategy to consolidate under our flagship Grove Co. brand.- Health and Wellness Growth: Grew the percentage of orders containing a wellness product in the fourth quarter of 2023 by more than 75% when compared to the fourth quarter of 2022, and established a dedicated Health and
Wellness Advisory Board of medical clinicians to guide our continued growth in this category. - Improved Customer Experience: Made changes to our website experience by improving personalized product recommendations that appear on a customer’s individual homepage.
- VIP Program Updates:Announced exclusive pricing in our VIP Shop for themed product assortments and bundles each month, including discounts up to 40% off for our most loyal customers.
-
Sustainability: Highlights from the fourth quarter related to our sustainability priorities include:
- 15 Millions Pounds of Plastic Collected: Recovered 15 million pounds of nature- and ocean-bound single-use plastic since 2020 through our plastic neutrality commitment and ongoing partnership with plastic recovery platforms.
- Beyond Plastic™ Badging5: Launched a digital badging system on products across our site that meet Grove’s Beyond Plastic™ standard, including 100%
Plastic Free , 95%+Plastic Free , and No Single Use Plastic.
-
Profitability: Highlights from the fourth quarter related to our profitability priorities include:
- Ongoing improvement of operating costs: Executed initiatives, including vendor, partner, and contract negotiations, to increase our operating leverage and improve profitability. We also took additional action in the first quarter of 2024 to further optimize our operating costs and expense structure, including the reduction of our headquarters lease footprint and optimization of our fulfillment network footprint.
__________________ |
||
5 |
For each product sold on our website, |
Full Year 2023 Financial Results
Net revenue of
Gross margin of 53.0%, up 490 basis points year-over-year driven by the full year impact of the online order related fees that we began charging in the fourth quarter of 2022, a decrease in lower margin first orders, and sell-through of previously reserved for inventory.
Operating Expenses of
Net loss margin of (16.7%), an improvement of 1,060 basis points year-over-year.
Adjusted EBITDA margin6 of (3.5%), an improvement of 2,130 basis points year-over-year.
Plastic Intensity of 1.10 pounds of plastic per
_________________ |
||
6 |
Adjusted EBITDA margin is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a description of adjusted EBITDA and a reconciliation of adjusted EBITDA to net loss in the table at the end of this press release. |
Financial Outlook:
Chief Financial Officer
Grove is providing the following guidance:
For the 12-month period ending
-
Net revenue of
$215 to$225 million , and - Adjusted EBITDA margin of 0.0% to 1.0%
Conference Call Information:
The Company will host an investor conference call and webcast to review these financial results at
About
Launched in 2016 as a
Every product Grove offers — from its flagship brand of sustainably powerful home care essentials,
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 our delivering profitable revenue growth in the second half of 2024, our expectation that we will be Adjusted EBITDA positive in 2024 and the momentum will continue in 2025, our plan to be growing and profitable in 2025, our balancing advertising efficiency and profitability, changes in 2023 setting us up for 2024, our first quarter 2024 revenue, and our 2024 guidance for Net revenue and Adjusted EBITDA margin. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. The forward-looking statements contained in this press release are based on our current expectations and beliefs in light of our experience and perception of historical trends, current conditions and expected future developments and their potential effects on the Company as well as other factors we believe are appropriate under 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 business, market, financial, political and legal conditions; legal and regulatory matters and developments, risks relating to the uncertainty of the projected financial information; our ability to successfully expand our business; competition; the uncertain effects of the COVID-19 pandemic; risks relating to inflation and interest rates; effectiveness of our ecommerce platform and selling efforts; demand for our products and other brands that we sell and those factors discussed in documents we have 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 income (loss), adjusted to exclude: stock-based compensation expense; depreciation and amortization; remeasurement of convertible preferred stock warrant liability; changes in fair values of derivative liabilities; transaction costs allocated to derivative liabilities upon closing of the transaction where we became a publicly traded company; interest income; interest expense; restructuring and severance related costs; loss on extinguishment of debt; provision for income taxes and certain litigation and legal settlement expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net revenue. Because Adjusted EBITDA excludes these elements that are otherwise included in our GAAP financial results, this measure has limitations when compared to net loss determined in accordance with GAAP. Further, Adjusted EBITDA is not necessarily comparable to similarly titled measures used by other companies. For these reasons, investors should not consider Adjusted EBITDA in isolation from, or as a substitute for, net loss determined in accordance with GAAP.
Consolidated Balance Sheets (In thousands, except share and per share amounts) |
|||||||
|
|
||||||
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
86,411 |
|
|
$ |
81,084 |
|
Restricted cash |
|
5,650 |
|
|
|
11,950 |
|
Inventory, net |
|
28,776 |
|
|
|
44,132 |
|
Prepaid expenses and other current assets |
|
3,359 |
|
|
|
4,844 |
|
Total current assets |
|
124,196 |
|
|
|
142,010 |
|
Restricted cash |
|
2,802 |
|
|
|
2,951 |
|
Property and equipment, net |
|
11,625 |
|
|
|
14,530 |
|
Operating lease right-of-use assets |
|
9,612 |
|
|
|
12,362 |
|
Other long-term assets |
|
2,507 |
|
|
|
2,192 |
|
Total assets |
$ |
150,742 |
|
|
$ |
174,045 |
|
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
8,074 |
|
|
$ |
10,712 |
|
Accrued expenses |
|
16,020 |
|
|
|
31,354 |
|
Deferred revenue |
|
7,154 |
|
|
|
10,878 |
|
Operating lease liabilities, current |
|
3,489 |
|
|
|
3,705 |
|
Other current liabilities |
|
306 |
|
|
|
249 |
|
Debt, current |
|
— |
|
|
|
575 |
|
Total current liabilities |
|
35,043 |
|
|
|
57,473 |
|
Debt, noncurrent |
|
71,662 |
|
|
|
60,620 |
|
Operating lease liabilities, noncurrent |
|
14,404 |
|
|
|
16,192 |
|
Derivative liabilities |
|
11,511 |
|
|
|
13,227 |
|
Total liabilities |
|
132,620 |
|
|
|
147,512 |
|
Commitments and contingencies |
|
|
|
||||
Redeemable convertible preferred stock |
|
10,000 |
|
|
|
— |
|
Stockholders’ equity: |
|
|
|
||||
Common stock |
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
629,208 |
|
|
|
604,387 |
|
Accumulated deficit |
|
(621,090 |
) |
|
|
(577,858 |
) |
Total stockholders’ equity |
|
8,122 |
|
|
|
26,533 |
|
Total liabilities, redeemable convertible preferred stock and stockholders’ equity |
$ |
150,742 |
|
|
$ |
174,045 |
|
Consolidated Statements of Operations (In thousands, except share and per share amounts) |
|||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
||||||||
Revenue, net |
$ |
59,857 |
|
|
$ |
74,036 |
|
|
$ |
259,278 |
|
|
$ |
321,527 |
|
Cost of goods sold |
|
27,295 |
|
|
|
39,245 |
|
|
|
121,919 |
|
|
|
166,875 |
|
Gross profit |
|
32,562 |
|
|
|
34,791 |
|
|
|
137,359 |
|
|
|
154,652 |
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Advertising |
|
3,900 |
|
|
|
6,910 |
|
|
|
21,292 |
|
|
|
66,269 |
|
Product development |
|
4,555 |
|
|
|
4,576 |
|
|
|
16,401 |
|
|
|
22,503 |
|
Selling, general and administrative |
|
32,050 |
|
|
|
51,703 |
|
|
|
134,929 |
|
|
|
206,863 |
|
Operating loss |
|
(7,943 |
) |
|
|
(28,398 |
) |
|
|
(35,263 |
) |
|
|
(140,983 |
) |
|
|
|
|
|
|
|
|
||||||||
Interest expense |
|
4,159 |
|
|
|
2,767 |
|
|
|
16,077 |
|
|
|
9,685 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
4,663 |
|
|
|
— |
|
|
|
4,663 |
|
Changes in fair value of derivative liabilities |
|
(1,514 |
) |
|
|
(22,383 |
) |
|
|
(216 |
) |
|
|
(71,532 |
) |
Other expense (income), net |
|
(1,113 |
) |
|
|
(781 |
) |
|
|
(7,930 |
) |
|
|
3,862 |
|
Interest and other expense (income), net |
|
1,532 |
|
|
|
(15,734 |
) |
|
|
7,931 |
|
|
|
(53,322 |
) |
Loss before provision for income taxes |
|
(9,475 |
) |
|
|
(12,664 |
) |
|
|
(43,194 |
) |
|
|
(87,661 |
) |
Provision for income taxes |
|
10 |
|
|
|
19 |
|
|
|
38 |
|
|
|
54 |
|
Net loss |
$ |
(9,485 |
) |
|
$ |
(12,683 |
) |
|
$ |
(43,232 |
) |
|
$ |
(87,715 |
) |
Less: Accretion on redeemable convertible preferred stock |
|
19 |
|
|
|
— |
|
|
|
(957 |
) |
|
|
— |
|
Less: Accumulated dividends on redeemable convertible preferred stock |
|
(150 |
) |
|
|
— |
|
|
|
(233 |
) |
|
|
— |
|
Net loss attributable to common stockholders, basic and diluted |
$ |
(9,616 |
) |
|
$ |
(12,683 |
) |
|
$ |
(44,422 |
) |
|
$ |
(87,715 |
) |
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(0.27 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.28 |
) |
|
$ |
(4.85 |
) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
|
35,893,031 |
|
|
|
32,412,045 |
|
|
|
34,797,582 |
|
|
|
18,101,407 |
|
Consolidated Statements of Cash Flows (In thousands) |
|||||||
|
Year Ended |
||||||
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
|
||||
Cash Flows from Operating Activities |
|
|
|
||||
Net loss |
$ |
(43,232 |
) |
|
$ |
(87,715 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Remeasurement of convertible preferred stock warrant liability |
|
— |
|
|
|
(1,616 |
) |
Stock-based compensation |
|
15,513 |
|
|
|
45,660 |
|
Depreciation and amortization |
|
5,824 |
|
|
|
5,716 |
|
Changes in fair value of derivative liabilities |
|
(216 |
) |
|
|
(71,532 |
) |
(Reduction of) transaction costs allocated to derivative liabilities upon Business Combination |
|
(3,745 |
) |
|
|
6,873 |
|
Non-cash interest expense |
|
3,833 |
|
|
|
586 |
|
Inventory reserve |
|
372 |
|
|
|
7,036 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
4,663 |
|
Asset impairment charges |
|
2,495 |
|
|
|
5,300 |
|
Other non-cash expenses |
|
135 |
|
|
|
274 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Inventory |
|
14,984 |
|
|
|
3,285 |
|
Prepaids and other assets |
|
1,672 |
|
|
|
3,114 |
|
Accounts payable |
|
(2,574 |
) |
|
|
(10,518 |
) |
Accrued expenses |
|
2,216 |
|
|
|
(5,004 |
) |
Deferred revenue |
|
(3,724 |
) |
|
|
(389 |
) |
Operating lease right-of-use assets and liabilities |
|
(1,603 |
) |
|
|
(130 |
) |
Other liabilities |
|
57 |
|
|
|
(1,864 |
) |
Net cash used in operating activities |
|
(7,993 |
) |
|
|
(96,261 |
) |
|
|
|
|
||||
Cash Flows from Investing Activities |
|
|
|
||||
Purchase of property and equipment |
|
(2,985 |
) |
|
|
(4,222 |
) |
Net cash used in investing activities |
|
(2,985 |
) |
|
|
(4,222 |
) |
|
|
|
|
||||
Cash Flows from Financing Activities |
|
|
|
||||
Proceeds from issuance of common stock upon Closing of Business Combination |
|
— |
|
|
|
97,100 |
|
Proceeds from the issuance of common stock |
|
— |
|
|
|
4,924 |
|
Proceeds from issuance of redeemable convertible preferred stock, convertible common stock, and common stock warrants |
|
10,000 |
|
|
|
27,500 |
|
Payment of transaction costs related to the Closing of the Business Combination, the ELOC Agreement and convertible preferred stock issuance costs |
|
(4,555 |
) |
|
|
(6,558 |
) |
Proceeds from the issuance of debt |
|
7,500 |
|
|
|
70,820 |
|
Payment of debt issuance costs |
|
(925 |
) |
|
|
(2,463 |
) |
Repayment of debt |
|
(575 |
) |
|
|
(5,180 |
) |
Payment of debt upon extinguishment |
|
— |
|
|
|
(66,034 |
) |
Net proceeds (payments) related to stock-based award activities |
|
(1,589 |
) |
|
|
(2,017 |
) |
Net cash provided by financing activities |
|
9,856 |
|
|
|
118,092 |
|
|
|
|
|
||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
(1,122 |
) |
|
|
17,609 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
95,985 |
|
|
|
78,376 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
94,863 |
|
|
|
95,985 |
|
Non-GAAP Financial Measures (Unaudited) (In thousands) |
|||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net Loss to Adjusted EBITDA |
|
||||||||||||||
Net loss |
$ |
(9,485 |
) |
|
$ |
(12,683 |
) |
|
$ |
(43,232 |
) |
|
$ |
(87,715 |
) |
Stock-based compensation |
|
3,572 |
|
|
|
11,312 |
|
|
|
15,513 |
|
|
|
45,660 |
|
Depreciation and amortization |
|
1,465 |
|
|
|
1,425 |
|
|
|
5,824 |
|
|
|
5,716 |
|
Remeasurement of convertible preferred stock warrant liability |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,616 |
) |
Changes in fair value of derivative liabilities |
|
(1,514 |
) |
|
|
(22,383 |
) |
|
|
(216 |
) |
|
|
(71,532 |
) |
(Reduction of) transaction costs allocated to derivative liabilities upon Business Combination |
|
— |
|
|
|
— |
|
|
|
(3,745 |
) |
|
|
6,873 |
|
Interest income |
|
(1,148 |
) |
|
|
(521 |
) |
|
|
(3,773 |
) |
|
|
(521 |
) |
Interest expense |
|
4,159 |
|
|
|
2,767 |
|
|
|
16,077 |
|
|
|
9,685 |
|
Restructuring expenses |
|
3,258 |
|
|
|
5,887 |
|
|
|
3,811 |
|
|
|
8,879 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
4,663 |
|
|
|
— |
|
|
|
4,663 |
|
Provision for income taxes |
|
10 |
|
|
|
19 |
|
|
|
38 |
|
|
|
54 |
|
Litigation and legal settlement expenses |
|
(180 |
) |
|
|
— |
|
|
|
520 |
|
|
|
— |
|
Total Adjusted EBITDA |
$ |
137 |
|
|
$ |
(9,514 |
) |
|
$ |
(9,183 |
) |
|
$ |
(79,854 |
) |
Net loss margin |
|
(15.8 |
) % |
|
|
(17.1 |
) % |
|
|
(16.7 |
) % |
|
|
(27.3 |
) % |
Adjusted EBITDA margin |
|
0.2 |
% |
|
|
(12.9 |
) % |
|
|
(3.5 |
) % |
|
|
(24.8 |
) % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240306681855/en/
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