Grove Announces First Quarter 2024 Financial Results
-
First Quarter 2024 Adjusted EBITDA of
$1.9 million , Adjusted EBITDA margin of 3.5% -
Launched Grove Co. rebrand alongside new Ready-to-Use Hand Soap, Dish Soap and Liquid Laundry Detergent -
Completed headquarters lease restructuring; more than
$5M of cash savings throughMay 2027 - Maintains full year 2024 Revenue and Adjusted EBITDA Guidance
Grove Collaborative’s first quarter 2024 financial results include several milestones for the Company, including its third consecutive quarter of positive Adjusted EBITDA, demonstrating continued progress on overall profitability while laying the groundwork for the business transformation to drive top line growth.
“This quarter’s results show the early benefits of our continued focus on profitability alongside our focus on being the trusted brand for conscientious customers who are seeking high-performing, planet-friendly products. But I want to emphasize this is just the beginning of our transformation,” said
First Quarter 2024 Financial Results
Revenue, Net was
Gross Margin was 55.5%, improving 110 basis points from the fourth quarter of 2023 and 350 basis points year-over-year. The sequential improvement was mostly due to an increase in estimate to Grove’s vendor funding allowance to better reflect the sell-through of third party inventory. The year-over-year improvement was further benefited by the sell-through of previously reserved-for inventory and a decrease in discounts resulting from fewer first orders, which are more heavily discounted on average.
Operating Expenses were
Net Loss was
Adjusted EBITDA
2
was positive
Cash, Cash equivalents, and Restricted Cash was
First Quarter 2024 Key Business Highlights:
|
Three Months Ended |
||||||
(in thousands, except DTC Net Revenue Per Order and percentages) |
2024 |
|
2023 |
||||
Financial and Operating Data |
|
|
|
||||
Grove Brands % Net Revenue |
|
43 |
% |
|
|
49 |
% |
DTC Total Orders |
|
773 |
|
|
|
1,097 |
|
DTC Active Customers |
|
807 |
|
|
|
1,241 |
|
DTC Net Revenue Per Order |
$ |
66 |
|
|
$ |
62 |
|
Grove Brands % of Net Revenue was 43.0% in the first quarter of 2024, down 150 basis points quarter-over-quarter and 580 basis points year-over-year. The sequential and year-over-year declines were largely due to the expansion of the Company’s third party product offering, especially as it relates to the Health and Wellness category, fewer first orders, which have more Grove branded items on average, and the Company’s recent transformation of the customer experience on its ecommerce platform.
Direct to Consumer (DTC) Total Orders totaled 0.8 million, down 10.5%, quarter-over-quarter and 29.5% year-over-year. The year-over-year and sequential declines resulted from lower advertising spend.
DTC Active Customers, the number of customers that have placed an order in the trailing twelve months, totaled 0.8 million, down 12.3% quarter-over-quarter and 35.0% year-over-year. Similarly, the year-over-year and sequential declines were due to lower advertising spend.
DTC Net Revenue Per Order was
First Quarter 2024 Operational Highlights
Key operational highlights related to the Company’s strategic pillars:
-
Customers: Highlights related to customer priorities include:
- Growth Model and Experience Updates: The Company began rebuilding the front end of its ecommerce platform by removing default subscriptions, eliminating gated email access, and creating a program for customers to subscribe and save when purchasing individual products. The launch of the new customer experience in
February 2024 initially led to a reduction in new customer conversion, but has subsequently improved as the new customer experience has been optimized. As first order conversion, repeat order rates, and paybacks improve, the Company plans to spend more on advertising. - Third Party Category and Selection Expansion: The number of third party products offered by the Company increased 34% year-over-year. Customers have received the Company’s increased offering of health & wellness products positively, and as a result, the Company plans to curate planet-first products relevant to the conscientious customer.
Grove Co. Product Innovation: The company executed aGrove Co. rebrand leveraging sustainable aluminum packaging and launched a ready-to-use assortment ofGrove Co. Hand Soap, Dish Soap, and Liquid Laundry Detergent to offer more accessible entry points that don’t require the purchase of a durable dispenser. Other new products included Rooted Beauty byGrove Co. Facial Wipes and new fragrances throughout the portfolio including Sunshower, Fresh Pomelo, Wild Mint, and Sea Spray. OnMay 1 , the Company launched its Summer Limited Edition Collection withThe Nature Conservancy to celebrate Grove’s ongoing partnership withThe Nature Conservancy and the partnership’s conservation efforts in the Tongas rainforest region.
- Growth Model and Experience Updates: The Company began rebuilding the front end of its ecommerce platform by removing default subscriptions, eliminating gated email access, and creating a program for customers to subscribe and save when purchasing individual products. The launch of the new customer experience in
-
Sustainability: Highlights related to sustainability priorities include:
- Plastic Intensity3: Plastic intensity across the entire Grove business (across all online and retail sales) was 1.08 pounds of plastic per
$100 in net revenue in the first quarter of 2024, roughly flat to 1.07 pounds in the fourth quarter of 2023, but down from 1.12 pounds in the first quarter of 2023. More details on Grove’s plastic intensity can be found in the Company’s sustainability report, which the Company plans to publish in the second half ofMay 2024 . - Earth Month Celebration: For Earth month 2024 throughout April, the Company announced key sustainability program updates and
Grove Co. innovation updates. Among these efforts, the Company began using paper tape packaging to further reduce plastic usage, launched a digital campaign titled “Perfect Isn’t Sustainable, Progress Is,” and celebrated core partners, including rePurpose Global, 5 Gyres, andThe Nature Conservancy .
- Plastic Intensity3: Plastic intensity across the entire Grove business (across all online and retail sales) was 1.08 pounds of plastic per
-
Profitability: Highlights related to profitability priorities include:
- Continued Improvement of Operating Costs: Executed initiatives, including vendor, partner, and contract negotiations, to increase operating leverage and improve profitability. The Company also finalized a new, reduced lease for its San Francisco Headquarters space, and announced the forthcoming closure of its fulfillment center in
St. Peters, MO by the end of May to streamline operations and improve overall fulfillment efficiency.
- Continued Improvement of Operating Costs: Executed initiatives, including vendor, partner, and contract negotiations, to increase operating leverage and improve profitability. The Company also finalized a new, reduced lease for its San Francisco Headquarters space, and announced the forthcoming closure of its fulfillment center in
Financial Outlook:
Chief Financial Officer
Despite the uncertainty noted above, the Company is maintaining the following guidance for the full fiscal year 2024:
-
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,
_______________ |
1 Direct to Consumer is defined as orders through the Grove website and mobile application. |
2 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. See “Non-GAAP Financial Measures” for a description of Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to net loss and net loss margin in the table at the end of this press release. |
3 Grove defines plastic intensity as pounds of plastic used per |
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 long term profitability and growth, continued improvements in Grove’s first order conversion rate and long term strategy to efficiently acquire new customers, revenue growth in the second half of 2024, delivering positive Adjusted EBITDA for 2024, future increases in marketing spend, third party product expansion, the focus on use of cash and efficient returns on its use and Grove’s 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 Grove’s current expectations and beliefs in light of the Company’s experience and perception of historical trends, current conditions and expected future developments and their potential effects on the Company as well as other factors believed to be appropriate under the circumstances. There can be no assurance that future developments affecting the Company will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s 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; Grove’s ability to successfully expand their business; competition; the uncertain effects of the COVID-19 pandemic; risks relating to inflation and interest rates; effectiveness of the Company’s ecommerce platform and selling efforts; demand for Grove products and other brands that sold and those factors discussed in documents 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
Grove calculates Adjusted EBITDA as net income (loss), adjusted to exclude: stock-based compensation expense; depreciation and amortization; changes in fair values of derivative liabilities; transaction costs allocated to derivative liabilities upon closing of the transaction where Grove became a publicly traded company; interest income; interest expense; restructuring and severance related costs; provision for income taxes and certain litigation and legal settlement expenses. Grove defines Adjusted EBITDA Margin as Adjusted EBITDA divided by net revenue. Because Adjusted EBITDA excludes these elements that are otherwise included in 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) |
|||||||
|
2 024 |
|
2 023 |
||||
|
(Unaudited) |
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
77,757 |
|
|
$ |
86,411 |
|
Restricted cash |
|
3,325 |
|
|
|
5,650 |
|
Inventory, net |
|
31,451 |
|
|
|
28,776 |
|
Prepaid expenses and other current assets |
|
3,422 |
|
|
|
3,359 |
|
Total current assets |
|
115,955 |
|
|
|
124,196 |
|
Restricted cash |
|
502 |
|
|
|
2,802 |
|
Property and equipment, net |
|
10,008 |
|
|
|
11,625 |
|
Operating lease right-of-use assets |
|
9,043 |
|
|
|
9,612 |
|
Other long-term assets |
|
2,355 |
|
|
|
2,507 |
|
Total assets |
$ |
137,863 |
|
|
$ |
150,742 |
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
8,200 |
|
|
$ |
8,074 |
|
Accrued expenses |
|
11,939 |
|
|
|
16,020 |
|
Deferred revenue |
|
6,569 |
|
|
|
7,154 |
|
Operating lease liabilities, current |
|
1,703 |
|
|
|
3,489 |
|
Other current liabilities |
|
482 |
|
|
|
306 |
|
Total current liabilities |
|
28,893 |
|
|
|
35,043 |
|
Debt, noncurrent |
|
72,533 |
|
|
|
71,662 |
|
Operating lease liabilities, noncurrent |
|
7,610 |
|
|
|
14,404 |
|
Derivative liabilities |
|
11,313 |
|
|
|
11,511 |
|
Total liabilities |
|
120,349 |
|
|
|
132,620 |
|
Commitments and contingencies (Note 6) |
|
|
|
||||
Redeemable convertible preferred stock, |
|
10,000 |
|
|
|
10,000 |
|
|
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Common stock - |
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
631,991 |
|
|
|
629,208 |
|
Accumulated deficit |
|
(624,481 |
) |
|
|
(621,090 |
) |
Total stockholders’ equity |
|
7,514 |
|
|
|
8,122 |
|
Total liabilities, redeemable convertible preferred stock and stockholders’ equity |
$ |
137,863 |
|
|
$ |
150,742 |
|
Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share amounts) |
|||||||
|
Three Months Ended M arch 31, |
||||||
|
2024 |
|
2023 |
||||
Revenue, net |
$ |
53,545 |
|
|
$ |
71,565 |
|
Cost of goods sold |
|
23,805 |
|
|
|
34,310 |
|
Gross profit |
|
29,740 |
|
|
|
37,255 |
|
|
|
|
|
||||
Operating expenses: |
|
|
|
||||
Advertising |
|
2,053 |
|
|
|
8,673 |
|
Product development |
|
3,626 |
|
|
|
4,216 |
|
Selling, general and administrative |
|
24,594 |
|
|
|
38,021 |
|
Operating loss |
|
(533 |
) |
|
|
(13,655 |
) |
|
|
|
|
||||
Non-operating expenses: |
|
|
|
||||
Interest expense |
|
4,129 |
|
|
|
3,729 |
|
Changes in fair value of derivative liabilities |
|
(198 |
) |
|
|
292 |
|
Other income, net |
|
(1,083 |
) |
|
|
(4,617 |
) |
Total non-operating expenses (income), net |
|
2,848 |
|
|
|
(596 |
) |
Loss before provision for income taxes |
|
(3,381 |
) |
|
|
(13,059 |
) |
Provision for income taxes |
|
10 |
|
|
|
10 |
|
Net loss |
$ |
(3,391 |
) |
|
$ |
(13,069 |
) |
Less: Accumulated dividends on redeemable convertible preferred stock |
|
(150 |
) |
|
|
— |
|
Net loss attributable to common stockholders, basic and diluted |
$ |
(3,541 |
) |
|
$ |
(13,069 |
) |
Net loss per share attributable to common stockholders, basic and diluted |
$ |
(0.10 |
) |
|
$ |
(0.39 |
) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
|
36,262,917 |
|
|
|
33,747,855 |
|
Consolidated Statements of Cash Flows (Unaudited) (In thousands) |
|||||||
|
Three Months Ended
|
||||||
|
2024 |
|
2023 |
||||
Cash Flows from Operating Activities |
|
|
|
||||
Net loss |
$ |
(3,391 |
) |
|
$ |
(13,069 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Gain on lease modification |
|
(3,139 |
) |
|
|
— |
|
Stock-based compensation expense |
|
3,113 |
|
|
|
4,893 |
|
Depreciation and amortization |
|
2,201 |
|
|
|
1,448 |
|
Changes in fair value of derivative liabilities |
|
(198 |
) |
|
|
292 |
|
Reduction in transaction costs allocated to derivative liabilities upon Business Combination |
|
— |
|
|
|
(3,745 |
) |
Non-cash interest expense |
|
961 |
|
|
|
948 |
|
Inventory reserve |
|
(505 |
) |
|
|
124 |
|
Other non-cash expenses |
|
— |
|
|
|
77 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Inventory |
|
(2,170 |
) |
|
|
3,078 |
|
Prepaids and other assets |
|
(14 |
) |
|
|
(828 |
) |
Accounts payable |
|
125 |
|
|
|
1,554 |
|
Accrued expenses |
|
(4,082 |
) |
|
|
162 |
|
Deferred revenue |
|
(585 |
) |
|
|
(1,726 |
) |
Operating lease right-of-use assets and liabilities |
|
(4,872 |
) |
|
|
(261 |
) |
Other liabilities |
|
176 |
|
|
|
316 |
|
Net cash used in operating activities |
|
(12,380 |
) |
|
|
(6,737 |
) |
|
|
|
|
||||
Cash Flows from Investing Activities |
|
|
|
||||
Purchase of property and equipment |
|
(518 |
) |
|
|
(784 |
) |
Net cash used in investing activities |
|
(518 |
) |
|
|
(784 |
) |
|
|
|
|
||||
Cash Flows from Financing Activities |
|
|
|
||||
Payment of transaction costs related to the Business Combination |
|
— |
|
|
|
(4,150 |
) |
Proceeds from issuance of debt |
|
— |
|
|
|
7,500 |
|
Payment of debt issuance costs |
|
— |
|
|
|
(837 |
) |
Repayment of debt |
|
— |
|
|
|
(235 |
) |
Payments related to stock-based award activities |
|
(381 |
) |
|
|
(288 |
) |
Net cash (used in) provided by financing activities |
|
(381 |
) |
|
|
1,990 |
|
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash |
|
(13,279 |
) |
|
|
(5,531 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
94,863 |
|
|
|
95,985 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
81,584 |
|
|
$ |
90,454 |
|
Non-GAAP Financial Measures (Unaudited) (In thousands) |
|||||||
|
Three Months Ended
|
||||||
|
2024 |
|
2023 |
||||
Reconciliation of Net Loss to Adjusted EBITDA |
|
||||||
Revenue |
$ |
53,545 |
|
|
$ |
71,565 |
|
Net loss |
$ |
(3,391 |
) |
|
$ |
(13,069 |
) |
Stock-based compensation |
|
3,113 |
|
|
|
4,893 |
|
Depreciation and amortization |
|
2,201 |
|
|
|
1,448 |
|
Changes in fair value of derivative liabilities |
|
(198 |
) |
|
|
292 |
|
Reduction in transaction costs allocated to derivative liabilities upon Business Combination |
|
— |
|
|
|
(3,745 |
) |
Interest income |
|
(1,086 |
) |
|
|
(424 |
) |
Interest expense |
|
4,129 |
|
|
|
3,729 |
|
Restructuring and severance related costs |
|
(2,885 |
) |
|
|
46 |
|
Provision for income taxes |
|
10 |
|
|
|
10 |
|
Total Adjusted EBITDA |
$ |
1,893 |
|
|
$ |
(6,820 |
) |
Net loss margin |
|
(6.3 |
)% |
|
|
(18.3 |
)% |
Adjusted EBITDA margin (loss) |
|
3.5 |
% |
|
|
(9.5 |
)% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514643253/en/
Investor Relations Contact
ir@grove.co
Media Relations Contact
Ryan.Zimmerman@grove.co
Source: