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Purple Innovation Inc

Purple Innovation Reports First Quarter 2025 Results; Reaffirms 2025 Guidance

Exceeded Q1 Adjusted EBITDA Target; Delivered Q1 Sales Consistent with Guidance

GAAP Gross Margin of 39.4% in Q1; Adjusted Gross Margin Above 40% for Fourth Consecutive Quarter

LEHI, Utah , May 6, 2025 /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 first quarter ended March 31, 2025.

"Our first quarter performance reflects continued progress against our strategic priorities to stabilize and strengthen the business, and position Purple for long-term success," said Rob DeMartini, CEO of Purple Innovation. "Revenue was in line with expectations, led by positive showroom growth, while continued improvement in gross margin and cost control drove Adjusted EBITDA ahead of guidance."

DeMartini continued, "As we move forward, our focus is on unlocking growth through continued innovation, including the full rollout of our Rejuvenate 2.0 collection, promoting our unique Gel Grid differentiation, and further optimizing our operations. Though the current economic environment remains uncertain, including the evolving impact of tariffs, we believe the structural improvements we have achieved, and investments we have made across innovation and partnership expansion, position us to navigate near-term pressures and deliver sustained growth over time."

First Quarter 2025 Financial Results
First quarter 2025 net revenue declined by 13.2% to $104.2 million, compared to $120.0 million in the first quarter of 2024, reflecting the impact of persistent macroeconomic challenges and reduced demand in our wholesale and ecommerce channels.

Gross profit for the first quarter decreased slightly to $41.0 million, compared to $41.7 million in the prior-year period. GAAP gross margin improved to 39.4%, an increase of 460 basis points year-over- year. Adjusted gross margin, which excludes restructuring and related charges, expanded to 40.3%, an improvement of 550 basis points year-over-year, driven by ongoing strategic sourcing efforts, production efficiencies, and the successful integration of our consolidated manufacturing operations.

Operating expenses for the first quarter were $55.5 million, down 14.4% from $64.9 million in the first quarter 2024. This improvement was primarily driven by headcount reductions from our restructuring efforts and the in-sourcing of certain functions in marketing and finance.

Net loss attributable to Purple Innovation, Inc. for the first quarter was ($19.1) million, an improvement from $(50.2) million in the prior year.

Adjusted EBITDA for the first quarter was $(4.7) million, a significant improvement compared to $(13.2) million last year, driven by ongoing improvements in gross margin and well-managed expenses.

Balance Sheet 
As of March 31, 2025, the Company had cash and cash equivalents of $21.6 million compared to $29.0 million as of December 31, 2024.

Inventories as of March 31, 2025 totaled $60.2 million, down 16.5% compared to March 31, 2024, and an increase of 5.8% compared to December 31, 2024.

2025 Outlook 
The Company is reiterating its 2025 outlook for full year revenue to be in the range of $465 to $485 million and adjusted EBITDA in the range of flat to positive $10 million. This guidance incorporates expected revenue and EBITDA contributions from expanded wholesale distribution in the second half of the year, and anticipated impacts from recently announced tariffs. Given the ongoing uncertainty around timing and scope of the tariffs, the Company's outlook remains subject to change.

Mattress Firm Update
Today, the Company announced a significant expansion of its commercial partnership with Mattress Firm, through an agreement with Somnigroup International, Inc. Under the terms of this multifaceted agreement, Purple will more than double its retail footprint in Mattress Firm stores nationwide through the second half of 2025, from approximately 5,000 mattress slots to a minimum of 12,000 mattress slots. The agreement also expands the existing strategic supply relationship with Tempur Sherwood, LLC, a subsidiary of Tempur Sealy, which will have the exclusive right to assemble certain product lines that Purple sells to Mattress Firm. Purple will maintain production of its proprietary grid technology and retain all related intellectual property. These expanded partnerships are a clear endorsement of Purple's product differentiation and brand strength, and enable further investment in driving innovation, brand visibility, and top-line growth.

Term Loan Amendment
Subsequent to quarter-end, Purple successfully borrowed an incremental $20 million through an amendment to its Term Loan. These funds will support the ramp-up of one-time rollout costs and inventory production associated with the new, expanded distribution agreement with Mattress Firm. The additional capital also provides a financial cushion to help navigate ongoing market uncertainty.

Conference Call and Webcast Information
 Purple Innovation, Inc. will host a live conference call to discuss financial results today, May 6, 2025 at 4:30 p.m. Eastern Time. To access the call dial 800-715-9871 (domestic) or 646-307-1963 (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 55 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 statements include, but are not limited to, statements regarding our innovation pipeline, the timing of new product collection launches, our ability to improve profitability and optimize our business, and the future expansion of and benefits to us from our commercial relationships with Somnigroup International, Inc. 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 14, 2025, 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 gross margin, 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 full year 2025, 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 par value)










March 31,
2025



December 31,
2024


Assets









Current assets:









     Cash and cash equivalents


$

21,627



$

29,011


     Accounts receivable, net



24,388




33,057


     Inventories



60,177




56,863


     Prepaid expenses



5,582




6,023


     Other current assets



1,627




1,414


Total current assets



113,401




126,368


Property and equipment, net



90,433




93,874


Operating lease right-of-use assets



77,817




75,516


Intangible assets, net



8,215




8,890


Other long-term assets



3,906




3,197


Total assets


$

293,772



$

307,845











Liabilities and Stockholders' Equity









Current liabilities:









     Accounts payable


$

32,356



$

40,639


     Accrued compensation



7,445




9,415


     Customer prepayments



3,726




6,411


     Accrued rebates and allowances



6,159




10,013


     Accrued warranty liabilities – current portion



7,351




6,114


     Operating lease obligations – current portion



15,904




15,661


     Other current liabilities



10,672




12,750


Total current liabilities



83,613




101,003


Related party debt



72,737




55,394


Accrued warranty liabilities, net of current portion



24,367




26,091


Operating lease obligations, net of current portion



88,281




87,072


Warrant liabilities



21,414




16,067


Other long-term liabilities



2,030




2,009


Total liabilities



292,442




287,636


Commitments and contingencies (Note 13)









Stockholders' equity:









     Class A common stock; $0.0001 par value, 210,000 shares authorized; 107,955
      issued and outstanding at March 31, 2025 and 107,545 issued and outstanding at
      December 31, 2024



11




11


     Class B common stock; $0.0001 par value, 90,000 shares authorized; 165 issued and
      outstanding at March 31, 2025 and at December 31, 2024



—




—


     Additional paid-in capital



594,332




594,053


     Accumulated deficit



(593,003)




(573,866)


Total stockholders' equity attributable to Purple Innovation, Inc.



1,340




20,198


     Noncontrolling interest



(10)




11


Total stockholders' equity



1,330




20,209


Total liabilities and stockholders' equity


$

293,772



$

307,845


 

PURPLE INNOVATION, INC.

Condensed Consolidated Statements of Income

(unaudited - in thousands, except per share amounts)







Three Months Ended
March 31,




2025



2024


Revenues, net


$

104,171



$

120,033


Cost of revenues:









     Cost of revenues



62,207




78,313


     Cost of revenues - restructuring related charges



918




—


Total cost of revenues



63,125




78,313


Gross profit



41,046




41,720


Operating expenses:









     Marketing and sales



36,626




41,462


     General and administrative



14,487




19,728


     Research and development



2,452




3,666


     Restructuring, impairment and other related charges



1,960




—


Total operating expenses



55,525




64,856


Operating loss



(14,479)




(23,136)


Other income (expense):









     Interest expense



(4,764)




(4,474)


     Other income, net



69




4,394


     Gain (loss) on extinguishment of debt



—




(3,394)


     Change in fair value – warrant liabilities



49




(23,599)


Total other income (expense), net



(4,646)




(27,073)


Net loss before income taxes



(19,125)




(50,209)


     Income tax expense



(41)




(59)


Net loss



(19,166)




(50,268)


     Net loss attributable to noncontrolling interest



(29)




(51)


Net loss attributable to Purple Innovation, Inc.


$

(19,137)



$

(50,217)











Net loss per share:









     Basic


$

(0.18)



$

(0.47)


     Diluted


$

(0.18)



$

(0.47)











Weighted average common shares outstanding:









     Basic



107,596




106,022


     Diluted



107,596




106,022


 

PURPLE INNOVATION, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)







Three Months Ended
March 31,




2025



2024


Cash flows from operating activities:









     Net loss


$

(19,166)



$

(50,268)











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









     Depreciation and amortization



5,050




6,382


     Non-cash interest



2,120




1,563


     Paid-in-kind interest



2,789




1,850


     Non-cash restructuring, impairment and other related charges



635




—


     Loss on extinguishment of debt



—




3,394


     Loss on disposal of property and equipment



88




112


     Change in fair value – warrant liabilities



(49)




23,599


     Stock-based compensation



368




492


Changes in operating assets and liabilities:









     Accounts receivable



8,669




10,060


     Inventories



(3,314)




(5,150)


     Prepaid expenses and other assets



2,229




66


     Operating leases, net



(848)




(209)


     Accounts payable



(9,701)




(7,043)


     Accrued compensation



(1,970)




4,724


     Customer prepayments



(2,685)




(1,724)


     Accrued rebates and allowances



(3,854)




(4,717)


     Accrued warranty liabilities



(487)




368


     Other accrued liabilities



(2,944)




(313)


Net cash used in operating activities



(23,070)




(16,814)











Cash flows from investing activities:









     Sale of property and equipment



258




—


     Purchase of property and equipment



(2,241)




(3,038)


     Investment in intangible assets



(161)




(62)


Net cash used in investing activities



(2,144)




(3,100)











Cash flows from financing activities:









     Proceeds from related party loan



19,000




61,000


     Payments on term loan



—




(25,000)


     Payments on revolving line of credit



—




(5,000)


     Payments for debt issuance costs



(1,170)




(3,466)


Net cash provided by financing activities



17,830




27,534











Net increase (decrease) in cash, cash equivalents and restricted cash



(7,384)




7,620


     Cash and cash equivalents, beginning of the year



29,011




26,857


     Cash and cash equivalents, end of the period


$

21,627



$

34,477











 

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 loss, and adjusted net loss per diluted share. 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 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, net, and depreciation and amortization. Adjusted EBITDA represents EBITDA excluding costs incurred due to changes in the fair value of the warrant liability, stock-based compensation expense, restructuring related charges, nonrecurring legal fees, Board special committee costs, 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

 March 31,




2025



2024









GAAP net loss


$

(19,166)




(50,268)


Interest expense



4,764




4,474


Income tax expense



41




59


Other income, net



(69)




(4,394)


Depreciation and amortization



5,050




6,382


EBITDA



(9,380)




(43,747)


Adjustments:









Change in fair value - warrant liability



(49)




23,599


Loss on extinguishment of debt



—




3,394


Stock-based compensation expense



406




492


Restructuring related charges



2,648




—


Legal fees



233




837


Board special committee fees



174




—


Executive interim and search costs



—




1,448


Severance costs



1,209




780


Showroom opening/closing costs



33




1


Adjusted EBITDA


$

(4,726)



$

(13,196)


 

Reconciliation of GAAP Gross Profit to Adjusted Gross Profit

A reconciliation of GAAP gross margin to the non-GAAP measures of adjusted gross margin is provided below. Adjusted gross profit represents net revenue less adjusted cost of revenue. Adjusted cost of revenues represents cost of revenues excluding restructuring charges recorded in cost of revenues. We believe adjusted gross profit 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

March 31,




2025



2024


Revenues, net


$

104,171



$

120,033











Total cost of revenues



63,125




78,313


Restructuring charges in cost of revenues



(918)




—


Adjusted cost of revenues



62,207




78,313











Adjusted gross profit


$

41,964



$

41,720


Adjusted gross profit %



40.3

%



34.8

%

 

Reconciliation of GAAP Net Loss to non-GAAP Adjusted Net Loss and Adjusted Net Loss per Diluted Share

Our presentation of adjusted net loss assumes that all net loss is attributable to Purple Innovation, Inc. (i.e. there is no allocation of net 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 loss per share, diluted, is calculated by dividing adjusted net loss 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 loss 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:

Three Months Ended
March 31,





2025



2024


Net loss


$

(19,166)



$

(50,268)


Income tax (benefit) expense, as reported



41




59


Change in fair value – warrant liabilities



(49)




23,599


Loss on extinguishment of debt



—




3,394


Restructuring related charges



2,878




—


Gain on insurance proceeds



—




(4,300)


Board special committee fees



174




—


Adjusted net loss before income taxes



(16,122)




(27,516)


Adjusted income taxes(1)



4,176




7,127


Adjusted net loss


$

(11,946)



$

(20,389)











Adjusted net income per share, diluted


$

(0.11)



$

(0.19)











Adjusted weighted-average shares outstanding, diluted(2)



107,761




106,227



(1) Represents the estimated effective tax rate of 25.9% for the three months ended March 31, 2025 and 2024, 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 income per diluted share is set forth below for the three months ended March 31, 2025 and 2024:

For the Three Months Ended




March 31, 2025



March 31, 2024




Net Loss



Weighted
Average
 Shares,
 Diluted



Net Loss
per
Share,
Diluted



Net Loss



Weighted
Average
Shares,
Diluted



Net Loss
per Share,
Diluted



























Net loss attributable to Purple
    Innovation Inc.(1)


$

(19,137)




107,596




(0.18)



$

(50,217)




106,022



$

(0.47)


Assumed exchange of shares(2)



(29)




165








(51)




205






Net loss



(19,166)












(50,268)










Adjustments to arrive at adjusted net
    loss before taxes(3)



3,044












22,752










Adjusted net loss before taxes



(16,122)












(27,516)










Adjusted income tax benefit(4)



4,176












7,127










Adjusted net loss


$

11,946




107,761




(0.11)



$

(20,389)




106,227



$

(0.19)



(1) Represents net income 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 and added in if not already included in the weighted average diluted shares. 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 March 31, 2025 and 2024, 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