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Purple Announces Financial Results & Strategic Review

March 16, 2025  by Karen Parrish in Business Strategy, Industry   

"Purple achieved a significant milestone in the fourth quarter, returning to positive Adjusted EBITDA for the first time in eight quarters and generating positive cash flow," said CEO Rob DeMartini. "This accomplishment reflects our team's disciplined execution, operational improvements, and strategic cost-saving initiatives throughout the year."

"Looking forward, we are confident the durability we structured into the business through recent cost saving initiatives and the support of the additional borrowings under our term loan will enable the continued execution of our Path to Premium strategy. We look forward to bringing new products to market from our robust innovation pipeline, including our Rejuvenate 2.0 launch in the second quarter, which we believe will build on our strong foundation and drive improved profitability."

Fourth Quarter 2024 Financial Results
Fourth quarter 2024 net revenue declined by 11.6% to $129.0 million, compared to $145.9 million in the fourth quarter of 2023, driven by continued industry softness, as well as cycling the 2023 launch of our new mattress lines.

Gross profit for the fourth quarter increased to $55.3 million, compared to $48.5 million in the prior-year period. GAAP gross margin improved significantly to 42.9%, an increase of 970 basis points. Adjusted gross margin, which excludes restructuring-related charges and launch costs in the prior year, expanded to 44.9%, an improvement of over 810 basis points year-over-year, driven by continued improvements from sourcing initiatives and profitable liquidation of inventories. The Company plans to continue its focus on driving cost savings, including through additional measures in 2025 beyond the 2024 restructuring plan.

Operating expenses for the fourth quarter were $63.0 million, down 2.6% from $64.7 million in Q4 2023. This improvement was driven by disciplined cost control and benefits of the Company's restructuring activities in the third quarter of 2024, offset partially by an increase in advertising investments.

Net loss attributable to Purple Innovation, Inc. for the fourth quarter was $(8.5) million, an improvement from $(18.3) million in the prior year.

Adjusted EBITDA for the fourth quarter was $2.9 million, a significant improvement compared to $(9.8) million last year, demonstrating the benefits of higher ticket sizes from the Company's premium sleep strategy and restructuring initiatives.

Full Year 2024 Financial Results
For the full year 2024, net revenue was $487.9 million, down 4.4% compared to $510.5 million in 2023. DTC net revenue was $283.7 million, a decrease of 4.4%, while wholesale net revenue was $204.2 million, a decrease of 4.5%, due primarily to increased industry softness and cycling the launch in 2023 of the Company's new mattress product lines.

Gross profit for the full year increased to $181.1 million, compared to $171.8 million last year. GAAP gross margin for the year improved to 37.1%, an increase of 350 basis points year-over-year. Adjusted gross margin grew to 40.3%, up 310 basis points compared to the prior year, as the Company benefited from production efficiencies and sourcing initiatives.

Full-year operating expenses declined 4.6% to $273.3 million, compared to $285.5 million in 2023, with the benefits of cost savings initiatives and lapping special committee costs from 2023 being partially offset by $20.0 million in restructuring, impairment and other related charges.

Full-year net loss attributable to Purple Innovation, Inc. was $(97.9) million, an improvement from $(120.8) million in the prior year.

Adjusted EBITDA for the full year improved significantly to $(20.8) million, compared to $(54.7) million in 2023, reflecting the Company's strategic focus on improving profitability.

Term Loan Amendment
As part of its ongoing capital management strategy, Purple borrowed an additional $19.0 million pursuant to an amendment to its existing term loan, bringing the total principal commitment to $80.0 million. As with our existing Term loan the increased amount includes the ability to PIK our interest.

Mr. DeMartini added, "We are grateful to our lenders for their continued confidence in Purple and our strategy, as demonstrated by this increased financial commitment. The additional capital will support Purple's liquidity position as we continue to invest in innovation and advertising and execute on our Path to Premium strategy."

2025 Outlook
For 2025, the Company currently expects 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. The Company expects its quarterly revenue and adjusted EBITDA performance to improve sequentially as it progresses through the year.

For the first quarter, the Company plans total revenue to be in the range of $102 to $107 million, and adjusted EBITDA in the range of $(6) to $(9) million.

Review of Strategic Alternatives
In a separate news release today, Purple announced that its Board of Directors has formed a special committee of independent directors to evaluate strategic alternatives to maximize shareholder value. The review, which was initiated following inbound expressions of interest, may include, but is not limited to, consideration of a sale, merger, or other strategic or financial transaction. There can be no assurances as to the outcome or timing of the review, or whether any particular transaction may be pursued or consummated.

Conference Call and Webcast Information
Purple Innovation, Inc. will host a live conference call to discuss financial results today, March 13, 2025, 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.