Purple Innovation (PRPL) investor relations material

Executive summary

• Q1 2026 net revenue declined 8.1% year-over-year to $95.7 million, driven by e-commerce and wholesale softness, partially offset by showroom growth and a 7% rise in showroom comps, marking the third consecutive quarter of positive comps.

• Gross profit fell 14.3% to $35.2 million, with gross margin dropping to 36.8% due to strategic floor model investments and lower production volumes.

• Operating expenses declined 6.3% to $52.0 million, reflecting cost savings, restructuring benefits, and lower advertising and employee costs, partially offset by higher strategic alternative costs.

• Net loss widened to $30.5 million from $19.1 million in Q1 2025, mainly due to lower gross margins and a $7.0 million loss from warrant liability revaluation.

• Actions taken in the prior year improved operating expenses and reinforced the business model's durability.

Financial highlights

• Net revenue for Q1 2026 was $95.7 million, down 8.1% year-over-year; excluding a $4.9 million accounting adjustment, revenue would have been $100.6 million, down 3.4%.

• Gross margin was 36.8%, impacted by strategic floor model investments and lower manufacturing absorption.

• Adjusted EBITDA was -$4.8 million, flat year-over-year.

• Adjusted Net Loss per share was $0.13, compared to $0.11 last year.

• Cash and cash equivalents ended at $25 million, with inventories at $58.1 million, down 2.7% from year-end.

Outlook and guidance

• Full-year 2026 revenue guidance updated to $465–$485 million from $500–$520 million, solely due to the accounting adjustment.

• Adjusted EBITDA guidance maintained at $20–$30 million.

• Guidance assumes no recovery in the broader market and reflects ongoing operational improvements.

• Management is focused on growth through innovation, premium product positioning, and cost discipline.

• The company is evaluating strategic alternatives, including potential mergers or sales, amid substantial going concern risks.