Purple Innovation (PRPL) Q3 2024 earnings summary

Executive summary

• Q3 2024 net revenue declined 15.3% year-over-year to $118.6 million, reflecting industry-wide demand softness and reduced advertising spend.

• Operational restructuring and manufacturing consolidation are more than halfway complete, delivering significant margin improvements and operational efficiencies, with full transition expected by year-end.

• Adjusted EBITDA loss narrowed to $(6.4) million from $(16.3) million in Q3 2023, and adjusted net loss improved to $(8.4) million from $(19.4) million.

• Net loss attributable to Purple Inc. was $39.2 million, up from $36.0 million in Q3 2023, primarily due to $32.7 million in restructuring, impairment, and related charges.

• The company expects to finish 2024 at the lower end of revenue and adjusted EBITDA guidance, targeting positive cash flow and adjusted EBITDA in 2025.

Financial highlights

• Q3 2024 net revenue was $118.6 million, down 15.3% year-over-year.

• GAAP gross margin was 29.7%, down 410bps year-over-year due to $12.9 million in restructuring charges; adjusted gross margin improved 340bps to 40.5%.

• Adjusted EBITDA was negative $6.4 million, an improvement from negative $16.3 million last year.

• Net loss was $39.2 million (vs. $36.0 million in Q3 2023); adjusted net loss for the quarter was $8.4 million, compared to $19.4 million last year.

• Cash and cash equivalents at quarter-end were $23.4 million; inventories down 10.5% to $59.9 million compared to December 31, 2023.

Outlook and guidance

• Full-year 2024 net revenue expected at the lower end of $490–$510 million guidance range.

• Adjusted EBITDA for the year expected at the lower end of negative $20 to negative $10 million; positive adjusted EBITDA expected in Q4.

• Annual EBITDA savings of $15–$20 million from restructuring expected to begin in 2025.

• Additional restructuring and related charges of $9.9 million are expected through Q2 2025.

• Positive cash flow and adjusted EBITDA targeted for 2025, with no volume-driven tailwind assumed.