Purple Innovation (PRPL) Q4 2024 earnings summary

Executive summary

• Achieved adjusted EBITDA profitability and positive cash flow in Q4 2024 for the first time in eight quarters, driven by operational improvements and cost savings.

• Gross margin reached 42.9% in Q4, up 970 basis points year-over-year, with full-year gross margin at 37.1%, up 350 basis points.

• Launched new products, including the Purple Renew mattress at Costco and the Rejuvenate 2.0 luxury mattress line, expanding distribution and market presence.

• Initiated a review of strategic alternatives, including a potential sale or merger, with a special committee of independent directors established following inbound interest.

• Full-year net loss narrowed to $(97.9)M from $(120.8)M in 2023; adjusted EBITDA improved to $(20.8)M from $(54.7)M.

Financial highlights

• Q4 2024 net revenue was $129 million, down 11.6% year-over-year, but improved sequentially from Q3; full-year revenue was $487.9 million, down 4.4%.

• Q4 gross profit was $55.3 million, with adjusted gross margin at 44.9%, up 810 basis points year-over-year.

• Q4 adjusted net loss was $8 million, improved from $15.8 million loss last year; Q4 net loss improved to $(8.5)M from $(18.3)M.

• Q4 adjusted EBITDA was $2.9 million, up from negative $9.8 million; full-year adjusted EBITDA was negative $20.8 million, improved from negative $54.7 million.

• Cash and cash equivalents at year-end were $29 million, up from $26.9 million last year; inventory at year-end was $56.9 million, down 15% year-over-year.

Outlook and guidance

• 2025 full-year revenue expected between $465 million and $485 million, with adjusted EBITDA ranging from flat to up $10 million.

• Q1 2025 revenue guidance is $102-$107 million, with adjusted EBITDA of negative $6 to negative $9 million.

• Revenue and EBITDA expected to grow sequentially through 2025, with profitability in the second half driven by new product launches and cost savings.

• Gross margin expected to expand by at least 200 basis points in 2025, with continued cost savings from plant consolidation and sourcing initiatives.