Grove Collaborative Holdings, Inc. Q2 FY2025 earnings call

• Grove's Board and leadership team value HumanCo's engagement and agreed to set up a working group to unlock value. - Strategic pillars include sustained profitability (adjusted EBITDA negative $0.9M in Q2, but cost discipline and investment in customer acquisition ongoing), balance sheet strength (positive operating and total cash flow, amended loan facility), revenue growth (Q2 revenue $44M, down YOY but up sequentially, expected sequential growth in H2 2025 with slight YOY growth in Q4), and environmental/human health (focus on sustainability and health, nearly 150 guides/blogs, microplastics research and advocacy). - Platform migration caused short-term friction but largest issues resolved by end of Q2.

In the second quarter, revenue was $44 million, down 15.5% year-over-year but up 1.1% sequentially. Adjusted EBITDA was negative $0.9 million, or a negative 2.1% margin. Gross margin was 55.4%, up 150 basis points compared to the prior year. Advertising spend was $2.7 million, an 11.6% increase year-over-year. Product development expense was $2.2 million, a decline of 59.4% year-over-year. SG&A expense was $23 million, a 15.4% decrease year-over-year. The company had positive operating and total cash flow, with an inventory balance of $20.7 million, a decrease from Q1. Revenue contribution details by segment not explicitly broken down beyond overall figures.

• Q1 2025 is expected to be the lowest revenue quarter. - Full-year 2025 revenue expected to decline mid-single to low double-digit YOY. - Full-year 2025 adjusted EBITDA expected negative low single-digit millions to breakeven, narrowing from prior range. - Continue investing in advertising to drive top line growth while maintaining financial discipline.

• Platform migration impact on operations and customer experience. - Dependence on advertising spend and its payback. - NYSE listing standard notice and need to regain compliance within 18 months.

Q: Could you give color on the lower revenue per order?

A: Tied to platform migration; working on improving experiences for subscribers with long lists of subscriptions and those with few subscriptions.

Q: Have you seen returns on current marketing and drivers to Q4 revenue?

A: Disciplined marketing spend showing good paybacks; revenue in Q4 driven by comps, improved customer experience, expanded categories, and accelerated marketing.

Q: Talk about adding new categories and sales breakdown by category?

A: Moving away from cleaning, focusing on personal care, wellness, etc.; specific category sales breakdown not disclosed but focusing on human health and wellness areas.