Purple Innovation, Inc. Q3 FY2025 earnings call

Innovation: Launched Rejuvenate 2.0 with DreamLayer gel grid technology, which has outperformed expectations. GridC Pillow also shows strong early performance. ### Showrooms: Net revenue grew 6.5% to $22 million, with 12% comparable sales growth. 76% of showrooms are profitable year-to-date. ### E-commerce: Website refresh and Amazon progress show signs of improvement, with demand shifting to higher-priced mattresses. ### Wholesale: Grew 8% driven by Rejuvenate 2.0 and Mattress Firm expansion, with Purple products in nearly 9,200 Mattress Firm slots and on track for 12,000 by March 2026. Expansion with other partners like Costco and QVC is ongoing. Restructuring completed, saving $25-30 million annually and improving gross margin from low 30s to over 40%.

Purple Innovation reported revenue of $118.8 million for the third quarter, up slightly from the prior year. Direct-to-consumer (DTC) net revenue was $67.2 million, down 5.1% year-over-year. Within DTC, showroom net revenue was $22 million, up 6.5% despite fewer stores opened. E-commerce DTC was down 9.8% in the quarter but showed sequential improvement. The wholesale segment grew 7.9% to $51.5 million, driven by the Rejuvenate 2.0 launch and expansion with Mattress Firm. Gross margin improved to 42.8% in Q3, with an expectation of around 40% in Q4.

Full year 2025: Expected revenue in the range of $465 million to $485 million and adjusted EBITDA between breakeven and $10 million. ### Q4: Anticipates continued top line growth from Mattress Firm expansion, Rejuvenate 2.0 momentum, and Black Friday/Cyber Monday sales. ### 2026: On pace to reach 12,000 Mattress Firm slots by March 2026, with approximately $70 million in incremental revenue expected next year.

• Market conditions could impact sales performance. - Tariff-related headwinds, though mitigation efforts are in place. - Board is reviewing strategic alternatives including merger, sale, or other transactions.

Q: Bradley Thomas asked about industry green shoots vs. Purple's initiatives.

A: Robert DeMartini responded that most in the category saw mixed results in Labor Day and September, but Purple's wholesale is growing with expanded distribution, showroom has 6.5% growth and 12% comps, and e-com shows early signs of improvement from marketing initiatives.

Q: Matt Koranda asked about adjusted EBITDA guide.

A: Todd Vogensen responded that Q4 expects continued revenue acceleration from Mattress Firm expansion, Rejuvenate 2.0 launch, and Black Friday/Cyber Monday, with incremental revenue flowing through quickly due to strong cost control.

Q: Bobby Griffin asked about gross margin and showroom profitability.

A: Robert DeMartini stated gross margin is expected to be around 40% going forward, and showrooms are a vibrant channel with 76% profitable year-to-date, with plans to invest in it in the future.

Q: Daniel Silverstein asked about wholesale segment and Mattress Firm slots.

A: Robert DeMartini replied that Mattress Firm launch hurt short-term productivity but overall productivity held with increased slots, and Costco business is growing, with other wholesale partners showing mixed performance but mostly positive.