Purple Innovation, Inc. Q1 FY2026 earnings call

Rob DeMartini stated that the quarter reflected continued progress with solid trends in showroom and wholesale, and e-commerce improving sequentially. Priorities are deepening consumer understanding, delivering better sleep through product experience, and expanding distribution with financial discipline. On consumer understanding, there's a shift to benefit-driven storytelling, sharpening focus on 'why Purple', and seeing early benefits from marketing execution discipline. On product experience and distribution, Purple Royale had strong initial response, Rejuvenate 2.0 performed well, and there's expansion in distribution through partners like Mattress Firm, Costco, Sam's Club, and Amazon. On financial discipline, gross margins were below 40% baseline due to Royale floor model discounts, but expected to improve as floor model transition normalizes; progress in cost structure with supplier diversification and other mitigation efforts. Todd discussed net revenue by channel, gross margin drivers (floor models and manufacturing overhead), operating expenses decrease, and balance sheet details including cash and inventory levels

In the first quarter, total sales decreased by 8%. E-commerce saw a sequential improvement, with a 10% decline in Q1 compared to a 15% decline in the prior period. Excluding the accounting-related impact, net revenue would have been $100.6 million, down 3.4% year-over-year. Showroom performance was a bright spot with sales up 5% and comps up 7% for the third consecutive quarter of positive comp growth. Wholesale sales were down approximately 11% in the quarter, but excluding the accounting-related impact, were up 1%. Rejuvenate 2.0 was 56% of showroom mattress revenue. The Royale collection's initial sell-through was in line with expectations. The accessory business performed well, and Costco's in-store furniture event met expectations. Amazon delivered strong growth with shifted assortment to fulfilled by Amazon. Showroom contributed 5% growth to sales, e-commerce contributed a 10% decline, and wholesale contributed a ~11% decline but a 1% increase excluding accounting impact

Revenue guidance was updated to a range of $465 to $485 million from the prior range of $500 to $520 million because of the accounting-related adjustment. Adjusted EBITDA guidance remains $20 million to $30 million. The outlook is based on momentum in the premium product portfolio, expanded wholesale distribution, and operating leverage as volume grows, without assuming a broader market recovery

Input costs such as oil, foam, and transportation pose pressures; accounting-related adjustments can impact revenue; gross margin variability due to timing dynamics of production and sales; macro conditions and external factors causing near-term variability

Q: Taylor Zick inquired about demand trends, input costs, and showroom comps.

A: Rob responded that Q1 started healthy, e-commerce improved in March, input costs are managed with tariff savings, and showroom comps are driven by explaining 'why Purple' and 'which Purple' with a strong mix of Rejuvenate.

Q: Dan Silverstein asked about sales guidance and wholesale comps.

A: Todd said the revenue guidance change is due to a reporting adjustment, and there are still good overall trends; Rob discussed wholesale performance with details on Mattress Firm and other partners.

Q: Matt Coranda asked about quarter to date trends, e-com media buys, and oil impact on COGS.

A: Todd noted that underlying volume is good, e-com media buys are changing with better responsiveness, and oil impact flows through quickly.

Q: Brian Nagel asked about accounting change impact, gross margin sizing, and channel growth.

A: Todd said the accounting change impact is ongoing, gross margin was impacted by floor models and production levels, and showrooms are not cannibalizing other channels