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-saving initiatives.

• Gross margin reached 42.9% in Q4, up 970 basis points year-over-year, with full-year adjusted gross margin at 40.3%, reflecting structural gains from plant consolidation and sourcing initiatives.

• Board formed a special committee to review strategic alternatives, including a potential sale or merger, following inbound interest.

• Showroom channel delivered four quarters of sequential revenue growth and achieved full-year four-wall profitability for the first time since 2021.

• Launched new mattress and pillow products, including Purple Renew at Costco and Rejuvenate 2.0, supporting market presence and diversification.

Financial highlights

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

• Q4 gross profit was $55.3 million, up from $48.5 million last year; adjusted EBITDA was $2.9 million, a turnaround from negative $9.8 million last year.

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

• Q4 adjusted net loss was $8 million (vs. $15.8 million loss last year); full-year adjusted net loss was $61.7 million (vs. $72.2 million loss last year).

• Cash and equivalents at year-end were $29 million, up from $26.9 million last year; positive Q4 cash flow of $6 million.

Outlook and guidance

• 2025 full-year revenue expected between $465-$485 million; adjusted EBITDA guidance is flat to up $10 million, with sequential revenue and margin growth anticipated through the year.

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

• Gross margin expected to expand by at least 200 basis points in 2025, driven by cost savings and operational efficiencies.

• Revenue growth and positive EBITDA in the second half of 2025 expected from the Rejuvenate 2.0 launch and further cost savings.

• Sequential improvement in revenue and adjusted EBITDA anticipated through 2025.