GROV

Good afternoon, and thank you for standing by. Welcome to Grove Collaborative Holdings, Inc.'s first quarter 2026 earnings conference call. At this time, all lines have been placed in listen-only mode to prevent any background noise. Following the speaker's remarks, we will open up your lines for questions. As a reminder, this conference call is being recorded. Hosting today's call are Grove's CEO, Jeff Yurcisin, and CFO Tom Siragusa. Some of the statements made today about future prospects, financial results, business strategies, industry trends, and Grove's ability to successfully respond to business risks may be considered forward-looking, including statements relating to the first quarter of 2026 representing the revenue trough for the year.

Our 2026 strategy, revenue and operating leverage growing sequentially throughout the year, scaling of future customer acquisition costs, and prioritizing paybacks and lifetime value, gradually increasing advertising expense and guidance for 2026, including guidance relating to revenue and adjusted EBITDA. Such statements are based on current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including those risks discussed in Grove's filings with the Securities and Exchange Commission. These statements are based on Grove's views today, and Grove assumes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. During today's call, Grove will also discuss certain non-GAAP financial measures which adjust GAAP results to eliminate the impact of certain items.

You'll find additional information regarding these non-GAAP financial measures and a reconciliation of those non-GAAP items to the most directly comparable GAAP financial measures in Grove's earnings release, which is also available on Grove's investor relations website. I would now like to turn the call over to Jeff Yurcisin to begin.

Thank you, operator, and thank you all for joining us. A year ago, we were navigating a platform migration that effectively broke our customer experience and weighed on our results throughout 2025. Throughout the year, we made deliberate choices to protect liquidity and profitability while we repaired it. Those choices are reflected in the results we are reporting today. The first quarter performed ahead of our expectations. Net revenue was $36.2 million and adjusted EBITDA was $0.3 million, our second consecutive quarter of positive adjusted EBITDA, reflecting the foundation we built in 2025. The cost structure is more efficient, the customer experience is improving, and we are seeing green shoots as it relates to recent cohort behavior, giving us further conviction that we expect the first quarter of 2026 represents the revenue trough for the year.

What this means for Grove is this: the platform disruption that defined 2025 is largely behind us, and Grove is turning the page. The work ahead is about growth, deepening our authority in human health, re-accelerating advertising spend responsibly, and translating a stronger customer experience into durable momentum. That is a very different and more optimistic conversation than the one we've been having for the past several quarters, and I want to make sure that comes through clearly today. Let me emphasize, we expect net revenue in the first quarter of 2026 to be the bottom, and we're seeing the evidence. Repeat order rates among recent cohorts have recovered to levels consistent with what we saw before the migration. The effectiveness of our advertising is proving strong at the current scale, and we're ready to accelerate from here.

Because of this progress, it gives us confidence to raise our top and bottom line guidance, which Tom will discuss more later on. Let me take a step back and discuss what Grove is and what we are building toward. Grove is the leading curated destination for clean, sustainable, non-toxic products for every room in the house. Our addressable market is the 57 million conscientious consumers who want to make healthier choices for their families and the planet. Behind that curation is a deeper conviction that the products in your home are not just a lifestyle choice, they are an important health decision. Every dish soap, every lotion, every cleaning spray that contains synthetic chemicals or harmful microplastics is a small but cumulative exposure that adds up over a lifetime. Grove exists to make those decisions easier, safer, and more trustworthy for the families who care.

We back that promise with more than 10,000 banned or restricted ingredients, including more than 3,000 that are outright banned across every category we carry. The most stringent standards we know of in the industry. The opportunity in front of us has never been clearer. Translating that opportunity into durable, profitable growth is what 2026 is about. Our strategy is straightforward: maintain profitability discipline, and re-accelerate growth responsibly as platform improvements take hold. As we have done throughout this transformation, we are organizing our progress around four strategic pillars, and I want to walk through each of them, starting with sustained profitability. We delivered adjusted EBITDA of $0.3 million in the first quarter. This is our second consecutive quarter of positive adjusted EBITDA, and it matters because it demonstrates cost discipline at the expected revenue trough.

We expect revenue to grow sequentially through the year, and as it does, we expect the operating leverage in the business to follow. A meaningful contributor to that margin performance is Grove Green Rewards, the loyalty program we launched in the fourth quarter. The program has enabled a structural shift in how we approach promotions, moving away from broad discounting and free gifts towards rewards-based incentives that deliver a higher gross margin while still giving customers a compelling reason to shop at Grove. Gross margin of 54.8% was up 180 basis points year-over-year, and we believe this represents a durable improvement. The program also gives us more flexibility in how we structure new customer acquisition offers, which becomes increasingly important as we re-accelerate advertising investment through the year. The next pillar is balance sheet strength.

We continue to manage the balance sheet with discipline. We ended the quarter with $10.4 million in cash equivalents and restricted cash. Operating cash flow was a -$0.7 million, primarily reflecting an increase in inventory during the period. This is a substantial improvement compared to the -$6.9 million in the prior year period. The third pillar is revenue growth. Net revenue of $36.2 million was down 16.8% year-over-year. We expect sequential improvement from here, driven not by any single initiative, but by several improvements that are compounding together. Let me walk through each. The redesigned mobile app, which we launched in February, is the most visible milestone of the quarter.

We rebuilt a custom application that restores the reliability and functionality our customers expect after the disruptions associated with our third-party approach following the e-commerce migration last year. Mobile application orders represent approximately half of non-auto ship orders, and the app is a primary interface through which customers manage their subscriptions. In other words, the app is central to engagement and retention, and having a stable, high quality app is a prerequisite for the revenue growth and advertising re-acceleration we are planning. The early response has been encouraging, with five-star app reviews that reflect a meaningfully better experience. On subscriptions, we are making progress on the improved subscription experience. Subscriptions drove 60% of our revenue in 2025 and were present in 79% of total orders.

The experience of managing a subscription, modifying orders, adjusting frequency, adding or removing products is one of the most important interactions a customer has with Grove. Our near term focus is building a world-class subscription experience, one where customers can reliably stock their home with products they trust on a schedule that works for them. We remain committed to delivering a meaningfully improved subscription experience by the time we report second quarter results. On advertising and customer acquisition, we maintain disciplined investment in Q1, consistent with our strategy to prioritize stabilization before re-accelerating spend. What gives us confidence in gradually increasing investment is the quality of what we are seeing in our underlying metrics. Early life cycle repeat order rates among recent cohorts have performed at levels consistent with what we saw prior to the platform migration.

Customer acquisition costs and marketing efficiency have also improved to the point where we believe an increase in investment is justified. It's the strength of these new cohorts that are justifying the increased spend and reinforce confidence in expected sequential growth. Our fourth and final pillar is environmental and human health. I want to spend a moment here because the progress we made is helping us build the kind of authority that will define Grove's position in human health. Every product a family brings into their home is a quiet health decision, one most people don't realize they're making. That's the foundation of our human health worldview, and it's why we are making a strategic commitment to deepen our scientific infrastructure across three developing fronts in the first quarter. First, we onboarded a chief medical advisor to guide our health-first approach.

Second, we are in the process of establishing a Human Health Advisory Council of Experts to guide our ingredient standards and help ensure our vetting evolves with the science. Lastly, we are onboarding physician advisors to translate that science into practical insights and everyday choices that shape a healthier home. These initiatives represent a strategic commitment to scientific rigor. It is how we help to ensure that when a customer trusts Grove, that trust is backed by something real. Lastly, in February, the Oceanic Preservation Society produced The Plastic Detox, a Netflix documentary about the human health consequences of everyday microplastic exposure. The conversation about what is in household products and what it does to human bodies is crossing into the mainstream, and Grove has been building toward this moment since our founding.

Alongside the film, Grove and the Oceanic Preservation Society launched the Unplastic Shop, a curated assortment of products vetted to reduce everyday exposure to plastics and endocrine-disrupting chemicals. We believe the convergence of consumer awareness, emerging science, and regulatory momentum around ingredients, microplastics, and chemical safety is one of the most significant long-term tailwinds available to Grove. The investments we're making now in clinical expertise, scientific governance, and consumer education are how we earn the right to lead that conversation at scale. The progress across all four pillars in Q1 reinforces our conviction that the foundation is in place and the path forward is clear. Finally, as we have stated previously, we continue to evaluate strategic options that could accelerate our path to scale, strengthen our competitive position, or unlock additional value for shareholders.

Any action we take will be guided by the same principles that shape how we operate every day customer focus, capital efficiency, and shareholder value creation. In closing, our goal for 2026 is straightforward. Deliver sequential revenue growth through the year while maintaining discipline on the bottom line. The work in front of us is clear. The team is executing with urgency, and I'm more optimistic and confident than ever that we're building something that will matter for our customers, our shareholders, our public benefit, and the families we serve. With that, I will turn it over to Tom to walk through the financials in more detail. Tom, go ahead.

Thank you, Jeff, and welcome everyone. I'm encouraged by what the numbers are telling us. Repeat order rates among recent cohorts have recovered to levels consistent with what we saw prior to the e-commerce migration. Customer acquisition costs and unit economics have improved. Gross margin is expanding in a way that reflects structural change. Across the organization, there is tangible momentum. Our teams are executing against a clear strategic roadmap. Turning to the results. Starting at the top line, net revenue for the first quarter was $36.2 million, down 16.8% year-over-year. The decline was primarily driven by fewer orders, reflecting a smaller active customer base and during the year. Similar to prior quarters, that smaller base is the compounding result of lower advertising investment in prior periods and customer attrition associated with the 2025 e-commerce platform disruptions.

DTC total orders were 502,000, a decline of 19.2% year-over-year. Active customers totaled 553,000 at quarter end, down 18.5% versus the prior year. These declines reflect the lagging effects of reduced advertising investment in prior periods and customer attrition from the 2025 platform disruption. DTC net revenue per order was $67.79, an increase of 2% year-over-year. The increase was primarily driven by more targeted promotional strategies, including the shift to loyalty-based incentives through Grove Green Rewards and a larger mix of higher priced items in customer orders as we continue to expand our assortment in categories such as clean beauty, personal care, and wellness.

Gross margin was 54.8%, an increase of 180 basis points compared to 53% in the first quarter of 2025. The improvement was primarily driven by the shift to more targeted promotional activity enabled by Grove Green Rewards, which has allowed us to move away from broad discounting and free gifts toward more efficient rewards-based incentives. We believe this represents a durable improvement, and it is one of the proof points in the quarter that the business model changes we have made are translating to improved financial performance. Turning to advertising, we invested $1.2 million in the quarter, a 58.6% decrease year-over-year, but in line with fourth quarter spend levels as shared last quarter. This reflects a deliberate choice to preserve liquidity and drive profitability.

As the customer experience improvements Jeff described previously take hold, we expect to gradually increase investment through the year. The current trends we are seeing in customer acquisition costs and repeat order rates give us confidence in the returns on that investment. Product development expense was $1.4 million, down 19.4% year-over-year, reflecting a decrease in consulting expenses related to the e-commerce platform migration and lower own brands development. At present, we have been more selective in own brand innovation, prioritizing resources towards stabilizing and improving our core technology and customer experience. SG&A was $18.2 million, a 17.4% decrease versus the prior year. The reduction was driven by the full quarter benefit of the reduction in force executed in November 2025, lower fulfillment costs from fewer orders, and ongoing cost optimization across the organization.

Net loss was $1 million or a 2.8% net loss margin, compared to a net loss of $3.5 million or an 8.1% net loss margin in the prior year. The year-over-year improvement reflects gross margin expansion and lower operating expenses flowing through from the structural changes we have made over the past several quarters. adjusted EBITDA was positive $0.3 million or a 0.8% margin, compared to -$1.6 million or a -3.7% margin in the prior year. The year-over-year improvement reflects the gross margin expansion and lower operating expenses consistent with the net loss improvement. This is our second consecutive quarter of positive adjusted EBITDA.

Delivering positive adjusted EBITDA at the revenue trough is the result of deliberate choices made throughout 2025 to protect the financial foundation of the business. Turning to the balance sheet and liquidity. We ended the quarter with $10.4 million in cash equivalents and restricted cash, a decrease from $11.8 million at the end of the fourth quarter, primarily reflecting cash used in operating and investing activities, including the development of our recently launched mobile application. Furthermore, we ended the quarter with $1.7 million of availability under our asset-based loan facility, an increase from $1.1 million at the end of the fourth quarter due to an increase in inventory. We are comfortable with our liquidity position relative to our operating plan.

Operating cash flow was a negative $0.7 million, reflecting working capital usage in the quarter, primarily an increase in inventory to support ongoing operational execution. This compares favorably to -$6.9 million in the prior year period, which included a larger net loss net of non-cash items, working capital investment, and other one-time items that did not reoccur. Now turning to our outlook. The first quarter came in ahead of our expectations on both revenue and adjusted EBITDA, and we are continuing to see sustained momentum from the underlying business drivers discussed. Therefore, we are raising the top and bottom line guidance.

For full year 2026, we now expect net revenue of $142.5 million-$152.5 million, an increase from $140 million-$150 million, and adjusted EBITDA of breakeven to positive low single-digit millions, an increase from approximately breakeven. On revenue, we still expect the first quarter to represent the trough for the year, with sequential improvement in each remaining quarter. The first quarter reflects the financial discipline we committed to at the start of the year, protecting liquidity at the expected trough while laying the groundwork for the growth we expect to follow. The cost structure is more efficient, the unit economics are improving, and we are managing cash flow consistent with our liquidity.

I am encouraged by where we stand, and I remain confident in our ability to deliver on the plan we laid out for 2026. With that, I will turn the call back over to Jeff for closing remarks.

Thank you, Tom. I want to close by reflecting on where we are in this journey. A year ago, we were navigating arguably the most disruptive period in Grove's history, managing through platform instability and making difficult choices that we believe would pay off. Where we stand today, the customer experience is improving rapidly. The unit economics are moving in the right direction. The mission we've been building toward, helping families make healthier choices for their homes through rigorous curation, scientific authority, and genuine transparency has never been more relevant or timely. This is what gives me the most confidence in the path forward since stepping into this role. Not just the sequential revenue growth we expect to deliver through the year, but the longer arc of what Grove is becoming, the trusted destination for families who care about what comes into their home.

We're building something that matters, and I look forward to demonstrating that progress in the quarters ahead.

Our first question today is coming from Susan Anderson from Canaccord Genuity. Your line is now live.

Hi, Jeff. Hey, Tom. It's Alec on for Susan this evening. Nice job, by the way. I guess to start, can you walk through how 1Q performed? You mentioned it was outperformance, first quarter has been pretty interesting. You know, on one hand we have, you know, the Iran conflict that started in late February, and then just for you guys, you had the app experience, and then the Netflix documentary. I guess, what changed and led to the outperformance in the first quarter?

Appreciate that, Alec. I will kind of kick off. First, it goes back to the customer experience. We delivered $36.2 million. Gross margin expanded by 180 basis points year-over-year. Both of those two metrics and the stability of our cohorts are driven by the improved customer experience. We launched Green Rewards, which has improved our underlying gross margin structure while delivering a best-in-class loyalty program to customers that's flowing through the gross margin line. From a revenue line, like, this app relaunch, five-star reviews are back. Customers are loving the app again. We are seeing very strong signals in all of the data that we look at in terms of sessions and in conversion.

I would say those are the two big customer experience drivers that are impacting both the stabilization of revenue and also the improvement in gross margin.

Thanks. Then the app issue, I guess, drilling down, when was that fully resolved? Was that in March?

Roughly mid-February. Like, we always have rolling releases. Mid-February. What we've also seen is just really, some phenomenal strength in these early cohorts. Again, I think the best e-commerce companies are measuring not just the acquisition costs, but that ratio between LTV and CAC. We are measuring repeat rates and third orders. Just all of the early signals look quite positive since that mobile relaunch. Our push into human health. The shift into talking about, and weaving the human health story into our content, both on the website and in email and all different touch points, I think has also been critical to our showing up in a more meaningful way for our customers.

Got it. On gross margins, I know it had a pretty nice jump up. Was there any other drivers besides the loyalty program helping manage pricing? Just any details there?

I think we're just operating more efficiently. Like, now that this platform migration is truly behind us, we're able to find smaller, more nuanced ways to improve and invest in our kind of processes. I would say the primary driver is, of course, the reduced discounting and the different type of economics, but we're also seeing strength at the AOV, the average revenue per order line. All of these are pointing in the right direction.

Got it. Is this gross margin level you think the new normal, kind of like a rebase upward? Is that how we should think about it going forward?

You know, I, um, uh-

Too early to tell.

I, yeah, I think Well, I wouldn't say I don't wanna use the phrase the new normal, but I think we believe that there is continued opportunity to run this business efficiently. That requires a gross margin comparable to what you're seeing today.

Understood. On the Green Rewards program, I know it's still a couple months in. I guess, how has the initial sign-up been? Have you been able to get most of the active customers onto the program? Any details on getting people to convert to the VIP tier?

Great question. Still a majority of our active customers are, you know, members of our rewards program. I would just say that in terms of new customers, we're not disclosing any numbers there, but at the core, we are seeing strong improvement year-over-year in adoption rates from new customers into the VIP part of the program.

Got it. My last question on tariffs. I guess, have you been impacted by the IEEPA tariffs at all? If so, are you able to quantify how much that was? Any updates on a potential refund if so?

I love it.

Sorry. Everyone's gotta ask about tariffs this quarter.

No, all good. Our 26 guide assumes continuation of current trade policy. Nothing in our guidance kind of assumes anything. Of course, just like all other brands that were impacted by tariffs, we will be pursuing the type of clawback, but no update to kind of guide towards.

Perfect. Thank you so much. I'll turn it over.

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

I wanna thank everyone again for joining our call. Hope you all have a great night. Thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Good afternoon, and thank you for standing by. Welcome to Grove Collaborative Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Hosting today's call are Grove's CEO, Jeff Yurcisin and CFO, Tom Siragusa. Some of the statements made today about future prospects, financial results, business strategies, industry trends and Grove's ability to successfully respond to business risks may be considered forward-looking, including statements relating to reactivation of lapsed customers, future increases in advertising spend, stabilization of our e-commerce platform, sequential revenue growth throughout the year, while maintaining profitability discipline, increased capacity to execute additional growth initiatives, savings from reduction in force and improved subscription experience, future increases in product development, guidance for 2026, including guidance related to revenue and adjusted EBITDA; net revenue reaching a low point in the first quarter of 2026, seasonality and advertising investment in the first quarter of 2026, sequential improvement in revenue and acceleration of advertising investment, such statements are based on current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including those risks discussed in Grove's filings with the Securities and Exchange Commission. All of these statements are based on Grove's views today, and Grove assumes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. During today's call, Grove will also discuss certain non-GAAP financial measures, which adjust GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP items to the most directly comparable GAAP financial measures and Grove's earnings release, which is also available on Grove's Investor Relations website. I would now like to turn the call over to Jeff Yurcisin to begin.

Thank you, operator, and thank you for everyone joining us. I want to start with the financial headlines. We delivered on our revised full year 2025 revenue and adjusted EBITDA guidance, and we returned to positive adjusted EBITDA in the fourth quarter. This was our first positive adjusted EBITDA quarter in the last 6 quarters, and the result reflects a deliberate choice to prioritize liquidity and adjusted EBITDA profitability while we work through customer experience disruptions tied to our e-commerce platform migration. Stepping back Grove's focus remains the same. Driving long-term shareholder value by building a stronger, more resilient business, one that can deliver sustainable growth and consistent profitability over time. Our mission is also unchanged to be the leading destination for clean, sustainable nontoxic products for every room in the home. To earn that position in a market dominated by scale, digital platforms, we have to win where it matters by delivering a customer experience that's meaningfully differentiated with unit economics that support profitable growth and that starts with execution in the near term. Today's consumer is navigating a fragmented, often confusing marketplace crowded with options, inconsistent standards and marketing claims that are hard to verify. And I have higher conviction than ever that Grove is positioned to capitalize on this consumer problem by building a platform of curated and highly vetted products leading with transparency and making it easier for customers to align everyday purchases with their values without sacrificing efficacy. For the conscientious 57 million consumers who care about ingredients, performance and sustainability, shopping can feel like a trade-off between convenience and trust. We believe Grove is uniquely positioned to simplify that decision. We curate and vet products to a higher standard. We lead with transparency, and we make it easier for customers to align everyday purchases with their values without sacrificing efficacy. That positioning matters because it's not just a brand promise. It's a business model that we believe can drive durable unit economics over time. When customers trust the curation and feel confident in the experience, we earn repeat behavior. And when we earn repeat behavior, we can invest more efficiently and scale more profitably. However, '25 was a challenging year and a meaningful part of that came from our e-commerce platform migration early in the year. While the migration was strategically important, the transition created real friction in the customer experience, most notably across the mobile app, subscriptions and our VIP program. When those areas did not perform consistently, we saw more churn in '25 than we originally expected. That was particularly disappointing because we entered '25 with real momentum. We had delivered our first quarter of sequential revenue growth in Q4 2024 and our first full year of positive adjusted EBITDA. The migration issues interrupted that progress. We ended 2025 with 599,000 active customers, down 13% from 689,000 at the end of 2024. That ending customer base is the starting point for our 2026 revenue expectations. Importantly, we don't view the customers who churned as gone forever. As we continue to stabilize our e-commerce platform and restore reliability and the customer experience, we believe we have an opportunity to reactivate a meaningful portion of them over time. But first, we need to build the best possible shopping experience for clean, sustainable products that arrive regularly in one's home. And that's what 2026 is for us, a year of rebuilding that momentum. We are encouraged by the direction because we now have clarity on the root e-commerce platform issues, and we're making tangible progress to fixing them. As those fixes take hold, we expect to stabilize active customers, reactivate lapsed ones and measurably increasing advertising spend to acquire new customers. We expect to deliver sequential revenue growth through the year while maintaining profitability discipline. And as the core experience stabilizes, we will also have more capacity to execute additional growth initiatives, which I'm looking forward to highlighting in future quarters. As we execute that plan, we're staying anchored to the same 4 key pillars we've discussed throughout the year, balance sheet strength, sustainable profitability, revenue growth in environmental and human health. These pillars continue to represent the framework that keeps us focused as we're still rebuilding parts of the customer experience. Starting with balance sheet strength and profitability. In the fourth quarter, we delivered $1.6 million of positive adjusted EBITDA. It reinforces our commitment to navigate this transformation responsibly, protecting liquidity, managing profitability and scaling advertising spend only when the customer experience is stable and paybacks justify it. We also delivered breakeven operating cash flow in the quarter. This is the fifth quarter in the last 8, where we've achieved at least breakeven or positive operating cash flow. That consistency matters. It underscores our focus on disciplined execution and building a more durable operating model. Contributing to these results, we continue to align expenses to the current scale of the business. We executed a reduction in force in November that we expect to generate approximately $5 million of annualized savings. This action was necessary to match our cost structure to the business today, improve operating leverage and create capacity to invest as performance improves. On the revenue and customer side, we advanced several important initiatives to strengthen the experience and rebuild engagement. First, we launched our loyalty program, Grove Green Rewards in the fourth quarter. The program is designed to deepen engagement, reward repeat behavior and reinforce the value customers get from shopping growth. It includes a sign-up bonus, differentiated earn rates for VIP customers and enhance earning on subscriptions. It also gives us multiple levers to run points-based promotions and exclusive VIP deals. And importantly, it allows us to incorporate rewards into new customer offers and reintroduce referral capabilities. Second, in February, we launched our redesigned mobile app, which is a key step towards stabilizing the mobile experience. We moved away from our prior third-party approach and rebuilt our own customer app. Mobile is too important to the customer experience to tolerate instability. This release restores much of the functionality and experience customers have prior to the migration. There's still work ahead to improve performance over the coming quarters. But this release represents a meaningful step forward in delivering a better customer experience. Third, we're focused on strengthening our subscription experience, which is a core driver of retention and lifetime value and an experience that was negatively impacted in the platform migration. In 2025, subscription units drove 60% of our revenue and orders with subscriptions were 79% of total orders. By the time we report second quarter earnings we expect to meaningfully improve the subscription experience to customers who want a box of home essentials delivered on a regular basis to their home. Taken together, Grove, Green Rewards, the redesigned mobile app and our planned subscription improvements are foundational to our strategy this year. They are designed to restore elements of the experience customers know and love, deepen engagement through loyalty, improve discovery and convenience and help us deliver a more personalized and reliable experience that reinforces Grove as the destination for clean and sustainable Assets. Our fourth pillar is environmental and human health. In the first quarter of 2026, we expanded Grove's ingredient standards to cover more than 10,000 banned or restricted ingredients, including more than 3,000 outright banned across every category we carry. To our knowledge, this is the most stringent standards and curated assortment that exists in this space. These standards are also informed by leading EU safety frameworks and often go beyond baseline U.S. requirements through tighter limits and stricter exclusions. For customers, the benefit is straightforward, more confidence in what comes into their home. Strategically, it further differentiates Grove versus competitors that have shorter, less comprehensive less, reinforcing our role as the trusted curator not just the marketplace. Alongside our focus on core execution, as we've stated previously, we continue to evaluate strategic options to maximize shareholder value. These may include additional acquisitions or partnerships, divestitures and other strategic options consistent with our mission and long-term vision. Any action we take will be guided by the same principles that shape how we operate the business every day, customer focus, capital efficiency and sustainable shareholder value creation. In closing, I'm energized about 2026 because the work in front of us is clear and gives us a credible path to stabilizing the business and then reaccelerating responsibly without sacrificing profitability discipline. Grove remains uniquely positioned to lead in human health and wellness by combining trusted standards with the convenience and economics of a modern digital platform. Tom will now walk you through the financials and our 2026 outlook.

Thank you, Jeff, and welcome, everyone. I'll walk through our fourth quarter and full year financial results and then review our outlook for 2026. Starting at the top line, revenue for the fourth quarter was $42.4 million, down 14.3% year-over-year. The decline was primarily driven by fewer orders reflecting reduced advertising investment and the lagging effects of disruptions from our e-commerce platform migration earlier in the year. That decline was partially offset by $2.9 million of QVC revenue driven by 8Greens Today’s Special Value program. QVC was an existing 8Greens sales channel that Grove acquired as part of the 8Greens acquisition in the first quarter. For the full year, revenue was $173.7 million, within our revised guidance range. While revenue declined 14.6% year-over-year, we made deliberate trade-offs to protect liquidity and profitability while prioritizing fixes to the customer experience, and we ended the year with positive adjusted EBITDA in the fourth quarter. Turning to our operating metrics. DTC total orders were $539,000, a decline of 25% year-over-year, while active customers ended the quarter at $599,000, down 13% versus the prior year. These declines were driven primarily by headwinds related to the e-commerce migration and lower advertising spend relative to prior years, which reduced new customer acquisition and in turn repeat orders given the recurring nature of our business. DTC net revenue per order was $69.50, an increase of 4.1% year-over-year. The increase was primarily driven by more targeted promotional strategies and a larger mix of higher-priced items and customer orders as we continue to expand our selection. Our gross margin was 53.0%, an increase of 60 basis points compared to 52.4% in the fourth quarter of 2024. The increase was primarily driven by lower promotional activity, partially offset by a nonrecurring benefit in the prior year period related to the sell-through of previously reserved inventory. Turning to advertising. We invested $1 million in the quarter, a 65.2% decrease year-over-year. This reduction reflects a strategic decision to preserve liquidity and drive profitability while we focus on optimizing the core experience through ongoing improvements across our web and app platforms. Product development expense was $1.9 million, down 59.2% year-over-year. This decline reflects our decision to streamline our technology organization as well as lower amortization costs following the e-commerce platform migration. In the near term, we've also been more selective in own brand innovation, prioritizing resources towards stabilizing and improving our core technology and customer experience. As the platform work progresses, we expect to rebalance our investment in product development to support both innovation and growth initiatives aligned with our financial discipline. SG&A expense was $21.2 million, a 20.8% decrease versus the prior year. The reduction was driven by lower fulfillment costs from fewer orders, ongoing cost optimization initiatives, including the reduction in force executed in the fourth quarter as well as reduced depreciation and amortization and lower stock-based compensation. Net loss was $1.6 million or a 3.7% net loss margin compared to a net loss of $12.6 million or a 25.5% net loss margin in the prior year. The year-over-year improvement reflects lower operating expenses and lower interest expense as well as the absence of the noncash loss on debt extinguishment related to the payoff of our term loan in the fourth quarter of 2024. Adjusted EBITDA was $1.6 million or a 3.7% margin compared to negative $1.6 million or a negative 3.3% margin in the prior year. The year-over-year increase reflects structural cost reductions, including our reduction in force from November and disciplined advertising investment. As Jeff mentioned, this is a return to positive adjusted EBITDA for the first time in 6 quarters, reaffirming our commitment to navigating our transformation with discipline. For the full year, net loss was $11.7 million, and adjusted EBITDA was negative $2.2 million, which is in line with our revised full year adjusted EBITDA guidance and reflects the trade-offs we made throughout the year as we navigated the migration and reset our cost structure. Turning to the balance sheet and liquidity. We ended the quarter with $11.8 million in cash, cash equivalents and restricted cash down from $12.3 million at the end of the third quarter, primarily reflecting cash used in investing and financing activities. Operating cash flow was breakeven for the quarter as noncash items more than offset the net loss while working capital was a modest use of cash. This is compared to a $0.3 million operating cash inflow in the prior year. Now turning to our outlook. For the full year 2026, we expect net revenue to be approximately $140 million to $150 million and adjusted EBITDA to be approximately breakeven. Looking across the year, we expect Q1 to represent the trough in revenue for the year, reflecting seasonality and continued disciplined advertising investment. From that point, we expect sequential improvement as customer experience enhancements support customer retention and enable a measured reacceleration of customer acquisition investment throughout the year. In closing, our priorities for 2026 are clear, maintain financial discipline as we continue to optimize the customer experience. These actions are laying the foundation for a healthier, more efficient business that can return to profitable growth going forward. With that, I'll turn the call back over to Jeff for closing remarks.

Thank you, Tom. As we close out the year, I want to bring us back to what's most important. Grove is rebuilding for the long term, but we also have to deliver in the short term. Over the past year, we've done the really hard work. migrating to a modern platform, reshaping our cost base and refocusing the organization on fixing the core customer experience. We now believe we're past the most disruptive phase of this migration. Our priorities for the next phase are clear. First, keep improving the experience, especially on mobile and subscriptions, so customers can reliably shop, subscribe and reorder with confidence. Second, operate with tight financial discipline protecting liquidity and ensuring that investments meet our standards for payback and lifetime value. And third, as these improvements take hold, we turn to measured growth built on stronger unit economics and a more efficient cost structure. The last year hasn't been good enough, but we know the path forward, and we're executing with urgency and discipline. That's how we'll rebuild long-term shareholder value and reinforce Grove as the destination for clean and sustainable essentials. With that, we're happy to answer any questions you have. Operator, please open the line for questions.

[Operator Instructions] Our first question is from Susan Anderson with Canaccord Genuity.

Maybe just to start off, if you could kind of talk about -- so first quarter is going to be the trough in sales and then pick up after that. Maybe talk about the drivers that's going to drive the pickup sequentially in sales as we go throughout the year. And then also, maybe if you could just talk about your customer acquisition investment for this year? Are you expecting to invest more in customer acquisition versus what you did last year?

Susan, let me take that, and then I'll let Tom kind of share in terms of total acquisition spend. So the core reason we're expecting the sequential growth goes back to building a better customer experience. Over the last 12 months since that -- since we jumped on the platform migration, it's been a rough customer experience. The mobile app alone was a really big change that we just launched in Q1, and we're seeing early positive signals. The loyalty program in Q4, each one of these will improve the core customer experience. We mentioned the subscription experience that we hope to be able to announce before our next call, and you put all of this together. And it's pretty energizing about what we can get accomplished. And so that is the primary driver. And then with that in parallel, we do expect to be increasing marketing spend because we are seeing the better repeat rates and a better LTV to CAC and ultimately, better paybacks. Tom, I'll let you kind of handle the specifics around marketing spend.

Thanks, Jeff. Yes, so Susan, we -- if you look at our P&L in the fourth quarter, we took our advertising spend down from about $3 million in the third quarter, down to about $1 million in the fourth quarter. We expect to be in about the same range in the first quarter. And we're not going to give specifics as to what we think that ramp is going to look like over the course of the year. But given some of the technology improvements and the impact that those will have on the CX, those should be the enabler for us to go and grow advertising spend because there will be a better user experience, and that should be one of the key enablers for growth over the course of the year. That, along with stabilizing existing customer base. So that's how I would think about the cadence.

Okay. Great. And then maybe if you could just talk about the categories that you offer currently on your site. And I guess, is there any white space left. You've obviously been able to expand quite a bit into health and wellness and then beauty and pet as well. So maybe just talk about kind of where you're at with those newer categories and then also any white space opportunity ahead.

Appreciate that. We think most of the opportunity is within our core categories, and we see real growth paths within the type of assortment that we are currently selling. Are there opportunities adjacent, of course, they are. So some of those will be when we think about wellness, thinking in a more broad perspective than justify them as minerals and supplements, but everything going into air filters and even potentially mattresses where the opportunity is to deliver and curate the best products for a healthy home. And that goes beyond just our kind of standard categories. I would also say, this year, we will be enabling some drop ship capabilities, which will allow us to get into some higher AOV categories with the right type of economics. But again, all through the lens of these 3,000 banned ingredients and substances, the highest most -- the highest standards from an ingredients perspective. And also the most kind of curated assortment out there. And so from a category perspective, we are seeing success in all of these new categories whenever we launch more products, customers love it. And we're seeing growth, but the real opportunity is serving the core customer with an adjacency towards drop ship, which will expand our overall categories into beyond just VMS, but into broader human health.

Okay. Great. And then maybe lastly, if you could just talk about the margins for this year and if there's any varying cadence by quarter, whether it's gross margin or operating expense to get to your breakeven for the year?

Tom, I'll let you take this.

Yes. So I think in terms of margins, without giving specific guidance, I think from a gross margin perspective, we don't expect there to be a lot to move the needle one way or the other there. We did launched our loyalty program, which will allow us to be more tactical with our promotions from a point-based perspective. So we'll be leaning into that and using that to be as effective as we possibly can from a promotional perspective to engage customers. And then from an advertising perspective, we're going to spend similar to the fourth quarter and the first quarter, and then we'll scale it from there. I think given the discretionary nature of advertising spend, we'll lean in there as we see the results from some of the technology improvements and from a new customer acquisition perspective. And then from an operating expense perspective, we executed the RIF in the fourth quarter that reset our cost base lower. And so I think that's probably a good baseline to think about what our operating expense structure will look like going forward.

There are no further questions at this time. I'd like to hand the floor back over to Jeff Yurcisin for any closing comments.

Thank you very much. I just want to thank everyone who joined the call, and hope you have a great night. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.