PRPL

Image source: The Motley Fool. Monday, Aug. 10, 2026 at 4:30 p.m. ET Chief Executive Officer - Robert DeMartini Chief Financial Officer - Robert Lucian Investor Relations - Stacy Turnof Operator: Hello, everyone. Thank you for joining us and welcome to Purple Innovation's Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Stacy Turnof. Please go ahead. Stacy Turnof: Thank you for joining Purple Innovation's Second Quarter 2026 Earnings Call. A copy of our earnings press release is available on the Investor Relations section of Purple's website at www.purple.com. Before we begin, I'd like to remind you that certain statements made in this presentation are forward-looking statements. These statements reflect Purple Innovation's judgment and analysis as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. We should not place undue reliance on these forward-looking statements. For more information, please refer to the risk factors outlined in our filings in the SEC. Additionally, today's presentation will reference non-GAAP financial measures such as adjusted gross margin, adjusted operating expenses, adjusted EBITDA, adjusted net loss, and adjusted net loss per share. A reconciliation of these measures to their most comparable GAAP measures can be found in the earnings release available on our website. With that, I'll turn the call over to Rob DeMartini, Purple Innovation's Chief Executive Officer. Robert DeMartini: Thanks, Stacy, and good afternoon, everyone. I want to start with what matters most from the quarter. While the market remains difficult, we continue to make progress in areas where we believe we have the greatest impact. Our showrooms had another strong quarter. Our premium products continued to perform well, e-commerce improved sequentially, and we delivered better profitability. This tells us the work we've been doing over the past year continues to take hold. We're a stronger and more disciplined business today than we were a year ago, and that is showing up in our direct-to-consumer business, product mix, and cost structure. The broader market did not give us any help in the second quarter. Demand remained uneven, and wholesale was softer than we expected. Turning to our quarterly performance, our results were mixed across channels. Starting with our direct-to-consumer, we continue to make progress across both our showroom and e-commerce channels. Our showroom business was the highlight of the quarter, with retail sales up 16.6% versus the prior year, driven by improving traffic, stronger conversion, and continued strength in our premium portfolio. E-commerce was down slightly versus last year, but the channel continued to move in the right direction, marking the third consecutive quarter of sequential improvement. We're getting better at managing the channel, and the work we're doing across marketing and the site experience is contributing to that progress. Purple's wholesale performance remained challenged in the second quarter as wholesale revenues were down approximately 19% year-over-year. In addition to continued softness in the broader mattress category, we've made a deliberate decision during the second quarter to invest more than $4 million incrementally in marketing programs with our retail partners. These investments affected reported wholesale revenue in the quarter, but we believe they were necessary to support consumer activation, retailer engagement, and Purple's long-term position within the wholesale channel. Excluding the impact of these incremental investments and other payments to customers, wholesale revenue would have declined approximately 8% year-over-year. On profitability, we made progress through disciplined expense management while continuing to invest in innovation, advertising, and consumer experience. Consistent with previous quarters, our strategy continues to center on three priorities: number one, deepening our understanding of the consumer, number two, delivering better sleep through product experience and expanded distribution, and number three, executing with financial discipline across the business. Let me walk you through how these priorities showed up during the second quarter. First, knowing our consumer. Purple has strong awareness, but awareness alone is not enough. We remain focused on helping people understand why the GelFlex Grid is different and why it matters to sleep quality and which Purple product is right for them. Since March, we've shifted our marketing's approach to place greater emphasis on brand building and consumer education outside of key holiday periods, while continuing to use targeted conversion marketing as consumers move closer to purchase. The opportunity is to turn our strong awareness into stronger consideration. That means making the benefits of GelFlex Grid easier to understand before consumers are ready to buy and making it simpler to choose the right Purple product when they enter the purchase process. This work applies across the full consumer journey from our showrooms and website to our wholesale partners with the same objectives everywhere; clearly answer why Purple and which Purple mattress. Within e-commerce, we continue to make improvements to the consumer journey throughout the quarter. It was a series of enhancements designed to make it easier for consumers to reach, to research, compare, and ultimately choose the right Purple mattress while better understanding why our technology is so unique. These enhancements include improved product comparison tools, refined site navigation, and new content and landing pages designed to better educate consumers. We're also improving how Purple shows up across traditional search and AI-powered tools where consumers are increasingly beginning their research. The goal is not simply to drive traffic, it's to bring more informed consumers into the purchase journey and help them understand how Purple's GelFlex Grid delivers a better sleep experience. We've now experienced three consecutive quarters of sequential improvement within e-commerce, supported by better marketing execution and stronger performance on Amazon. Second, delivering better sleep through product experience and expanded distribution. Our innovation continues to differentiate Purple in the marketplace, and we remain encouraged by the continued performance of our premium portfolio. During the quarter, our premium products continue to perform well, with Rejuvenate remaining the strongest performing collection, particularly in our showroom channel. Within our showroom business, Rejuvenate 2.0 continues to account for more than half of total mattress revenue, underscoring the strength of our premium positioning and the consumer's willingness to invest in better sleep products. Beyond mattresses, our pillow business continued to deliver strong results, reinforcing the broader appeal of the Purple brand and providing additional opportunities to introduce new consumers to our GelFlex Grid technology. While the overall mattress category remained under pressure, we continue to believe our premium innovation positions us well for long-term growth. Beyond the product itself, we're continuing to invest in customer experience across every touch point. Our showrooms are the clearest proof point for our product. When consumers experience the GelFlex Grid in person and our teams can explain the difference, we see better conversion and a stronger premium mix. That was evident again in the second quarter with showroom sales up strongly. This reinforces something that we've believed for a long time. When consumers experience the GelFlex Grid firsthand and understand how it differs from traditional foam, Purple wins. Turning to distribution, expanding and strengthening our network remains an important component of our long-term growth strategy. Our owned retail footprint expanded during the quarter with the opening of one new showroom and the relocation of another, both of which are performing well. Looking ahead, we remain on track to open 5 additional showrooms before year end as we refine our real estate strategy and shift towards more productive, open-air retail locations that better align with evolving consumer shopping trends. We're planning a broader growth of the store fleet in fiscal 2027 with 12 to 16 additional locations. Our job is to scale the model thoughtfully so it can become a more meaningful contributor to Purple's growth. As we expand our showrooms, we continue to deepen our presence with key wholesale partners. The rollout of Purple Royale at Mattress Firm was completed during the second quarter. Costco continued to perform well during the quarter, and year-to-date volume was well ahead of last year, and we continue to see meaningful opportunity with this partner. Amazon also had another strong quarter delivering double-digit growth as we further optimized our product assortment and fulfillment strategy. Now let's talk about the third pillar, executing with financial discipline. Over the past year, we've taken meaningful steps to improve the efficiency of the business. Those efforts continue to support stronger profitability. During the second quarter, we delivered higher gross margins and profitability above last year despite lower sales. We took pricing action in June to help offset commodity and logistics inflation and preserve gross margins going forward. Our sourcing teams continue to identify additional opportunities to improve costs through supplier diversification and operational efficiencies. As we move into the second half, the demand environment remains uncertain, but we are operating from a stronger foundation. We expect to benefit from continued operational improvements, additional sourcing initiatives, and the continued development of our premium product portfolio. Before I turn it over to Bob, one other update. Following the reverse stock split in July, last Friday, NASDAQ confirmed that Purple has regained compliance with its minimum bid price requirement and that matter is now behind us. With that, I'll turn the call over to Bob. Robert Lucian: Thank you, Rob, and good afternoon, everyone. Before I walk through the financials, I'd like to briefly address the change in the presentation of certain costs in our reporting results. Beginning this quarter, merchant credit card processing and third-party consumer financing fees are no longer classified within cost of revenues and are now being presented in marketing and sales expense. This presentation is consistent with industry practice and makes our gross margins more comparable to our industry peers. In the second quarter, the reclassification increased GAAP gross margin by 505 basis points, with a corresponding 505 basis point increase in marketing and sales expense. This change does not impact previously reported revenue, operating loss, adjusted EBITDA, or cash flow. To make the periods easier to compare, our Form 10-Q includes supplemental schedules presenting prior periods under the revised classification. Net revenue for the second quarter was $98.3 million, down 6.5% from $105.1 million in the prior year period. The decrease is primarily driven by lower wholesale revenue, partially offset by strong growth and showroom revenue. By channel, direct-to-consumer, or DTC, net revenue for the quarter was $60.9 million, up 3.4%, compared with $58.9 million last year. Within DTC, showroom revenue increased 16.6% to $18.4 million, marking the fourth consecutive quarter of year-over-year growth. Comparable revenue in stores open for at least one year increased 18%, reflecting continued strength in Rejuvenate and improving traffic and conversion. The second quarter also marked the fourth consecutive quarter of positive comps. E-commerce revenue decreased 1.4% to $42.5 million, improving sequentially for the third consecutive quarter. The decrease was primarily attributable to lower mattress revenue, partially offset by growth in pillows and cushions, and continued strength at Amazon. June was especially strong given the shift of Prime Days from July into June this year. Wholesale revenue decreased 19.1% to $37.4 million from $46.2 million last year. The decrease reflected a $5.3 million increase in certain payments to customers and a manufacturer under control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction in revenue. In addition, we had a $3.5 million decrease in wholesale sales volume related to lower industry demand. GAAP gross profit increased 4.5% to $44.4 million compared with $42.5 million last year. GAAP gross margin was 45.2%, up approximately 470 basis points from 40.5% last year. The improvement in gross margin primarily reflected a $5.3 million IEEPA tariff refund received in the quarter and year-over-year tariff mitigation from sourcing projects, favorable inventory adjustments, and lower scrap. These benefits were partially offset by higher freight and material costs, higher wholesale discounting, and lower volume leverage. We also took pricing during the second quarter to help offset higher input and freight costs and preserve gross margins moving forward. Because the increases did not impact revenue until the second week of June and take longer to flow through for certain customers, the benefit to the second quarter was limited. We expect to see a more meaningful impact in the second half of the year from these pricing actions. Operating expenses for the quarter were approximately $48.7 million, down $8.1 million, or 14.3%, from $56.8 million last year. Approximately half of the improvement was due to non-recurrence of restructuring, impairment, and other related charges recorded in the prior period. The other half of the dollar reduction primarily reflected lower payroll-related expenses following a number of workforce reduction efforts over the last 12 months, lower professional service expenses, and continued discipline across the business. GAAP net loss was $3.2 million, a $14.1 million improvement versus last year. GAAP net loss per share was $0.74 compared to a GAAP net loss per share of $4.01 in the prior period. Adjusted EBITDA was $2.1 million, a notable improvement of $4.4 million from an adjusted EBITDA loss of $2.4 million in the prior year period. For more details, please see the reconciliation of GAAP net loss to adjusted EBITDA in today's press release. We ended the quarter with cash and cash equivalents of $23.3 million, compared with $24.3 million on December 31, 2025. Net inventories were $55.4 million, down $4.3 million compared to December 31, 2025, reflecting continued disciplined inventory management and improving working capital efficiency. Cash flow from operations was positive for the second straight quarter and totals $3.6 million through the first six months of fiscal 2026. This was a $30.7 million improvement over previous year's first half results, which are typically challenged due to the seasonality of our business. Capital spending in the first six months was $3.6 million, supporting showroom expansion and investments in our manufacturing operations. Finally, turning to our outlook. Given the continued softness in the category, particularly in wholesale, we are lowering our revenue guidance in the range of $420 million to $440 million. Importantly, the continued strength of our DTC business, coupled with our cost discipline, gives us confidence in our outlook to deliver a fiscal year adjusted EBITDA of $20 million to $25 million. Please note that we are revising our fiscal year 2026 gross margin target from approximately 40% to approximately 45% to reflect the reclassification of merchant credit card processing and third-party consumer financing fees from cost of revenues to marketing and sales expense. We continue to expect gross margins to improve through the second half of the year as seasonal volumes increase. Price increases to offset inflation are fully realized, and our ongoing sourcing and productivity initiatives continue to take hold. While we are not satisfied with the current level of revenue, we believe the improvements in profitability, cash generation, and operating discipline demonstrate that Purple is operating from a stronger foundation versus last fiscal year. With that, I'll turn the call back to the operator for questions. Operator: [Operator Instructions] Your first question comes from the line of Matt Koranda with Roth Capital. Matt Koranda: I guess just in terms of the reduced sales guide, is that all coming from a weaker wholesale channel? Are you assuming, I guess, that DTC sales continue to grow, just given the strength that you highlighted in showroom? And then, I guess, how do the pricing actions from June offset the volume declines in the back half of the year, just trying to kind of fit it all together. Robert DeMartini: A couple of questions there. Let me take them backwards because that's how I'm remembering them. So we did some elasticity assumptions when we put the pricing in. I will tell you what we saw in -- right after those started to take effect is that the reaction from the consumer was a little bit more downward than we would have expected or had we seen previously. We really need to get through Labor Day to figure out how they respond before we can read them. But to your first question, primarily the reduction is our wholesale business, and that's what allows us to keep our profit guide at the bottom half of it in the same place of where it was and really just taking off some of the top. We had previously been at 20 to 30. Does that make sense? I think I misremember your question. Remind me what the middle one... Matt Koranda: Okay. Got it. Yes, yes. No, I think it was just that -- I think you kind of buried it in there, but I was asking if DTC sales are still going to grow in the outlook in the back half of the year if you kind of look at the channel. Robert DeMartini: Yes, Q3 will be a little bit tricky because we had some delivery issues last year with the launch of Rejuvenate, but we're still very confident in our showroom business and very encouraged by the fact that e-comms keeps getting closer and closer to flat. We were down 1.4% in the quarter and the back half tends to be more important to both of those businesses. Matt Koranda: Yes. Okay. And then my second question, I guess, was just in terms of the implied EBIT I got for the back half, maybe Bob, if you want to take sort of conversion to free cash flow, how we should be thinking about sort of the working capital needs or flush for the rest of the year and how that might impact cash flow for 3Q, 4Q? Robert Lucian: I would expect that in Q3, we're going to see probably just given the seasonality of where Labor Day is and where the shipments come in for that, we'll see a small -- we could potentially see a small step back from an operating cash flow perspective, but then we typically will see a very large increase in Q4 that will keep us positive for the entire year. Operator: Your next question comes from the line of Bradley Thomas with KeyBanc Capital Markets. Bradley Thomas: I wanted to just ask about the performance in your showrooms relative to the rest of the market. If our data is correct, this is at least the sixth consecutive quarter that same store sales has had positive growth, if not some really strong positive growth as it did this quarter, that I think really is very encouraging to see. And I was wondering if you could just help talk about perhaps why some of your partners in the wholesale channel maybe aren't performing quite as well as what you've been able to deliver in your own showrooms. Robert DeMartini: A couple things. I think Q2, the 16.6% or 18% comp sales were helped a little bit by what I just referenced in Matt's question is some written sales last year that didn't deliver until outside the quarter. But the core of that business, certainly 12% or more of that 18%, is growth of the premium product portfolio. I can't comment on -- I don't want to comment on our partners' business and how they do it, but I know when we get people in stores onto our beds and we can explain the technology, what looked like very expensive products become things they want to buy when they realize the benefit they're going to get out of it. And, you know, we've always known showrooms is the stickiest of all of our businesses, then probably wholesale, then e-commerce, where it tends to be a little bit more transactional. But that's what's behind it. I think I know we've got four quarters in a row of positive comps in that channel, and we do expect that to continue. Bradley Thomas: I appreciate that and, obviously, really a nice bright spot here in your execution. Maybe if I just move over to the environment with raw material prices having gone up. Can you just speak a little bit to pricing and how much that's running Up and the potential needs to do more on the pricing front in the back half? Robert Lucian: Yes, we took prices up in mid -- towards the middle of June between 8% and 10% across mattresses and pillows. The expectation is that we're seeing prices, obviously, move all over the place right now with what's going on over in Iran. One of the biggest challenges we see from a pricing perspective or a cost perspective is mineral oil, which is a large component of the GelFlex Grid. And we are priced to where we think that's going to end up kind of averaging out over the back half of this year. Obviously, if it gets a lot worse than that, we would take additional pricing, but right now we feel like we're covered both for those costs as well as preserving the margin that goes along with the price increase. Operator: Your next question comes from the line of Brian Nagel with Oppenheimer. Brian Nagel: So the first question I have. Can you just explain further in the prepared comments you talked about the impact to the wholesale sales and the kind of the [ adjustment ] the sales would have been. Can you just explain for me what that is? It sounds like it was a marketing expenditure, but then that affected revenue growth. So I guess can you just explain further what it is. And then the question is, is this a one-time -- or one-time adjustment? Robert Lucian: This represented a co-op advertising that we entered into with a number of our wholesale customers, where we, if you write a customer a check for anything, it's contra revenue. So as a result, that's -- some investment that we did over the Memorial Day and Labor Day period -- I'm sorry, not Labor Day, sorry, Fourth of July period. So we did more of that in this last quarter that we just finished. And as a result of those payments to those customers, and also last quarter, if you recall, we have a company owned by SGI selling to another company owned by SGI, Mattress Firm, some of our products and those are also deemed a related party transaction. And those are also payments to customers. So a combination of those things make up that $5.3 million I mentioned in my prepared remarks and those are all just reductions to revenue. Brian Nagel: Got it. And then so the question is this -- we should -- it this something we should expect going forward, too? Robert DeMartini: Yes, I think -- I mean, the SGI relationship, we've gotten clear with our accountants and we know how to treat it now, and we'll be projecting it accordingly. I think what you are saying is a change in practice where the burden that a vendor needs to produce results from co-op advertising is higher now that you have to reflect it as a direct reduction in sales. We've just got to make good choices with our customers and invest in things that grow the business for both of us. And we remain committed to do that. I think the burden of proof is just a bit higher than it used to be. Brian Nagel: So to be clear, you're still moving. I guess the unit sales would be better, that's maybe that one -- the unit sales would be better there, they get masked by this payment then? Robert DeMartini: Yes. That's why if you look at my remarks, the 19% in wholesale, about 10 points of that is contra revenue situation where the core unit volume -- and again, I'm not speaking to mix so this may not be exact, but the business operationally was down about 8%, not 19%. Robert Lucian: Got it. Yes, the important piece on the -- any co-op advertising revenue is that it provides a good enough return on ad spend to just pay itself out, not on a revenue-free basis, but on a profit basis. Brian Nagel: Yes. That makes sense. Then I guess my follow-up question, different topic. You mentioned the tariff refunds in your prepared comments. But I guess can you just talked about what that amount was? Have you -- are they -- you still have more tariff refunds potentially coming and how should we think about what Purple was doing with those refunds? Robert Lucian: Yes, the amount that we received that went into COGS was $5.3 million. And that was -- we got 100% of what we were eligible for, that we applied for. A little bit came in, in April and the rest of it came in towards the end of June. Brian Nagel: And then as far as like strategically, the deployment of those payments? Robert Lucian: Well, we're continuing to grow our store network by five stores in the back half, and then we're working on improving our cash flow in the back half of the years to enable us to really take the increases in store openings into the 12 to 16 range, given the fact that we're seeing the most success as Rob talked about, when we can have that one-on-one relationship with the consumer, get them in the store, and sell them on why Purple is so special. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Purple Innovation, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Purple Innovation wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Purple (PRPL) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Net Revenue: $98.3 million, down 6.5% from $105.1 million in the prior year period. Direct-to-Consumer (DTC) Revenue: $60.9 million, up 3.4% year over year. Showroom Revenue: $18.4 million, up 16.6% year over year, with comparable store sales up 18%. E-commerce Revenue: $42.5 million, down 1.4% year over year, but improved sequentially for the third consecutive quarter. Wholesale Revenue: $37.4 million, down 19.1% year over year. GAAP Gross Profit: $44.4 million, up 44.5% from $42.5 million last year. GAAP Gross Margin: 45.2%, up approximately 470 basis points from 40.5% last year. Operating Expenses: Approximately $48.7 million, down 14.3% from $56.8 million last year. GAAP Net Loss: $3.2 million, a $14.1 million improvement versus last year. GAAP Net Loss Per Share: $0.74, compared to a loss of $4.01 in the prior period. Adjusted EBITDA: $2.1 million, an improvement of $4.4 million from a loss of $2.4 million in the prior year period. Cash and Cash Equivalents: $23.3 million at quarter end. Net Inventories: $55.4 million, down $4.3 million compared to December 31, 2025. Cash Flow from Operations: Positive for the second straight quarter, totaling $3.6 million through the first six months of fiscal 2026. Capital Spending: $3.6 million in the first six months. Fiscal 2026 Revenue Guidance: Lowered to a range of $420 million to $440 million. Fiscal 2026 Adjusted EBITDA Guidance: Expected to deliver up to $25 million. Fiscal 2026 Gross Margin Target: Revised from approximately 40% to approximately 45% due to reclassification of certain fees. Warning! GuruFocus has detected 7 Warning Signs with PRPL. Is PRPL fairly valued? Test your thesis with our free DCF calculator. Release Date: August 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Showroom revenue increased 16.6% year-over-year, with comparable store sales up 18%, marking the fourth consecutive quarter of positive comps. Adjusted EBITDA improved to $2.1 million from a loss of $2.4 million in the prior year, reflecting stronger profitability. GAAP gross margin expanded by 470 basis points to 45.2%, driven by tariff refunds, sourcing initiatives, and favorable inventory adjustments. E-commerce revenue improved sequentially for the third consecutive quarter, supported by better marketing execution and strong Amazon performance. The company regained compliance with NASDAQ's minimum bid price requirement following the reverse stock split, removing a key overhang. Wholesale revenue declined 19.1% year-over-year, impacted by a $5.3 million increase in payments to customers and lower industry demand. Total net revenue decreased 6.5% to $98.3 million, reflecting continued softness in the broader mattress market. The company lowered its fiscal year 2026 revenue guidance to $420-$440 million due to persistent wholesale weakness. E-commerce revenue was still down 1.4% year-over-year, though improving sequentially, indicating ongoing challenges in the channel. Pricing actions taken in June to offset inflation led to a more negative consumer reaction than expected, with elasticity assumptions needing reassessment. Q: Is the reduced sales guidance entirely due to weaker wholesale channel performance, and how do the June pricing actions offset volume declines in the back half of the year?A: CEO Robert DeMartini confirmed the reduction is primarily driven by the wholesale business, allowing the company to maintain its adjusted EBITDA guidance. He noted that consumer reaction to the June price increases was slightly more negative than expected, and the company needs to assess response through Labor Day. CFO Robert Lucian added that pricing was increased 8%-10% across mattresses and pillows in mid-June, with expectations for a more meaningful impact in the second half as the increases fully flow through. Q: Can you explain the $5.3 million impact on wholesale revenue and whether these marketing investments are one-time in nature?A: CFO Robert Lucian explained that the $5.3 million represents co-op advertising payments to wholesale customers, which are recorded as contra-revenue, plus related-party transactions with Mattress Firm. CEO Robert DeMartini clarified that excluding these incremental investments, wholesale revenue would have declined approximately 8% rather than 19%. He noted that while co-op advertising is now a direct reduction to sales, the company remains committed to investing in programs that grow the business for both Purple and its partners. Q: Why are your own showrooms performing so well (18% comp growth) while wholesale partners are struggling?A: CEO Robert DeMartini attributed the showroom strength to the premium product portfolio, particularly the Rejuvenate collection, which accounts for more than half of mattress revenue in that channel. He emphasized that when consumers experience the GelFlex grid in person and understand the technology, conversion improves significantly. He noted that showrooms are the stickiest channel, followed by wholesale, then e-commerce, which tends to be more transactional. Q: How should we think about the tariff refund received in the quarter and whether more are coming?A: CFO Robert Lucian confirmed the company received a $5.3 million IEPA tariff refund that went into COGS, representing 100% of what they were eligible for. A portion came in April with the remainder in late June. He indicated the refunds are complete, and the company is deploying the cash toward expanding its showroom network, with plans for five additional stores in the back half of 2026 and 12-16 new locations in fiscal 2027. Q: What are the expectations for operating cash flow and working capital in the second half of the year?A: CFO Robert Lucian stated that Q3 could potentially see a small step back in operating cash flow due to the seasonality of Labor Day shipments, but the company typically experiences a very large increase in Q4 that should keep cash flow positive for the entire year. The company has already delivered positive operating cash flow for two consecutive quarters, totaling $3.6 million through the first six months of fiscal 2026. Q: How is the company managing raw material cost inflation, particularly with mineral oil prices?A: CFO Robert Lucian explained that mineral oil is a large component of the GelFlex grid and represents one of the biggest cost challenges. The company has priced its products to where it expects costs to average out over the back half of the year. If conditions worsen significantly, additional pricing actions would be considered, but currently management believes they are covered for both costs and margin preservation. Q: What is driving the sequential improvement in e-commerce, and how sustainable is this trend?A: CEO Robert DeMartini noted that e-commerce improved sequentially for the third consecutive quarter, with revenue down only 1.4% in Q2. The improvement is attributed to better marketing execution, enhanced site navigation, improved product comparison tools, and stronger performance on Amazon, which delivered double-digit growth. June was especially strong given the shift of Prime Days from July into June this year. Q: How is the company thinking about the gross margin reclassification and its impact on financial reporting?A: CFO Robert Lucian explained that merchant credit card processing and third-party consumer financing fees are now classified within marketing and sales expense rather than cost of revenues, consistent with industry practice. This reclassification increased GAAP gross margin by 505 basis points with a corresponding increase in marketing expense. The company revised its fiscal 2026 gross margin target from approximately 40% to approximately 45% to reflect this change, with no impact on previously reported revenue, operating loss, adjusted EBITDA, or cash flow. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Showroom Revenue Up 16.6% and Comparable Revenue Up 18% GAAP Net Loss of $3.2 Million in the Second Quarter Adjusted EBITDA Improves $4.4 Million to $2.1 Million Regains Compliance with Nasdaq Minimum Bid Price Requirement LEHI, Utah, Aug. 10, 2026 /PRNewswire/ -- Purple Innovation, Inc. (NASDAQ: PRPL) ("Purple"), a comfort innovation company whose mattresses promise to give you "less pain, better sleep," today announced results for the second quarter ended June 30, 2026. "The second quarter demonstrated continued progress in the areas we can control, even as industry conditions remained challenging and we fell short of our top-line expectations," said Rob DeMartini, CEO of Purple Innovation. "Our direct-to-consumer business grew, led by another strong quarter in showrooms, while e-commerce trends improved sequentially for the third consecutive quarter. GAAP Net Loss and Adjusted EBITDA improved compared with last year, including the benefit from tariff refunds." "These results reinforce that Purple is operating from a stronger and more disciplined foundation. We remain focused on helping consumers better understand why the GelFlex Grid is different, strengthening the experience across our direct channels, advancing our innovation pipeline and maintaining the cost discipline that is supporting improved profitability and cash generation in a difficult demand environment." Second Quarter 2026 Financial ResultsSecond quarter 2026 net revenue was $98.3 million, down 6.5% compared to $105.1 million in the second quarter of 2025. The decrease was primarily driven by lower wholesale revenue, partially offset by strong growth in showroom revenue. Direct-to-consumer revenue increased 3.4%, reflecting a 16.6% increase in showroom revenue and a 1.4% decrease in e-commerce revenue. Wholesale revenue decreased 19.1% to $37.4 million, compared with $46.2 million in the prior-year period. The decrease reflected a $5.3 million increase in certain payments to customers and a manufacturer under common control and a $3.5 million decrease in wholesale sales volume related to lower industry demand. Gross profit increased 4.5% to $44.4 million, compared to $42.5 million in the prior-year period. Gross margin was 45.2%, an increase of approximately 470 basis points year-over-year, primarily due to the $5.3 million tariff refund. Beginning in the second quarter of 2026, the Company changed the presentation of costs associated with merchant credit-card processing fees and third-party consumer-financing fees from being presented in cost of revenues to now being presented in marketing and sales costs. Prior periods have been revised to conform to the current presentation. This reclassification had no impact on previously reported revenue, operating loss, net loss, adjusted EBITDA or cash flow. The reclassification increases GAAP gross margin in the second quarter by approximately 500 basis points, with a corresponding 500 basis point increase in marketing and sales expense. Second quarter operating expenses were $48.7 million, down approximately 14.3% from the prior-year quarter. The improvement was primarily driven by the absence of restructuring related costs incurred in the prior year period, lower employee related expenses and professional services and all other operating expenses, partially offset by an increase in advertising spending. GAAP Net Loss for the second quarter was $3.2 million, a $14.1 million improvement versus the prior period. Adjusted EBITDA for the second quarter was $2.1 million, an improvement of $4.4 million from an adjusted EBITDA loss of $2.4 million in the prior-year period. Adjusted EBITDA is a non-GAAP financial measure. See discussion under the heading "Non-GAAP Financial Measures" below for additional information. Balance SheetThe Company ended the second quarter with cash and cash equivalents of $23.3 million, compared with $24.3 million as of December 31, 2025. Net inventories as of June 30, 2026, totaled $55.4 million, down 7.2% compared to December 31, 2025. Cashflow from operating activities YTD as of June 30, 2026 was $3.6M, a $30.7 million improvement over the prior year's same period. Nasdaq Listing UpdateSubsequent to the end of the second quarter, Purple Innovation has received written notification from The Nasdaq Stock Market LLC confirming that the Company has regained compliance with the minimum bid price requirement under Nasdaq Listing Rule 5450(a)(1). Accordingly, the previously disclosed bid price deficiency matter has been closed. 2026 Outlook Given the continued softness in the category, particularly in wholesale, we are lowering our revenue guidance in the range of $420 million to $440 million. Importantly, the continued strength of our DTC business, coupled with our cost discipline, gives us confidence in our ability to deliver adjusted EBITDA of $20 million to $25 million for fiscal 2026. Conference Call and Webcast InformationPurple Innovation, Inc. will host a live conference call to discuss financial results today, Monday, August 10, 2026, at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 833-461-5787 (domestic) or 585-542-9983 (international) and enter Conference ID 765 786 843. The conference call will also be available through a live webcast on the investor relations section of the Company's website at investors.purple.com. Please visit the website at least 15 minutes prior to the start of the call to register and download any necessary software. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for one year. About PurplePurple exists to help people get the best sleep of their lives — by reducing pain, deepening sleep, and unlocking the potential for brighter dawns and better days. At the center of that mission is our signature innovation, the GelFlex Grid®. Originally developed in medical settings to support the body in its most vulnerable moments, the GelFlex Grid delivers a one-of-a-kind combination of pressure relief, alignment, and temperature balance that helps people fall asleep easier, stay asleep longer, and wake up with less pain. That same comfort technology extends beyond mattresses into pillows, bedding, and cushions designed to make everyday life feel a little lighter and a lot more comfortable. Because when pain eases and sleep improves, everything else gets better too — your energy, your outlook, and your ability to show up for the moments that matter. Less pain. Better sleep. Learn more at www.purple.com Forward Looking StatementsCertain statements made in this release that are not historical facts are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company's expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These statements include, but are not limited to, statements regarding our innovation pipeline, our ability to improve profitability, manage costs, generate cash, and optimize our business, the expansion of and benefits to us from our commercial relationships, our ability to drive profitable growth and create shareholder value, and our outlook for revenue and adjusted EBITDA for the full year 2026. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Factors that could influence the realization of forward-looking statements include, among others: changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices and cost of labor; the financial condition of our customers and suppliers; competitive pressures, including the need for technology improvement, successful new product development and introduction; changes in consumer demand, including pullbacks in consumer spending; disruptions to our manufacturing processes; and the risk factors outlined in the "Risk Factors" section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 25, 2026, and in our other filings made with the SEC. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Non-GAAP Financial MeasuresEBITDA, adjusted EBITDA, adjusted net loss, and adjusted net loss per diluted share are non-GAAP financial measures that remove the impact of certain non-cash and non-recurring costs. Management believes that the use of such non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. Refer to the attached table for the reconciliation of such non-GAAP financial measures to the most comparable GAAP financial measure. With respect to the Company's adjusted EBITDA outlook for the full year 2026, a quantitative reconciliation to the corresponding GAAP information cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted, including but not limited to warrant liabilities and stock-based compensation. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results. Investor Contact:Stacy Turnof, Edelman [email protected] 917-362-2581 PURPLE INNOVATION, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES(In thousands) Management believes that the use of the following non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. These non-GAAP financial measures are EBITDA, adjusted EBITDA, adjusted net loss and adjusted net loss per diluted share. Other companies may calculate these non-GAAP measures differently than we do. These non-GAAP measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliation of GAAP Net Income (Loss) to Non-GAAP EBITDA and Adjusted EBITDA A reconciliation of GAAP net income (loss) to the non-GAAP measures of EBITDA and adjusted EBITDA is provided below. EBITDA represents net loss before interest expense, income tax expense, other income, net, and depreciation and amortization. Adjusted EBITDA represents EBITDA excluding costs incurred due to changes in the fair value of the warrant liability, stock-based compensation expense, restructuring related charges, nonrecurring legal fees, strategic alternative costs, severance cost and showroom opening and closing costs. We believe EBITDA and Adjusted EBITDA provide additional useful information with respect to the impact of various adjustments and provide meaningful measures of our operating performance. Reconciliation of GAAP Net Loss to non-GAAP Adjusted Net Loss and Adjusted Net Loss per Diluted Share Our presentation of adjusted net loss assumes that all net loss is attributable to Purple Innovation, Inc. (i.e. there is no allocation of net loss to noncontrolling interests), which assumes the full exchange at the beginning of the period of all outstanding Paired Securities for shares of Class A common stock of Purple Innovation, Inc., adjusted for certain nonrecurring items that we do not believe directly reflect our core operations. Adjusted net loss per share, diluted, is calculated by dividing adjusted net loss by the total shares of Class A common stock outstanding plus any dilutive warrants, options and restricted stock as calculated in accordance with GAAP and assuming the full exchange of all outstanding Paired Securities as of the beginning of each period presented. Adjusted net loss and adjusted net loss per diluted share, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net loss and earnings per share, as calculated in accordance with GAAP. We believe adjusted net loss and adjusted net loss per diluted share, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of net loss, the most directly comparable GAAP measure, to adjusted net loss and the computation of adjusted net loss per diluted share, are set forth below: A reconciliation of net income (loss) per share, diluted, to adjusted net loss per share, diluted is set forth below for the three months ended June 30, 2026 and 2025: A reconciliation of net loss per share, diluted, to adjusted net loss per share, diluted is set forth below for the six months ended June 30, 2026 and 2025: View original content to download multimedia:https://www.prnewswire.com/news-releases/purple-innovation-reports-second-quarter-2026-results-302847380.html

Wall Street expects a year-over-year increase in earnings on lower revenues when Purple Innovation (PRPL) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on August 10, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This company is expected to post quarterly loss of $2.00 per share in its upcoming report, which represents a year-over-year change of +27.3%. Revenues are expected to be $102.42 million, down 2.6% from the year-ago quarter. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Purple Innovation, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -12.50%. On the other hand, the stock currently carries a Zacks Rank of #2. So, this combination makes it difficult to conclusively predict that Purple Innovation will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Purple Innovation would post a loss of$3.25 per share when it actually produced a loss of -$3.25, delivering no surprise. Over the last four quarters, the company has beaten consensus EPS estimates three times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Purple Innovation doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PURPLE INNOVATION, INC. (PRPL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Purple (NASDAQ:PRPL) and the rest of the consumer discretionary - home furnishings stocks fared in Q1. The Consumer Discretionary sector, by definition, is made up of companies selling non-essential goods and services. When economic conditions deteriorate or tastes shift, consumers can easily cut back or eliminate these purchases. For long-term investors with five-year holding periods, this creates a structural challenge: the sector is inherently hit-driven, with low switching costs and fickle customers. As a result, only a handful of companies can reliably grow demand and compound earnings over long periods, which is why our bar is high and High Quality ratings are rare. Home furnishings companies design, manufacture, and sell furniture, décor, bedding, and related household products for residential and commercial spaces. Tailwinds include e-commerce expansion enabling broader distribution, continued remote-work trends sustaining home improvement interest, and premiumization as consumers invest in living spaces. However, headwinds are considerable: demand is closely tied to housing market activity, and rising mortgage rates have slowed home sales—a key purchase trigger. Bulky products carry high shipping costs and complex logistics. Intense competition from low-cost imports and mass-market retailers compresses margins, while consumer spending on furnishings is among the first categories deferred during economic downturns. The 5 consumer discretionary - home furnishings stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 2% while next quarter’s revenue guidance was 2.8% below. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 13.9% since the latest earnings results. Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories. Purple reported revenues of $95.73 million, down 8.1% year on year. This print fell short of analysts’ expectations by 5.9%. Overall, it was a slower quarter for the company with full-year revenue guidance missing analysts’ expectations significantly and a miss of analysts’ EPS estimates. "During the first quarter, we continued to build on the progress we made at the end of last year, with improving consistency across our business and solid performance in our showroom and wholesale channels," said Rob DeMartini, CEO of Purple Innovation. Purple delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. The market seems disappointed with the results as the stock is down 60.3% since reporting and currently trades at $6.40. Read our full report on Purple here, it’s free. Known for its oversized, premium beanbags, Lovesac (NASDAQ:LOVE) is a specialty furniture brand selling modular furniture. Lovesac reported revenues of $138.2 million, flat year on year, outperforming analysts’ expectations by 1.2%. The business performed better than its peers, but it was unfortunately a mixed quarter with a solid beat of analysts’ EBITDA estimates but EBITDA guidance for next quarter missing analysts’ expectations significantly. Lovesac pulled off the biggest analyst estimate beat and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 6.4% since reporting. It currently trades at $17.54. Is now the time to buy Lovesac? Access our full analysis of the earnings results here, it’s free. Founded in 1883, Leggett & Platt (NYSE:LEG) is a diversified manufacturer of products and components for various industries. Leggett & Platt reported revenues of $918.2 million, down 10.2% year on year, falling short of analysts’ expectations by 3.3%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates. Leggett & Platt delivered the slowest revenue growth of the whole group. As expected, the stock is down 7% since the results and currently trades at $10.58. Read our full analysis of Leggett & Platt’s results here. Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications. Mohawk Industries reported revenues of $2.73 billion, up 8% year on year. This print lagged analysts’ expectations by 0.5%. More broadly, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but EPS guidance for next quarter missing analysts’ expectations. The stock is up 2.5% since reporting and currently trades at $108.23. Read our full, actionable report on Mohawk Industries here, it’s free. Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup (NYSE:SGI) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products Somnigroup reported revenues of $1.80 billion, up 12.3% year on year. This number came in 1.6% below analysts’ expectations. It was a slower quarter as it also produced full-year EPS guidance slightly missing analysts’ expectations and a miss of analysts’ EBITDA estimates. Somnigroup achieved the fastest revenue growth in the group. The stock is down 11.1% since reporting and currently trades at $69.92. Read our full, actionable report on Somnigroup here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

This article first appeared on GuruFocus. Net Revenue: $95.7 million, down 8.1% year-over-year. Adjusted Net Revenue: $100.6 million, down 3.4% year-over-year, excluding accounting-related impact. Direct-to-Consumer Revenue: $59.4 million, down 6.2% year-over-year. Showroom Revenue: Increased approximately 5%, with comparable sales up 7%. E-commerce Revenue: Down 10.6%, flat for March. Wholesale Revenue: Decreased approximately 11%, up 1% excluding accounting-related impact. Gross Margin: Approximately 36.8%, impacted by strategic investments and manufacturing overhead deleverage. Operating Expenses: $52 million, down 6.3% year-over-year. Adjusted Loss Per Share: $0.13, compared to $0.11 last year. Adjusted EBITDA: Negative $4.8 million, in line with last year. Cash and Cash Equivalents: $25 million, up from $24.3 million at year-end 2025. Net Inventories: $58.1 million, down 2.7% from December 31, 2025. Updated Revenue Guidance: $465 million to $485 million, down from $500 million to $520 million. Maintained Adjusted EBITDA Guidance: $20 million to $30 million. Warning! GuruFocus has detected 6 Warning Signs with PRPL. Is PRPL fairly valued? Test your thesis with our free DCF calculator. Release Date: April 28, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Showroom sales increased by 5% with comparable sales up 7%, marking the third consecutive quarter of positive growth. The launch of the Purple Royale collection at Mattress Firm showed strong initial sell-through trends and positive consumer response. The Rejuvenate 2.0 collection accounted for 56% of showroom mattress revenue, indicating strong demand for premium products. Partnerships with major retailers like Costco and Sam's Club are performing well, with Costco revenues more than doubling compared to last year. The company is seeing early benefits from improved marketing execution, including better media buying and increased consumer engagement. Total sales were down 8% year-over-year, primarily due to declines in e-commerce and wholesale channels. Gross margins were below the normal 40% baseline, impacted by floor model discounts and lower production absorption. E-commerce revenue declined by 10.6% in the quarter, despite improvements in March. The company had to adjust its full-year revenue guidance downward due to an accounting-related adjustment. Input cost pressures, particularly from foam and transportation, are expected to continue impacting margins in the near term. Q: Can you speak more about the demand trends you saw throughout the quarter and what gives you confidence in the improvement for the second quarter? A: Robert Demartini, CEO: The first quarter started strong in January, was choppy in February, and improved in March across all channels. E-commerce performance was particularly encouraging, reaching flat growth in March, driven by better media buying. Although the consumer remains nervous, trends have improved slightly, but the category is not robust. Q: What are you seeing on the input cost side, particularly with transportation and foam costs, and how are you managing these pressures? A: Todd Vogensen, CFO: We are experiencing pressure from oil prices affecting transportation and foam costs. However, these are being offset by savings from lower tariffs and optimized sourcing. We are managing these headwinds within our guidance, assuming oil prices remain around $100 a barrel. Q: Can you clarify if the sales guidance change is due to underlying demand or just a reporting adjustment? Also, how has the wholesale channel trended recently? A: Todd Vogensen, CFO: The revenue guidance change is purely due to a reporting adjustment, not a change in underlying demand. Wholesale performance is strong, with top accounts like Costco and Mattress Firm performing well year-on-year. The accounting adjustment affected reported figures, but underlying trends are positive. Q: Are you considering any price adjustments due to cost inflation, and how does your competitive pricing environment look? A: Robert Demartini, CEO: We haven't seen any price actions from competitors and will likely follow rather than lead. We aim to reduce discount dependency to improve margins and brand health without damaging volume. Q: Regarding the accounting change in Q1, will there be similar impacts in future quarters? A: Todd Vogensen, CFO: Yes, the impact will continue, particularly as Royale production grows. The adjustment will increase throughout the year, as reflected in our updated revenue guidance. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Accounting-related wholesale adjustment trimmed reported Q1 revenue to $95.7M (down 8.1% y/y) but did not affect gross profit dollars, EBITDA, or cash; excluding the $4.9M reclassification, revenue would have been $100.6M (down 3.4%), and full-year revenue guidance was cut to $465M–$485M while Adjusted EBITDA guidance of $20M–$30M was maintained. Channel mix showed strength in showrooms (revenue +5%, comps +7%) and wholesale ex-adjustment (up ~1%), while e-commerce fell 10.6% for the quarter though March was flat year-over-year; premium products like Rejuvenate 2.0 and the Purple Royale rollout with Mattress Firm are showing early momentum and stronger accessory performance at partners like Costco and Amazon. Gross margin dipped to 36.8% due to floor-model investments and weaker overhead absorption (roughly a 400 bps combined drag) but management expects margin to rebound to around 40% by H2; liquidity and cost control improved (cash $25M, inventories down), and CFO Todd Vogensen will step down May 1, to be replaced by Bob G. Lucian. Interested in Purple Innovation, Inc.? Here are five stocks we like better. 3 more tax-loss selling buy opportunities Purple Innovation (NASDAQ:PRPL) reported first-quarter 2026 results that management said showed “continued progress and greater consistency across our channels,” even as total sales declined year-over-year and gross margin fell below the company’s longer-term target. Executives also detailed an accounting-related wholesale revenue adjustment that lowered reported revenue but did not affect gross profit dollars, EBITDA, or cash flow. Chief Executive Officer Rob DeMartini said the company entered 2026 building on progress from the fourth quarter, citing growth in the showroom and wholesale channels and sequential improvement in e-commerce trends. For the quarter, Purple’s total sales were down 8%, which DeMartini attributed to lower e-commerce and wholesale sales that more than offset gains in showrooms. → Pipelines and Automation: 2 Energy Plays Built for Any Oil Price 3 Small-Cap Stocks For Your Fall Shopping List Chief Financial Officer Todd Vogensen reported net revenue of $95.7 million, down 8.1% year-over-year. The decline was driven primarily by softness in e-commerce and a $4.9 million “accounting-related reduction” to wholesale revenue, partially offset by showroom growth. Excluding that accounting impact, Vogensen said net revenue would have been $100.6 million, down 3.4% year-over-year. By channel, Vogensen said direct-to-consumer (DTC) net revenue was $59.4 million, down 6.2%. Within DTC: Showrooms: Revenue rose about 5%, with comparable sales up 7%, marking the third consecutive quarter of positive comp growth. E-commerce: Revenue fell 10.6% for the quarter, but Vogensen noted March was flat year-over-year, “the first time in three years that we’ve seen a flat month in our e-commerce business.” → Homebuilder Earnings: D.R. Horton Sticks Out as Pulte & NVR Sales Tank Purple Innovation Stock is a DTC Mattress Winner Wholesale revenue decreased about 11% on a reported basis, which Vogensen said primarily reflected the $4.9 million accounting-related reclassification tied to certain commercial payments to a manufacturer affiliated with Mattress Firm. Excluding the impact, wholesale revenue would have been up 1%, driven by growth with Mattress Firm and Costco. Management emphasized that the wholesale accounting item was a reporting change rather than a change in underlying demand. Vogensen said the reclassification reduced net revenues and cost of sales by the same amount and had “no impact on gross profit dollars, EBITDA, or cash flow.” → Meta Platforms Earnings Preview: What to Watch in Q1 2026 Report As a result, Purple updated full-year revenue guidance to $465 million to $485 million from $500 million to $520 million. DeMartini and Vogensen both said the change was entirely tied to the accounting adjustment, with Vogensen stating it was “purely just the reporting change.” Purple maintained its full-year Adjusted EBITDA guidance of $20 million to $30 million. On the durability of the adjustment, Vogensen told analysts it will be ongoing, with the biggest impact tied to Royale production by an affiliate of Mattress Firm. He noted the company reduced revenue guidance by about $35 million versus the $5 million impact recorded in the first quarter, and said the adjustment could grow as Royale volume increases later in the year. DeMartini highlighted demand for premium offerings, including Rejuvenate 2.0, and pointed to early momentum from the rollout of the new Purple Royale collection developed with Mattress Firm. He said Purple Royale is in 3,100 slots across Mattress Firm’s 2,200 stores and that initial sell-through was in line with expectations. He also said Mattress Firm provided increased marketing support, calling it “one of the largest co-marketing investments in our partnership to date.” In showrooms, DeMartini said Rejuvenate 2.0 drove a “very strong mix up,” noting that Rejuvenate 2.0 represented 56% of showroom mattress revenue in the first quarter. He attributed showroom performance to teams focusing on explaining “the why Purple and the which Purple.” Accessories were another bright spot, according to DeMartini. He said Purple’s expanded pillow assortment at Mattress Firm was performing above plan and driving incremental growth. He also cited: Costco: In-store furniture event performed as expected; revenue was “up over double last year’s volume,” with the program expected to pause and return later in the year. Sam’s Club: In-store pillow displays were performing well, and Purple is planning additional events based on recent sell-through. Walmart: The company sees opportunities for incremental pillow assortment additions with select retail partners, including Walmart. QVC: Purple generated “solid performance” from a recent event and sees more opportunities ahead. Amazon: DeMartini called Amazon “a standout,” citing strong growth after shifting more assortment to fulfilled-by-Amazon to improve in-stock levels and delivery speed. Gross margin was 36.8% in the quarter. Vogensen attributed the lower rate to two primary factors: a strategic investment in Royale floor models (which ship at roughly 50% of list price) and modest deleverage in manufacturing overhead due to lower production as the company managed inventory more tightly. In response to a question, Vogensen sized the impacts as roughly 200 basis points of drag from floor models and about another 200 basis points from less favorable overhead absorption. Both DeMartini and Vogensen characterized the margin pressures as timing-related. Vogensen said the floor model and absorption impacts were largely worked through in the first quarter and expects gross margin to return to around 40% by the second half of the year. On costs and tariffs, DeMartini said Purple is actively managing a dynamic input-cost environment, including tariffs and rising costs such as foam. He said mitigation efforts include diversifying the supplier base, expanding multi-sourcing, and selectively insourcing key components like pillows. DeMartini said these actions contributed to about $2 million of cost savings in the quarter and added that the company expects tariffs to be “a modest tailwind this year,” while foam costs remain a near-term headwind. Operating expenses were $52 million, down 6.3% from $55.5 million last year, driven by cost savings and prior restructuring actions, partially offset by higher spending related to the evaluation of strategic alternatives, which Vogensen said can vary by quarter. Purple reported an Adjusted Net Loss per share of $0.13 versus $0.11 a year ago, and Adjusted EBITDA of negative $4.8 million, which Vogensen said was generally in line with last year. On liquidity and working capital, Vogensen said cash and cash equivalents ended the quarter at $25 million, up from $24.3 million at the end of 2025, calling it the company’s “best first quarter cash performance in seven years.” Net inventories were $58.1 million, down 2.7% from year-end. Discussing demand trends, DeMartini said January was “fairly healthy,” February was “a little bit choppy,” and March improved across channels. He said the consumer remains “pretty nervous,” and the category “is not robust,” but he pointed to better media buying as a factor in improved e-commerce performance. Later, he cautioned that one flat month does not establish a trend, noting Purple is changing the information used to guide daily media purchases and has engaged an outside agency to help refine execution. Purple also announced a leadership change in finance. DeMartini said Vogensen will step down as CFO effective May 1 to pursue another opportunity, and the company will appoint Bob G. Lucian as CFO. DeMartini said Lucian brings experience across branded consumer businesses, including serving as CFO of La-Z-Boy. Purple Innovation, Inc is a consumer products company specializing in the design, development and manufacture of comfort technology for the sleep and home furnishings markets. Best known for its proprietary Hyper-Elastic Polymer “Grid” technology, the company engineers mattresses, pillows and cushions that aim to combine pressure relief, support and temperature neutrality. Purple offers an array of sleep products alongside related lifestyle and wellness solutions. The company's product portfolio includes mattress models in various sizes and thicknesses, adjustable bed frames, pillows, sheets and mattress protectors, as well as seat cushions and pet beds. The article "Purple Innovation Q1 Earnings Call Highlights" was originally published by MarketBeat.