Purple Innovation, Inc.

Second-quarter net revenue was $98.3 million, down 6.5% from $105.1 million a year ago. GAAP gross profit rose 4.5% to $44.4 million, and GAAP gross margin was 45.2%, up about 470 basis points from 40.5%. GAAP net loss was $3.2 million, or $0.74 per share, versus a $4.01 per-share loss last year, and adjusted EBITDA was $2.1 million versus an adjusted EBITDA loss of $2.4 million a year ago. By channel, DTC revenue was $60.9 million, up 3.4%, with showroom revenue up 16.6% to $18.4 million and e-commerce down 1.4% to $42.5 million; wholesale revenue was $37.4 million, down 19.1%. Cash and cash equivalents were $23.3 million, net inventories were $55.4 million, and cash flow from operations totaled $3.6 million through the first six months. For fiscal 2026, management lowered revenue guidance to $420 million-$440 million, kept adjusted EBITDA guidance at $20 million-$25 million, and revised its gross margin target to approximately 45% from approximately 40% due to the reclassification of card-processing and financing fees. Management said gross margins should improve in the second half as pricing actions fully flow through, volumes seasonally improve, and sourcing/productivity initiatives continue.

Rob DeMartini said the quarter showed progress in the areas Purple can control: stronger showrooms, better premium product mix, sequential e-commerce improvement, and improved profitability. He emphasized that the company is more disciplined than a year ago and said the strategy remains centered on understanding the consumer, improving sleep products and distribution, and maintaining financial discipline. He also highlighted expansion plans, saying Purple expects five more showrooms by year-end and 12 to 16 additional locations in fiscal 2027.

Bob Lucian focused on the financial bridge and the accounting reclassification. He said the new presentation moves merchant card-processing and third-party financing fees out of cost of revenues and into marketing and sales, increasing GAAP gross margin by 505 basis points in the quarter without affecting revenue, operating loss, adjusted EBITDA, or cash flow. He pointed to the $5.3 million tariff refund, lower operating expenses of $48.7 million, positive operating cash flow for the second straight quarter, and $3.6 million of operating cash flow in the first half, while noting capital spending of $3.6 million for showroom expansion and manufacturing investments.

Analysts pressed on whether the lower revenue guide was mostly wholesale-related, and management said the reduction was primarily from wholesale, while DTC still looks better than wholesale. They also asked about the impact of June price increases; management said pricing was raised 8% to 10% across mattresses and pillows, but early consumer reaction was a bit weaker than expected and they want to see results through Labor Day. On wholesale, management explained that part of the reported decline was contra revenue from co-op advertising and related-party transactions, and said the core business was down about 8% rather than 19%.