Purple Innovation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 net revenue was $96.5 million, a 18.7% decrease compared to $118.8 million in the third quarter of 2025.
• Direct-to-consumer revenue was $60.9 million, down from $67.2 million in the prior year period; e-commerce revenue was $42.4 million versus $45.3 million, and showroom revenue was $18.5 million versus $22.0 million.
• Wholesale revenue was $35.6 million, down from $51.5 million in the prior year period.
• Approximately $4.0 million of the revenue reduction was attributed to increases in revenue reductions due to payments to customers and a manufacturer under common control with a customer.
• Gross margin was 43.4%, a decrease of 410 basis points year-over-year, driven by lower production leverage and inventory adjustments, partially offset by lower tariff costs and favorable channel mix.
• Operating expenses were $51.7 million, a 24.7% decrease from the prior-year quarter, reflecting lower restructuring costs, marketing expenses, and employee-related and professional services expenses.
• GAAP net loss was $1.4 million, compared to a GAAP net loss of $11.7 million in the prior-year period.
• Adjusted EBITDA was a loss of $0.5 million, compared to a profit of $0.2 million in the prior-year period.
• Cash and cash equivalents ended the quarter at $28.3 million, up from $24.3 million as of December 31, 2025.
• Cash flow from operating activities year-to-date was $10.6 million, representing a $38.7 million improvement over the prior year's same period.
• Net inventories totaled $53.5 million as of September 30, 2026, down $6.2 million from December 31, 2025.
• Related party debt increased to $135.1 million in current liabilities as of September 30, 2026, compared to zero current portion and $111.3 million non-current portion as of December 31, 2025.
• Total stockholders' deficit was $(65.2) million as of September 30, 2026, compared to $(29.7) million as of December 31, 2025.

Guidance and Future Outlook:

• Full-year 2026 revenue guidance is maintained in the range of $420 million to $440 million.
• Full-year 2026 Adjusted EBITDA guidance is now expected to be in the range of $15 million to $20 million.
• Revenue guidance is supported by an improved marketing plan, normal seasonal strength in direct-to-consumer, and new product introductions, partially offset by continued pressure in wholesale.
• The company is preparing for a significant product refresh planned for early 2027, including new Essentials and Hybrid collections representing almost 90% of mattress unit volume.

Business Segments and Product Lines:

• The company opened two new showrooms during the quarter, bringing the total network to 57 stores.
• E-commerce momentum improved as the quarter progressed, supported by stronger conversion rates on Purple.com.
• Wholesale performance was below expectations, prompting the company to increase sales coverage and improve product positioning and differentiation with retail partners.

Market and Competitive Landscape:

• Management described the mattress environment as challenging.
• The company is actively preparing for a product refresh to strengthen long-term performance and compete in the market.

Risks and Challenges:

• Continued pressure in the wholesale channel remains a challenge.
• The company faces a challenging mattress environment affecting overall revenue growth.
• Forward-looking statements involve risks including changes in economic conditions, raw material prices, labor costs, consumer demand, and competitive pressures.

Management Commentary and Tone:

• CEO Rob DeMartini characterized third-quarter performance as mixed but noted encouragement regarding improving e-commerce momentum.
• Management highlighted consistent cash generation with positive operating cash flow for the third consecutive quarter.
• Management expressed confidence that cost structure improvements and the upcoming product refresh position the company for long-term performance strengthening.

Other Key Points:

• The company generated positive operating cash flow for the third consecutive quarter.
• A significant product refresh is scheduled for early 2027, covering nearly 90% of mattress unit volume with new Essentials and Hybrid collections.
• The company hosts a conference call on November 4, 2026, at 4:30 pm Eastern Time to discuss results.
• Adjusted EBITDA is a non-GAAP financial measure used by management to evaluate operating performance.
• The company cannot provide a quantitative reconciliation of full-year 2026 Adjusted EBITDA to GAAP without unreasonable effort due to the difficulty of forecasting adjusting items.