Earnings DecryptSunday, May 18, 2025 11:43 am ET

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Revenue Performance and channel Dynamics:
- purple innovation reported of for Q1 2025, a decrease compared to the previous year.
- The decrease was primarily due to softness in the wholesale and e-commerce channels, with wholesale revenue down and e-commerce down , while the showroom channel grew by .
- The shift is attributed to fewer doors in the wholesale channel and e-commerce struggles in effectively conveying product benefits.

Gross Margin Improvements and Cost Management:
- Adjusted gross margin exceeded , an improvement of compared to the previous year.
- The improvement was driven by successful sourcing initiatives, production efficiencies, and the consolidation of manufacturing operations.
- The company anticipates continued gross margin expansion throughout the year, supported by these measures.

Strategic Partnership Expansion:
- Purple Innovation announced an expanded partnership with Mattress Firm, increasing its presence from 5,000 to 12,000 slots across the network, expected to drive more than in incremental net revenue beginning next year.
- This is supported by a strategic supply agreement with Sherwood Bedding for assembly of product lines, enhancing operational efficiency.
- The partnership is seen as a vote of confidence in Purple's brand and commitment to driving growth and profitability.

Product Innovation and Market Strategy:
- The launch of the Rejuvenate 2.0 mattress line is seen as a significant milestone, with initial feedback being strongly positive, including a 60% year-over-year increase in slot commitments in the wholesale channel.
- The focus is on effectively communicating the benefits of gel grid technology, particularly in the wholesale and showroom channels, where customers can experience the product firsthand.
- This strategy aims to enhance conversion rates and position Purple as a premium sleep solution.