PRPL Q4 Loss Smaller Than Expected, Revenue Increases Due to Strong Wholesale Performance

Purple Innovation, Inc. Exceeds Expectations in Q4 2025

Purple Innovation, Inc. (PRPL) reported its financial results for the fourth quarter of 2025, surpassing both revenue and earnings forecasts from Zacks Consensus Estimate. Both figures also showed improvement compared to the same period last year.

The company’s performance in the fourth quarter marked a significant milestone in its ongoing turnaround strategy. This progress was attributed to enhanced execution in wholesale and showroom operations, increased demand for its premium products, and the ongoing impact of cost-reduction measures. Leadership emphasized that these gains stemmed from internal improvements rather than broader industry trends, giving the company a stronger position as it heads into 2026.

Q4 Price, Consensus, and EPS Overview

Highlights from Purple’s Fourth Quarter

During the quarter, PRPL reported an adjusted net loss of $0.02 per share, which was significantly better than the anticipated loss of $0.08 per share and also improved from the $0.11 loss in the same quarter last year.

Net sales reached $140.7 million, representing a 9.1% year-over-year increase and exceeding the consensus estimate of $122 million. This growth was primarily driven by strong wholesale results, including a full quarter of expanded placements with Mattress Firm and continued momentum with Costco, though these gains were partially offset by weaker online sales.

• Direct-to-Consumer (DTC): Revenues totaled $71.9 million, down 9.9% from the previous year. However, showroom sales within this segment rose by 4.5%, marking the second consecutive quarter of growth, and comparable showroom sales climbed 8.8%, supported by the ongoing success of Rejuvenate 2.0.
• E-commerce: Online sales declined by 15.3% year over year.
• Wholesale: Revenues surged by 39.8%, largely due to increased distribution through Mattress Firm and Costco.

Margin and Cost Analysis

Adjusted gross profit for the quarter rose 1.9% to $59 million, though the adjusted gross margin narrowed by 300 basis points to 41.9%.

Operating expenses, on an adjusted basis, fell 9.8% to $55.8 million, down from $61.9 million a year earlier. This reduction was mainly the result of restructuring and additional cost-saving measures. As a percentage of sales, operating expenses dropped to 39.7%, an improvement of 830 basis points year over year.

Adjusted EBITDA jumped to $8.8 million from $2.9 million in the prior year, a rise of about 203%, fueled by higher revenues and disciplined expense management. The adjusted EBITDA margin improved by 410 basis points to 6.3%.

PRPL Stock Performance Over the Last Three Months

Source: Zacks Investment Research

Financial Position at Quarter-End

As of December 31, 2025, Purple Innovation held $24.3 million in cash and cash equivalents. Inventory levels were $59.7 million, reflecting a 5% increase from the previous year. The company reported a total shareholders’ deficit of $29.7 million, and net cash used in operating activities for 2025 amounted to $33.8 million.

Outlook for 2026

For the first quarter of 2026, Purple Innovation anticipates total revenues between $100 million and $105 million, with adjusted EBITDA expected to range from a loss of $7 million to a loss of $4 million.

For the full year, management projects revenues in the range of $500 million to $520 million and adjusted EBITDA between $20 million and $30 million. The company expects continued strength from the Rejuvenate 2.0 product line and further expansion with Mattress Firm and Costco to drive growth.

Ongoing operational improvements and restructuring are expected to further enhance EBITDA, gross margin, and operating expense efficiency, ultimately supporting stronger profitability and cash flow. Despite these efforts, PRPL shares have declined 8.2% over the past three months, while the broader consumer products staples industry saw a 0.6% increase.

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Additional Resources

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