Form 10-K: PURPLE INNOVATION, INC.
Purple Innovation, Inc. filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The company reported total revenue of $1.23 billion, a 25% increase from the previous year. Net income was $143.6 million, or $1.33 per diluted share, compared to a net loss of $21.4 million, or $0.20 per diluted share, in the prior year. The company’s gross profit margin increased to 34.5% from 32.1% in the prior year, driven by higher sales and improved manufacturing efficiency. Purple Innovation’s cash and cash equivalents increased to $243.8 million at the end of the year, up from $143.6 million at the end of the prior year. The company did not pay any dividends during the year and did not repurchase any shares of its common stock.
Overview of Purple’s Financial Performance
Purple’s financial performance in 2024 was mixed, with a decrease in net revenues but an increase in gross profit and a reduction in net loss.
Key Highlights:
- Net revenues decreased 4.4% to $487.9 million in 2024 compared to $510.5 million in 2023. This was primarily due to industry-wide demand softness and a reduction in advertising spend.
- Gross profit increased 5.4% to $181.1 million in 2024 from $171.8 million in 2023. Gross profit margin improved to 37.1% from 33.7% due to improved production efficiency.
- Operating expenses decreased 4.3% to $273.3 million in 2024 from $285.5 million in 2023, driven by lower marketing and sales costs and general and administrative expenses.
- Net loss attributable to Purple Inc. decreased to $97.9 million in 2024 from $120.8 million in 2023, primarily due to the increase in gross profit and decrease in operating expenses.
Revenue and Profit Trends:
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Net Revenues | $487.9 million | $510.5 million | -4.4% |
| Gross Profit | $181.1 million | $171.8 million | +5.4% |
| Gross Margin | 37.1% | 33.7% | +3.4 percentage points |
| Net Loss Attributable to Purple Inc. | $97.9 million | $120.8 million | -19.0% |
The decrease in net revenues was driven by industry-wide demand softness and a reduction in advertising spend, partially offset by growth in Purple showroom sales. The improvement in gross margin was due to increased production efficiency and the absence of non-recurring costs associated with the transition to new product lineups in 2023.
Strengths and Weaknesses:
Strengths:
- Innovative, proprietary comfort technologies that differentiate Purple’s products
- Successful expansion of Purple showrooms, which drove higher average selling prices
- Improved production efficiency and cost savings initiatives that boosted gross margins
Weaknesses:
- Industry-wide demand softness impacting overall revenue growth
- Restructuring charges and impairment of intangible assets negatively impacting profitability
- Reliance on debt financing and high interest expense
Outlook for the Future:
Purple is focused on three key initiatives to drive sustainable and profitable growth:
- Continuing to pioneer new comfort technologies to maintain its competitive advantage
- Promoting its product differentiation to attract more customers
- Prioritizing gross margin improvements through cost savings and operational efficiencies
If Purple can successfully execute on these initiatives, it believes it can return to profitable growth. However, the company faces risks and uncertainties that could impact its ability to achieve these goals.
Overall, Purple’s 2024 financial performance showed signs of improvement, with higher gross margins and lower net losses, but the company still faces challenges in driving revenue growth and managing its debt load. Continued innovation, operational efficiency, and effective marketing will be key to Purple’s future success.
