UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____________ TO _____________

Commission File Number: 001-37523

PURPLE INNOVATION, INC.

(Exact name of registrant as specified in its charter)

Delaware		47-4078206
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4100 NORTH CHAPEL RIDGE ROAD SUITE 200

LEHI, UTAH

84043

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (801) 756-2600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	PRPL	The NASDAQ Stock Market LLC
Preferred Stock Purchase Rights	N/A	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2024, 107,518,566 shares of the registrant’s Class A common stock, $0.0001 par value per share, and 191,648 shares of the registrant’s Class B common stock, $0.0001 par value per share, were outstanding.

PURPLE INNOVATION, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

			Page
Part I.	Financial Information		1
	Item 1.	Financial Statements (Unaudited):	1
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Operations	2
		Condensed Consolidated Statements of Stockholders’ Equity	3
		Condensed Consolidated Statements of Cash Flows	4
		Notes to Condensed Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
	Item 4.	Controls and Procedures	36

Part II.	Other Information		37
	Item 1.	Legal Proceedings	37
	Item 1A.	Risk Factors	37
	Item 5.	Other Information	39
	Item 6.	Exhibits	40
	Signatures		41

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PURPLE INNOVATION, INC.

Condensed Consolidated Balance Sheets

(unaudited – in thousands, except for par value)

	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	23,399		$	26,857
Accounts receivable, net		29,662			37,802
Inventories		59,881			66,878
Prepaid expenses		9,241			8,536
Other current assets		1,005			1,737
Total current assets		123,188			141,810
Property and equipment, net		100,155			128,661
Operating lease right-of-use assets		74,254			95,767
Intangible assets, net		9,226			22,196
Other long-term assets		2,450			2,191
Total assets	$	309,273		$	390,625

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	30,393		$	49,831
Accrued compensation		15,109			5,064
Customer prepayments		3,778			5,718
Accrued rebates and allowances		10,040			13,243
Accrued warranty liabilities – current portion		7,634			9,793
Operating lease obligations – current portion		16,157			14,843
Other current liabilities		11,353			12,490
Total current liabilities		94,464			110,982
Related party debt		50,813			—
Long-term debt, net of current portion		—			26,909
Accrued warranty liabilities, net of current portion		27,336			25,798
Operating lease obligations, net of current portion		85,621			109,094
Warrant liabilities		19,682			—
Other long-term liabilities		3,344			2,235
Total liabilities		281,260			275,018
Commitments and contingencies (Note 14)
Stockholders’ equity:
Class A common stock; $0.0001 par value, 210,000 shares authorized; 107,516 issued and outstanding at September 30, 2024 and 105,507 issued and outstanding at December 31, 2023		11			11
Class B common stock; $0.0001 par value, 90,000 shares authorized; 192 issued and outstanding at September 30, 2024 and at December 31, 2023		—			—
Additional paid-in capital		593,343			591,380
Accumulated deficit		(565,387	)		(475,969	)
Total stockholders’ equity attributable to Purple Innovation, Inc.		27,967			115,422
Noncontrolling interest		46			185
Total stockholders’ equity		28,013			115,607
Total liabilities and stockholders’ equity	$	309,273		$	390,625

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PURPLE INNOVATION, INC.

Condensed Consolidated Statements of Operations

(unaudited – in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenues, net	$	118,598		$	139,996		$	358,902		$	364,605
Cost of revenues:
Cost of revenues		70,546			92,687			220,190			241,244
Cost of revenues - restructuring related charges		12,859			—			12,859			—
Total cost of revenues		83,405			92,687			233,049			241,244
Gross profit		35,193			47,309			125,853			123,361
Operating expenses:
Marketing and sales		42,939			52,816			125,778			137,368
General and administrative		17,266			17,524			55,111			67,628
Research and development		2,920			2,704			10,572			9,001
Restructuring, impairment and other related charges		18,881			—			18,881			—
Loss on impairment of goodwill		—			6,879			—			6,879
Total operating expenses		82,006			79,923			210,342			220,876
Operating loss		(46,813	)		(32,614	)		(84,489	)		(97,515	)
Other income (expense):
Interest expense		(4,394	)		(594	)		(13,029	)		(1,148	)
Other income, net		7,165			205			11,612			315
Change in fair value – warrant liabilities		4,795			—			(111	)		—
Loss on extinguishment of debt		—			(3,114	)		(3,394	)		(4,331	)
Total other income (expense), net		7,566			(3,503	)		(4,922	)		(5,164	)
Net loss before income taxes		(39,247	)		(36,117	)		(89,411	)		(102,679	)
Income tax expense		(63	)		(18	)		(176	)		(162	)
Net loss		(39,310	)		(36,135	)		(89,587	)		(102,841	)
Net loss attributable to noncontrolling interest		(82	)		(131	)		(169	)		(417	)
Net loss attributable to Purple Innovation, Inc.	$	(39,228	)	$	(36,004	)	$	(89,418	)	$	(102,424	)

Net loss per share:
Basic	$	(0.36	)	$	(0.34	)	$	(0.84	)	$	(0.99	)
Diluted	$	(0.36	)	$	(0.34	)	$	(0.84	)	$	(0.99	)

Weighted average common shares outstanding:
Basic		107,508			105,326			107,008			102,962
Diluted		107,508			105,326			107,008			102,962

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PURPLE INNOVATION, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited – in thousands)

	Class A				Class B					Additional						Total
	Common Stock				Common Stock					Paid-in			Accumulated			Stockholders’			Noncontrolling			Total
	Shares		Par Value		Shares			Par Value		Capital			Deficit			Equity			Interest			Equity
Balance – December 31, 2023		105,507	$	11		205		$	—	$	591,380		$	(475,969	)	$	115,422		$	185		$	115,607
Net loss		—		—		—			—		—			(50,217	)		(50,217	)		(51	)		(50,268	)
Stock-based compensation		—		—		—			—		492			—			492			—			492
Issuance of stock for Intellibed acquisition		1,500		—		—			—		—			—			—			—			—
Issuance of stock under equity compensation plans		473		—		—			—		(115	)		—			(115	)		—			(115	)
Impact of transactions affecting NCI		—		—		—			—		(33	)		—			(33	)		33			—
Balance – March 31, 2024		107,480	$	11		205		$	—	$	591,724		$	(526,186	)	$	65,549		$	167		$	65,716
Net income (loss)		—		—		—			—		—			27			27			(36	)		(9	)
Stock-based compensation		—		—		—			—		825			—			825			—			825
Issuance of common stock under equity compensation plans		23		—		—			—		—			—			—			—			—
Impact of transactions affecting NCI		—		—		—			—		(8	)		—			(8	)		8			—
Balance – June 30, 2024		107,503	$	11		205		$	—	$	592,541		$	(526,159	)	$	66,393		$	139		$	66,532
Net loss		—		—		—			—		—			(39,228	)		(39,228	)		(82	)		(39,310	)
Stock-based compensation		—		—		—			—		791			—			791			—			791
Exchange of stock		13		—		(13	)		—		—			—			—			—			—
Impact of transactions affecting NCI		—		—		—			—		11			—			11			(11	)		—
Balance – September 30, 2024		107,516	$	11		192		$	—	$	593,343		$	(565,387	)	$	27,967		$	46		$	28,013

	Class A				Class B					Additional						Total
	Common Stock				Common Stock					Paid-in			Accumulated			Stockholders’			Noncontrolling			Total
	Shares		Par Value		Shares			Par Value		Capital			Deficit			Equity			Interest			Equity
Balance – December 31, 2022		91,380	$	9		448		$	—	$	529,466		$	(355,212	)	$	174,263		$	908		$	175,171
Net loss		—		—		—			—		—			(25,933	)		(25,933	)		(119	)		(26,052	)
Stock-based compensation		—		—		—			—		1,192			—			1,192			—			1,192
Issuance of stock under equity compensation plans		265		—		—			—		—			—			—			—			—
Issuance of stock upon underwritten offering, net of costs		13,400		2		—			—		57,198			—			57,200			—			57,200
Impact of transactions affecting NCI		—		—		—			—		(103	)		—			(103	)		103			—
Balance – March 31, 2023		105,045	$	11		448		$	—	$	587,753		$	(381,145	)	$	206,619		$	892		$	207,511
Net loss		—		—		—			—		—			(40,487	)		(40,487	)		(167	)		(40,654	)
Stock-based compensation		—		—		—			—		1,661			—			1,661			—			1,661
Exchange of stock		20		—		(20	)		—		—			—			—			—			—
Proportional Representation Preferred Linked Stock redemption fee		—		—		—			—		(105	)		—			(105	)		—			(105	)
Additional costs associated with underwritten public stock offering		—		—		—			—		(201	)		—			(201	)		—			(201	)
Issuance of stock under equity compensation plans		258		—		—			—		—			—			—			—			—
Impact of transactions affecting NCI		—		—		—			—		37			—			37			(37	)		—
Balance – June 30, 2023		105,323	$	11		428		$	—	$	589,145		$	(421,632	)	$	167,524		$	688		$	168,212
Net loss		—		—		—			—		—			(36,004	)		(36,004	)		(131	)		(36,135	)
Stock-based compensation		—		—		—			—		939			—			939			—			939
Exchange of stock		10		—		(10	)		—		—			—			—			—			—
Impact of transactions affecting NCI		—		—		—			—		12			—			12			(12	)		—
Balance – September 30, 2023		105,333	$	11		418		$	—	$	590,096		$	(457,636	)	$	132,471		$	545		$	133,016

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PURPLE INNOVATION, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited – in thousands)

	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(89,587	)	$	(102,841	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		27,448			18,963
Non-cash interest		5,303			920
Paid-in-kind interest		7,028			—
Non-cash restructuring, impairment and other related charges		20,115			—
Loss on impairment of goodwill		—			6,879
Change in fair value – warrant liabilities		111			—
Loss on extinguishment of debt		3,394			4,331
Stock-based compensation		2,108			3,792
Loss on disposal of property and equipment		770			—
Changes in operating assets and liabilities:
Accounts receivable		8,140			1,465
Inventories		2,971			696
Prepaid expenses and other assets		378			(1,204	)
Operating leases, net		(2,105	)		1,462
Accounts payable		(16,558	)		544
Accrued compensation		10,045			(801	)
Customer prepayments		(1,940	)		723
Accrued rebates and allowances		(3,203	)		(1,229	)
Accrued warranty liabilities		(621	)		7,422
Other accrued liabilities		1,592			3,070
Net cash used in operating activities		(24,611	)		(55,808	)

Cash flows from investing activities:
Excess restricted cash returned to acquiree		—			(826	)
Purchase of property and equipment		(6,160	)		(8,769	)
Investment in intangible assets		(221	)		(588	)
Net cash used in investing activities		(6,381	)		(10,183	)

Cash flows from financing activities:
Payments on term loan		(25,000	)		(24,656	)
Payments on revolving line of credit		(5,000	)		—
Proceeds from related party loan		61,000			—
Proceeds from term loan		—			25,000
Payments for debt issuance costs		(3,466	)		(6,126	)
Proceeds from stock offering		—			60,300
Payments for public offering costs		—			(3,301	)
Proportional Representation Preferred Linked Stock redemption fee		—			(105	)

SEC Form 10-Q filed by Purple Innovation Inc.