Purple’s second quarter results met Wall Street’s top- and bottom-line expectations, but the company’s 12.6% year-over-year revenue decline and negative market reaction reflected ongoing challenges. Management attributed performance to a mix of supply constraints in new product launches, evolving retail partnerships, and persistent tariff-related margin pressures. CEO Robert DeMartini noted that demand for the Rejuvenate 2.0 mattress exceeded supply, particularly in showrooms, and highlighted that the timing of inventory shipments to Mattress Firm and wholesale door exits from the previous year weighed on reported revenue. The company was candid about the temporary nature of these headwinds, emphasizing ongoing cost actions and operational improvements to support recovery.
Is now the time to buy PRPL? Find out in our full research report (it’s free).
Purple (PRPL) Q2 CY2025 Highlights:
- Revenue: $105.1 million vs analyst estimates of $105.3 million (12.6% year-on-year decline, in line)
- Adjusted EPS: -$0.11 vs analyst estimates of -$0.12 (in line)
- Adjusted EBITDA: -$2.36 million vs analyst estimates of -$2.92 million (-2.2% margin, relatively in line)
- The company reconfirmed its revenue guidance for the full year of $475 million at the midpoint
- EBITDA guidance for the full year is $5 million at the midpoint, above analyst estimates of $1.83 million
- Operating Margin: -13.5%, down from -12.1% in the same quarter last year
- Locations: 3,290.5 at quarter end, down from 3,500 in the same quarter last year
- Market Capitalization: $84.72 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Purple’s Q2 Earnings Call
- Bradley Thomas (KeyBanc Capital Markets) asked about the cadence of sales and drivers of second-half acceleration. CEO Robert DeMartini explained that Q2 began slowly but improved due to demand for Rejuvenate 2.0 and Mattress Firm expansion, with further momentum expected as supply catches up.
- Matt Koranda (ROTH Capital Partners) questioned whether sequential growth is concentrated in wholesale or also visible in direct channels. DeMartini clarified that both direct-to-consumer and wholesale are seeing positive trends, with e-commerce also showing early signs of improvement.
- Robbie Griffin (Raymond James) pressed on supply chain capacity and fulfillment as retail partnerships scale. DeMartini acknowledged prior supply bottlenecks but stated that lead times are returning to normal and capacity is being managed to support new launches.
- Griffin (Raymond James) also inquired about price increases to offset tariffs and their impact on demand. DeMartini reported minimal customer resistance so far and limited volume impact due to targeted pricing strategies.
- Daniel Silverstein (UBS) sought clarification on the size and timing of Mattress Firm’s contribution to revenue. DeMartini projected a substantial revenue boost next year as the partnership reaches full scale, with some incremental benefit in the current year.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) the scale and effectiveness of the Mattress Firm rollout and other new retail partnerships, (2) the pace of gross margin recovery as tariff mitigation and cost-saving measures take hold, and (3) showroom profitability improvements alongside renewed e-commerce engagement. Further progress on distribution with large national retailers like Costco and Walmart will also serve as important indicators of Purple’s execution and brand traction.
Purple currently trades at $0.80, down from $0.85 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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