Bedding and comfort retailer Purple (NASDAQ:PRPL) fell short of analysts' expectations in Q1 CY2024, with revenue up 12.5% year on year to $120 million. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $550 million at the midpoint. It made a non-GAAP loss of $0.19 per share, improving from its loss of $0.26 per share in the same quarter last year.
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Purple (PRPL) Q1 CY2024 Highlights:
- Revenue: $120 million vs analyst estimates of $122.1 million (1.7% miss)
- EPS (non-GAAP): -$0.19 vs analyst estimates of -$0.16
- The company reconfirmed its revenue guidance for the full year of $550 million at the midpoint
- Gross Margin (GAAP): 34.8%, down from 38% in the same quarter last year
- Free Cash Flow was -$19.85 million compared to -$4.48 million in the previous quarter
- Market Capitalization: $182.7 million
Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.
Home FurnishingsA healthy housing market is good for furniture demand as more consumers are buying, renting, moving, and renovating. On the other hand, periods of economic weakness or high interest rates discourage home sales and can squelch demand. In addition, home furnishing companies must contend with shifting consumer preferences such as the growing propensity to buy goods online, including big things like mattresses and sofas that were once thought to be immune from e-commerce competition.
Sales GrowthA company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. Purple's annualized revenue growth rate of 11.3% over the last five years was weak for a consumer discretionary business. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Purple's recent history shows a reversal from its already weak five-year trend as its revenue has shown annualized declines of 12.1% over the last two years.
This quarter, Purple's revenue grew 12.5% year on year to $120 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 6.3% over the next 12 months, a deceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Purple's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer discretionary sector, averaging negative 9%.
Purple burned through $19.85 million of cash in Q1, equivalent to a negative 16.5% margin, reducing its cash burn by 20.7% year on year.
Key Takeaways from Purple's Q1 Results We struggled to find many strong positives in these results. Its revenue and EPS fell short of Wall Street's estimates. On the bright side, its full-year revenue guidance was in line while its EBITDA forecast beat. Overall, the results were mixed. The stock is flat after reporting and currently trades at $1.7 per share.
