Q4 2025 Purple Innovation Inc Earnings Call

March 31, 2026

Speaker #1: Purple Innovation fourth quarter full year 2025 earnings. All eyes have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session.

Speaker #1: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.

Speaker #1: Thank you. I would now like to turn the call over to Stacy Turnof, Investor Relations. Please go ahead.

Speaker #2: Thank you for joining Purple Innovation's fourth quarter and full year 2025 earnings call. A copy of our earnings press release is available on the Investor Relations section of Purple's website at www.purple.com.

Speaker #2: Before we begin, I'd like to remind you that certain statements made in this presentation are forward-looking statements. These statements reflect Purple Innovation's judgment and analysis as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations.

Speaker #2: We should not place undue reliance on these forward-looking statements. For more information, please refer to the risk factors outlined in our filings with the SEC.

Speaker #2: Additionally, today's presentation will reference non-GAAP financial measures such as adjusted gross margin, adjusted operating expenses, adjusted EBITDA, adjusted net loss, and adjusted net loss per share.

Speaker #2: A reconciliation of these measures to their most comparable GAAP measures can be found in the earnings release available on our website. With that, I'll turn the call over to Rob DeMartini, Purple Innovation's Chief Executive Officer.

Speaker #3: As we close out 2025, I'm proud of how far the business has come over the past year. While the broader market remains challenging, the progress we're making at Purple is increasingly evident in our results.

Speaker #3: The fourth quarter marked an important inflection point for the company. Revenue increased approximately 9% year over year. We delivered gross profit expansion and profitability improved meaningfully across the business.

Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Purple Innovation Q4 full year 2025 earnings. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Stacy Turnof, Investor Relations. Please go ahead.

Speaker #3: In the quarter, we generated adjusted EBITDA of approximately $8.8 million and finished the year profitable. This performance was driven by the benefits of the strategic actions we've taken.

Speaker #3: Those actions include our cost initiatives that are now fully embedded in the business, including consolidating our manufacturing footprint, as well as a full quarter of expanded mattress firm distribution and a significant expansion of our Costco program.

Stacy Turnof: Thank you for joining Purple Innovation's Q4 and full year 2025 earnings call. A copy of our earnings press release is available on the investor relations section of Purple's website at purple.com. Before we begin, I'd like to remind you that certain statements made in this presentation are forward-looking statements. These statements reflect Purple Innovation's judgment and analysis as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. You should not place undue reliance on these forward-looking statements. For more information, please refer to the risk factors outlined in our filings with the SEC. Additionally, today's presentation will reference non-GAAP financial measures such as adjusted gross margin, adjusted operating expenses, Adjusted EBITDA, adjusted net loss, and adjusted net loss per share.

Speaker #3: Looking at the full year, 2025 was a period where the business became meaningfully stronger. We continued to build on our path to premium sleep strategy and delivered positive adjusted EBITDA for the year, finishing within the guidance range we established at the beginning of 2025.

Speaker #3: Importantly, we achieved profitability levels that we haven't seen since 2021. That progress was driven by the execution and by the changes we put in place.

Speaker #3: Not by a recovery in the broader market. Which speaks to the durability of the model we've been building. Our focus throughout the year was not on short-term fixes, but on creating a business that can perform more consistently.

Stacy Turnof: A reconciliation of these measures to their most comparable GAAP measures can be found in the earnings release available on our website. With that, I'll turn the call over to Rob DeMartini, Purple Innovation's Chief Executive Officer.

Speaker #3: Taken together, this represents more than a strong finish to the year. It marks a clear shift from defense to offense. Growth, margin expansion, and profitability are showing up in the numbers, and that's in a market which is down low single digits.

Robert DeMartini: As we close out 2025, I'm proud of how far the business has come over the past year. While the broader market remains challenging, the progress we're making at Purple is increasingly evident in our results. Q4 marked an important inflection point for the company. Revenue increased approximately 9% year over year. We delivered gross profit expansion, and profitability improved meaningfully across the business. In Q4, we generated adjusted EBITDA of approximately $8.8 million and finished the year profitable. This performance was driven by the benefits of the strategic actions we've taken. Those actions include our cost initiatives that are now fully embedded in the business, including consolidating our manufacturing footprint, as well as a full quarter of expanded Mattress Firm distribution, and a significant expansion of our Costco program.

Speaker #3: The direction is clear, the momentum is real, and we're entering 2026 with a playbook designed to scale profitably as demand continues to improve. We've made meaningful progress across each of our sales channels in 2025, and in the fourth quarter, two of our three channels delivered positive growth for the second consecutive quarter.

Speaker #3: Comparable sales in our showrooms increased 8.8% in the quarter, and showrooms continued to grow in profitability for the full year. Sales execution improved, the updated selling model gained traction, and rejuvenate 2.0 represented over 50% of showroom mattress revenue during the quarter, with more than 80% of showrooms four-wall profitable for the full year.

Speaker #3: Wholesale was a key driver in 2025, with a robust 39.8% growth in the fourth quarter. E-commerce performance was mixed during the year and declined in the fourth quarter, though we did see pockets of strength around Black Friday and Cyber Monday.

Robert DeMartini: Looking at the full year, 2025 was a period where the business became meaningfully stronger. We continued to build on our path to premium sleep strategy and delivered positive Adjusted EBITDA for the year, finishing within the guidance range we established at the beginning of 2025. Importantly, we achieved profitability levels that we haven't seen since 2021. That progress was driven by the execution, and by the changes we put in place, not by a recovery in the broader market, which speaks to the durability of the model we've been building. Our focus throughout the year was not on short-term fixes, but on creating a business that can perform more consistently. Taken together, this represents more than a strong finish to the year. It marks a clear shift from defense to offense.

those actions include our costs initiatives that are now fully embedded in the business, including consolidating, our manufacturing footprint, as well as a full quarter of expanded Mattress, Firm distribution, and a significant expansion of our Costco program.

Speaker #3: At the same time, we saw solid marketplace performance, particularly on Amazon, and meaningful improvements to the website experience tied to our less pain, better sleep positioning.

Looking at the full year 2025 was a period where the business became meaningfully stronger. We continued to build on our path to premium sleeve strategy and delivered positive adjusted. Evida for the year finishing within the guidance range. We established at the beginning of 2025,

Speaker #3: Stepping back, the way we're thinking about the business today is fundamentally different than a year ago. Last year was about reshaping the business for a tougher market.

Importantly, we achieved profitability levels that we haven't seen since 2021.

That progress was driven by the execution and by the changes we put in place not by a recovery in the broader Market.

Speaker #3: Right-sizing our cost structure, strengthening the foundation, and restoring profitability. Today, we're focused on growth. Going forward, our focus is centered on three priorities: deepening our understanding of the consumer, delivering better sleep through product experience and expanded distribution, and executing with financial discipline across the business.

Which speaks to the durability of the model we've been building.

Our Focus throughout the year was not on short-term fixes but on creating a business that can perform more consistently.

Robert DeMartini: Growth, margin expansion, and profitability are showing up in the numbers, and that's in a market which is down low single digits. The direction is clear, the momentum is real, and we're entering 2026 with a playbook designed to scale profitably as demand continues to improve. We've made meaningful progress across each of our sales channels in 2025, and in Q4, two of our three channels delivered positive growth for the second consecutive quarter. Comparable sales in our showrooms increased 8.8% in the quarter, and showrooms continued to grow in profitability for the full year. Sales execution improved, the updated selling model gained traction, and Rejuvenate 2.0 represented over 50% of showroom mattress revenue during the quarter, with more than 80% of showrooms four-wall profitable for the full year.

Speaker #3: This approach builds on what's already working and reflects how we're running our business. With that framing, let me walk you through our progress against these priorities and what they mean for the business going forward.

Digits.

The direction is clear, the momentum is real and we're entering 2026 with a Playbook designed to scale profitably as demand continues to improve.

Speaker #3: Number one, knowing our consumer. Over the past year, we've sharpened our focus on understanding who our consumers are, what matters most to them, and how they make their purchase decisions across the channels.

We've made meaningful progress each of our sales channels in 2025 and in the fourth quarter, 2 of our 3 channels, delivered positive growth for the second consecutive quarter.

Speaker #3: Our work is shaping how we communicate, shifting us away from promotionally led messaging towards clearer, benefit-driven storytelling focusing on gel flex grid technology. That helps consumers understand how Purple delivers better sleep.

Comparable sales in our showrooms increased to 8.8% in the quarter and showrooms continued to grow in profitability for the full year.

Speaker #3: Our less pain, better sleep positioning continues to resonate, providing a consistent consumer-led message that translates across e-commerce, retail, and wholesale channels. Importantly, we're focused on reaching our consumers with the right message, in the right place, at the right point in their decision journey.

Robert DeMartini: Wholesale was a key driver in 2025, with a robust 39.8% growth in the Q4. E-commerce performance was mixed during the year and declined in the Q4, though we did see pockets of strength around Black Friday and Cyber Monday. At the same time, we saw solid marketplace performance, particularly on Amazon, and meaningful improvements to the website experience tied to our Less pain. Better sleep. positioning. Stepping back, the way we're thinking about the business today is fundamentally different than a year ago. Last year was about reshaping the business for a tougher market, right-sizing our cost structure, strengthening the foundation, and restoring profitability. Today, we're focused on growth. Going forward, our focus is centered on three priorities, deepening our understanding of the consumer, delivering better sleep through product experience and expanded distribution, and executing with financial discipline across the business.

Sales execution improved. The updated selling model gained traction, and Rejuvenate 2.0 represented over 50% of showroom mattress revenue during the quarter, with more than 80% of showrooms four-wall profitable for the full year.

Wholesale was a key driver in 2025 with a robust 39.8% growth, in the fourth quarter.

Speaker #3: We're seeing early signs of improved brand momentum, with increased awareness beginning to translate into brand consideration. As a result, we're improving our clarity across touch points, strengthening engagement, and supporting higher quality conversion as consumers better understand the value of our

E-commerce performance was mixed during the year and declined. In the fourth quarter, though, we did see pockets of strength around Black Friday and Cyber Monday.

At the same time we saw solid Marketplace performance particularly on Amazon and meaningful improvements to the website experience tied to our less pain, better sleep positioning.

Speaker #1: Our product in e-commerce , we're encouraged by the progress we're making as part of better meeting consumers where they're shopping . Our expanded presence on Amazon is gaining traction Improvements in availability , delivery speed , and conversion are strengthening the consumer experience and broadening our reach , particularly among new to brand consumers This expanded assortment is driving a healthy lift in Amazon sales , especially in pillow and seat cushions and introduces new consumers to our technology .

Stepping back the way we're thinking about the business today. It's fundamentally different than a year ago. Last year was about reshaping the business for a tougher market, right? Sizing. Our cost structure strengthening the foundation and restoring profitability.

Today we're focused on growth.

Going forward. Our focus is centered on 3 priorities.

Deepening our understanding of the consumer.

Robert DeMartini: This approach builds on what's already working and reflects how we're running our business. With that framing, let me walk you through our progress against these priorities and what they mean for the business going forward. Number one, knowing our consumer. Over the past year, we've sharpened our focus on understanding who our consumers are, what matters most to them, and how they make their purchase decisions across the channels. Our work is shaping how we communicate, shifting us away from promotionally led messaging towards clearer benefit-driven storytelling, focusing on GelFlex Grid technology that helps consumers understand how Purple delivers better sleep. Our Less Pain, Better Sleep positioning continues to resonate, providing a consistent consumer-led message that translates across e-commerce, retail, and wholesale channels. Importantly, we're focused on reaching our consumers with the right message in the right place at the right point in their decision journey.

Delivering better sleep through product experience and expanded distribution, and executing with financial discipline across the business.

This approach builds on what's already working and reflects how we're running our business.

Speaker #1: We're also seeing this consumer focused approach resonate through our partnerships . Our participation in mattress firms sleep easy marketing campaign drove sales conversion and improved aided awareness scores at the heart of better Sleep is better product .

With that framing. Let me walk you through our progress against these priorities and what they mean for the business going forward.

Number 1, knowing our consumer.

over the past year, we've sharpened our focus on understanding who our consumers are

Speaker #1: From there , we focus on how we bring innovation to life , to the consumer experience . And expanded distribution . Innovation remains at the core of Purple's differentiation and our rejuvenate 2.0 collection continues to validate that approach Performance exceeded our expectations in 2025 , with strong traction across both showrooms and wholesale .

What matters most to them and how they make their purchase decisions across the channels.

Our work is shaping how we communicate, shifting us away from promotional LED messaging towards clearer, benefit-driven storytelling focusing on GelFlex Grid technology. That helps consumers understand how Purple delivers better sleep.

Speaker #1: As retail partners expanded , rejuvenate 2.0 placement on their floors through our direct channels Rejuvenate 2.0 is performing well at an average selling price of almost $5,800 , demonstrating our ability to drive demand at meaningfully higher price points and reinforcing the value consumers place on better sleep .

Our less pain better sleep positioning continues to resonate. Providing a consistent consumer-led message, that translates across e-commerce, retail and wholesale channels.

Robert DeMartini: We're seeing early signs of improved brand momentum with increased awareness beginning to translate into brand consideration. As a result, we're improving our clarity across touch points, strengthening engagement, and supporting higher quality conversion as consumers better understand the value of our product. In e-commerce, we're encouraged by the progress we're making. As part of better meeting consumers where they're shopping, our expanded presence on Amazon is gaining traction. Improvements in availability, delivery speed, and conversion are strengthening the consumer experience and broadening our reach, particularly among new to brand consumers. This expanded assortment is driving a healthy lift in Amazon sales, especially in pillow and seat cushions, and introduces new consumers to our technology. We're also seeing this consumer-focused approach resonate through our partnerships. Our participation in Mattress Firm's Sleep Easy marketing campaign drove sales conversion and improved aided awareness scores.

Importantly, we're focused on reaching our consumers with the right message, in the right place, at the right point in their decision journey.

Speaker #1: We also completed development work on Purple Royale , a new premium offering developed in close partnership with mattress firm This is an important product for us and a meaningful step forward in our premium strategy .

We're seeing early signs of improved brand momentum, with increased awareness beginning to translate into brand consideration.

Speaker #1: Purple Royale is complementary to our rejuvenate 2.0 collection with similar price points across the curated for model lineup . The launch is is on track with initial floor models arriving now .

As a result, we're improving our clarity across touchpoints, strengthening engagement, and supporting higher quality conversion, as consumers better understand the value of our product.

In e-commerce, we're encouraged by the progress we're making.

As part of better meeting consumers where they're shopping, our expanded presence on Amazon is gaining traction.

Speaker #1: The Purple Royale collection was originally planned for over 2800 slots , bringing us to a total of 12,000 slots across Mattress Firm's 2200 stores .

Improvements in availability, delivery, speed, and conversion are the consumer experience in broadening our reach.

Particularly among new-to-brand consumers.

Speaker #1: Encouragingly , the quality and design of the final product has exceeded expectations and as a result , Mattress Firm is adding incremental slots as the product launches beyond the product itself , we continue to focus on delivering a differentiated end to end consumer experience anchored by compelling in-store presentations across our own stores and wholesale partners .

This expanded assortment is driving a healthy lift in Amazon sales, especially in pillow and seat cushions, and introduces new consumers to our technology.

We're also seeing this consumer-focused approach resonate through our partnerships.

Robert DeMartini: At the heart of better sleep is better product. From there, we focus on how we bring innovation to life through the consumer experience and expanded distribution. Innovation remains at the core of Purple's differentiation, and our Rejuvenate 2.0 collection continues to validate that approach. Performance exceeded our expectations in 2025, with strong traction across both showrooms and wholesale as retail partners expanded Rejuvenate 2.0 placement on their floors. Through our direct channels, Rejuvenate 2.0 is performing well at an average selling price of almost $5,800, demonstrating our ability to drive demand at meaningfully higher price points and reinforcing the value consumers place on better sleep. We also completed development work on Purple Royale, a new premium offering developed in close partnership with Mattress Firm. This is an important product for us and a meaningful step forward in our premium strategy.

Our participation in mattress, firms, Sleep Easy marketing campaign drove sales, conversion, and improved aided awareness scores.

Speaker #1: This includes elevating how we educate our consumers around pain relief and the role of gelflex grid technology , which we are seeing drive strong engagement .

At the heart of better sleep is better product.

From there, we focus on how we bring innovation to life through the consumer experience and expanded distribution.

Speaker #1: When brought to life through in-store demonstrations and digital content We're also continuing to strengthen white glove delivery services to ensure that purple shows up consistently and credibly whenever the consumer chooses to engage .

Innovation remains at the core of Purple's differentiation.

And our rejuvenate 2.0 collection continues to validate that approach.

Speaker #1: This focus is strengthening the brand and improving conversion by reinforcing the value of our technology across channels . Part of delivering better sleep is expanding our distribution presence , meeting more consumers where they shop .

Speaker #1: The premium innovation is translating directly into expanded distribution , with Purple Royale now launching across Mattress Firm , we've expanded our footprint and deepened our presence across their network Additionally , we're seeing strong performance with Costco , where our program continues to resonate with members and provide an important opportunity to introduce purple to new customers at scale .

Through our direct channels, Rejuvenate 2.0 is performing well at an average selling price of almost $5,800, demonstrating our ability to drive demand at meaningfully higher price points and reinforcing the value consumers place on better sleep.

We also completed development work on Purple Royale, a new premium offering developed in close partnership with Mattress Firm.

Robert DeMartini: Purple Royale is complementary to our Rejuvenate 2.0 collection, with similar price points across the curated four-model lineup. The launch is on track, with initial floor models arriving now. The Purple Royale collection was originally planned for over 2,800 slots, bringing us to a total of 12,000 slots across Mattress Firm's 2,200 stores. Encouragingly, the quality and design of the final product has exceeded expectations, and as a result, Mattress Firm is adding incremental slots as the product launches. Beyond the product itself, we continue to focus on delivering a differentiated end-to-end consumer experience, anchored by compelling in-store presentations across our own stores and wholesale partners. This includes elevating how we educate our consumers around pain relief and the role of GelFlex Grid technology, which we are seeing drive strong engagement when brought to life through in-store demonstrations and digital content.

Speaker #1: With both Mattress Firm and Costco , our initial launch is significantly exceeded expectations , driving immediate demand for expanded placement in Costco's case , early performance was exceptional , supported by the introduction of Unruled beds on floor displays , which allowed members to see and feel our differentiated product .

This is an important product for us in a meaningful step forward in our premium strategy. Purple Royale is complimentary to our rejuvenate 2.0 collection with similar price points across the curated 4 model lineup.

Speaker #1: The strength of those results led Costco to quickly expand the program in the fourth quarter to approximately 450 clubs , bringing us to nearly nationwide distribution .

The launch is on track, with initial floor models arriving. Now, the Purple Royale collection was originally planned for over 2,800 slots, bringing us to a total of 12,000 slots across Mattress Firm’s 2,200 stores.

Speaker #1: We're also making progress in new channels , including Walmart and Sam's Club , which are helping us reach new consumers , diversify demand and drive incremental volume Importantly , expanding into these large , far reaching retail platforms strengthens distribution for our pillow portfolio and positions us to drive meaningful incremental pillow sales through highly scaled high traffic partners and in own retail .

Encouragingly, the quality and design of the final product have exceeded expectations. As a result, Mattress Firm is adding incremental slots as the product launches.

Beyond the product itself, we continue to focus on delivering a differentiated end-to-end consumer experience, anchored by compelling in-store presentations across our own stores and wholesale partners.

Speaker #1: We continue to focus on showroom profitability in 2025 . We closed for underperforming stores as part of optimizing the fleet and looking forward to 2026 .

Robert DeMartini: We're also continuing to strengthen white glove delivery services to ensure that Purple shows up consistently and credibly whenever the consumer chooses to engage. This focus is strengthening the brand and improving conversion by reinforcing the value of our technology across channels. Part of delivering better sleep is expanding our distribution presence, meeting more consumers where they shop. The premium innovation is translating directly into expanded distribution. With Purple Royale now launching across Mattress Firm, we've expanded our footprint and deepened our presence across their network. Additionally, we're seeing strong performance with Costco, where our program continues to resonate with members and provide an important opportunity to introduce Purple to new customers at scale. With both Mattress Firm and Costco, our initial launches significantly exceeded expectations, driving immediate demand for expanded placement.

This includes elevating how we educate our consumers around pain relief and the role of GelFlex Grid technology, which we are seeing drive strong engagement when brought to life through in-store demonstrations and digital content.

Speaker #1: We plan to open seven new stores Our showrooms continue to be an important part of the model that showcases our Gelflex grid technology and premium positioning .

We're also continuing to strengthen White Glove delivery services to ensure that Purple shows up consistently and credibly whenever the consumer chooses to engage.

This focus is strengthening the brand and improving conversion by reinforcing the value of our technology across channels.

Speaker #1: Our showrooms drive traffic to wholesale locations , helping convert interest into purchases Finally , let me talk about how we're executing with financial discipline across the business Last year , our focus was on rightsizing the business so we could operate profitably at current scale That work is now behind us and importantly , the actions we took were structural , not temporary .

Part of delivering better. Sleep is expanding our distribution. Presence meeting more consumers where they shop?

The premium Innovation is translating directly into expanded distribution.

Speaker #1: We're increasingly focused on driving growth from a much stronger foundation . Gross margin improvement remains a key focus , and we continue to see the benefits of the actions we've taken to simplify the business and improve efficiency across sourcing operations , fulfillment , and product quality .

With purple Royale. Now, launching a cross Mattress Firm, we've expanded our footprint in deepened, our presence across their Network. Additionally, we're seeing strong performance with Costco where our program continues to resonate with members and provide an important opportunity to introduce purple to new customers at scale.

With both Mattress Firm and Costco, our initial launches significantly exceeded expectations.

Robert DeMartini: In Costco's case, early performance was exceptional, supported by the introduction of unrolled beds on floor displays, which allowed members to see and feel our differentiated product. The strength of those results led Costco to quickly expand the program in Q4 to approximately 450 clubs, bringing us to nearly nationwide distribution. We're also making progress in new channels, including Walmart and Sam's Club, which are helping us reach new consumers, diversify demand, and drive incremental volume. Importantly, expanding into these large, far-reaching retail platforms strengthens distribution for our pillow portfolio and positions us to drive meaningful incremental pillow sales through highly scaled, high-traffic partners. In owned retail, we continue to focus on showroom profitability. In 2025, we closed four underperforming stores as part of optimizing the fleet, and looking forward to 2026, we plan to open seven new stores.

Driving immediate demand for expanded placement.

Speaker #1: Mix has become an increasingly important tailwind , led by the growth of rejuvenate 2.0 . The shift towards higher ticket products , combined with strong attachment rates for adjustable smart bases and pillows , is driving higher average transaction values .

In Costco's case, early performance was exceptional supported by the introduction of unrolled beds on floor displays, which allowed members to see, and feel are differentiated product.

Speaker #1: And incremental profit dollars . As a result , the operating discipline we put in place over the past year is now clearly showing up in our margins and profitability .

The strength of those results, LED Costco to quickly expand the program in the fourth quarter to approximately 450 clubs, bringing us to nearly Nationwide distribution.

Speaker #1: We continue to view 40% gross margins as a sustainable level , and we expect further improvement as we move into 2026 . As efficiencies continue to flow through the business Total provide more detail on specific margin drivers and cost actions .

We're also making progress in new channels, including Walmart and Sam's Club, which are helping us reach new consumers, diversify demand, and drive incremental volume.

Importantly, expanding into these large, far-reaching retail platforms strengthens distribution for our pillow portfolio. It positions us to drive meaningful incremental pillow sales through highly scaled, high-traffic partners.

Speaker #1: In his remarks Turning to our guidance as we look ahead to 2026 , we're entering the year with improved stability and a structurally stronger operating model .

And in own retail, we continue to focus on showroom profitability.

Speaker #1: For the full year , we expect revenue in the range of 500 to 520 million and adjusted EBITDA of 20 million to 30 million .

Robert DeMartini: Our showrooms continue to be an important part of the model that showcases our GelFlex Grid technology and premium positioning. Our showrooms drive traffic to wholesale locations, helping convert interest into purchases. Finally, let me talk about how we're executing with financial discipline across the business. Last year, our focus was on right-sizing the business so we could operate profitably at current scale. That work is now behind us, and importantly, the actions we took were structural, not temporary. We're increasingly focused on driving growth from a much stronger foundation. Gross margin improvement remains a key focus, and we continue to see the benefits of the actions we've taken to simplify the business and improve efficiency across sourcing, operations, fulfillment, and product quality. Mix has become an increasingly important tailwind, led by the growth of Rejuvenate 2.0.

In 2025, we closed four underperforming stores. As part of optimizing the fleet and looking forward to 2026, we plan to open seven new stores.

Speaker #1: This outlook reflects continued momentum in our premium product portfolio , expanded wholesale distribution , and the operating leverage in the business as volume grows Importantly , this guidance is driven by execution , not by recovery .

Our showrooms continue to be an important part of the model that showcases our gel Flex grid, technology and premium positioning.

Our showrooms drive traffic to wholesale locations, helping convert interest into purchases.

Finally, let me talk about how we're executing with financial discipline across the business.

Speaker #1: In the broader market . It reflects the progress we've made across product distribution and operations with gross margins sustainably above 40% and disciplined expense management .

Last year, our focus was on right-sizing the business, so we could operate profitably at the current scale.

Speaker #1: We believe we're well positioned to deliver meaningful earnings growth in 2026 . Before I close , I'd like to briefly readdress the board's ongoing review of strategic alternatives The process remains ongoing , and we've engaged with multiple parties across a broad range of opportunities to maximize shareholder value , including a potential merger , sale or other strategic or financial transaction .

That work is now behind us, an importantly, the actions we took were structural not temporary. We're increasingly focused on driving growth from a much stronger Foundation.

Gross margin Improvement remains a key focus. And we continue to see the benefits of the actions. We've taken to simplify the business and improve efficiency, across sourcing operations, fulfillment and product quality.

Robert DeMartini: The shift towards higher-ticket products, combined with strong attachment rates for adjustable smart bases and pillows, is driving higher average transaction values and incremental profit dollars. As a result, the operating discipline we put in place over the past year is now clearly showing up in our margins and profitability. We continue to view 40% gross margins as a sustainable level, and we expect further improvement as we move into 2026 as efficiencies continue to flow through the business. Todd will provide more detail on specific margin drivers and cost actions in his remarks. Turning to our guidance, as we look ahead to 2026, we're entering the year with improved stability and a structurally stronger operating model.

Mix has become an increasingly important tailwind, led by the growth of Rejuvenate 2.0.

Speaker #1: We'll continue to evaluate all options and will provide updates as appropriate . As a reminder , we will not be commenting further or taking questions on this topic during today's Q&A .

Higher ticket products, combined with strong attachment rates for adjustable smart bases and pillows, are driving higher average transaction values and incremental profit dollars.

Speaker #1: With that , I'll turn the call over to Todd . Thank you Rob . I'll begin by walking through our fourth quarter financial performance and then the year ended December 31st , 2025 .

As a result, the operating discipline we put in place over the past year is now clearly showing up in our margins and profitability.

Speaker #1: Net revenue for the fourth quarter was $140.7 million , representing growth of 9.1% year over year The increase was driven primarily by wholesale , reflecting a full quarter of expanded mattress firm placements and continued momentum , with Costco partially offset by a decline in e-commerce By channel direct to consumer net revenue for the quarter was $71.9 million , down 9.9% compared to last year Within DTC showroom revenue increased approximately 4.5% , up for the second consecutive quarter and comparable sales were up 8.8% , reflecting continued strength in rejuvenate .

We continue to view, 40%, gross margins as a sustainable level and we expect further Improvement as we move into 2026 as efficiencies continue to flow through the business.

Total provide more detail on specific margin drivers and cost actions in his remarks.

Robert DeMartini: For the full year, we expect revenue in the range of $500 to 520 million and Adjusted EBITDA of $20 to 30 million. This outlook reflects continued momentum in our premium product portfolio, expanded wholesale distribution, and the operating leverage in the business as volume grows. Importantly, this guidance is driven by execution, not by a recovery in the broader market. It reflects the progress we've made across product, distribution, and operations. With gross margins sustainably above 40% and disciplined expense management, we believe we're well-positioned to deliver meaningful earnings growth in 2026. Before I close, I'd like to briefly readdress the board's ongoing review of strategic alternatives. The process remains ongoing and we've engaged with multiple parties across a broad range of opportunities to maximize shareholder value, including a potential merger, sale, or other strategic or financial transactions.

Turning to our guidance as we look ahead to 2026. We're entering the year with improved stability and a structurally stronger operating model.

For the full year, we expect Revenue in the range of 500 to 520 million and adjusted evida of 20 million to 30 million.

This Outlook reflects continued momentum in our premium product, portfolio expanded wholesale distribution and the operating leverage in the business as volume grows.

Speaker #1: 2.0 e-commerce revenue continued to be down , with the decline of 15.3% . Wholesale revenue increased approximately 39.8% , driven by our expansion with Mattress Firm and Costco gross margin for the quarter was approximately 41.9% , remaining well above our 40% quarterly margin target and down 100 basis points from last year We're pleased with the durability of our gross margin , particularly given the strength of last year's results when gross margin rose 970 basis points , driven by sourcing initiatives and the profitable liquidation of inventories viewed over a two year period .

Importantly this guidance is driven by execution, not by a recovery in the broader Market. It reflects the progress we've made across product distribution and operations.

With gross margins sustainably above 40% and disciplined expense management, we believe we're well positioned to deliver meaningful earnings growth in 2026.

Before I close, I'd like to briefly re-address the board's ongoing review of strategic alternatives.

Robert DeMartini: We'll continue to evaluate all options and will provide updates as appropriate. As a reminder, we will not be commenting further or taking questions on this topic during today's Q&A. With that, I'll turn the call over to Todd.

The process remains ongoing, and we've engaged with multiple parties across a broad range of opportunities to maximize shareholder value, including a potential merger, sale, or other strategic or financial transactions.

Speaker #1: Gross margin increased by nearly 870 basis points , reflecting durable improvements to the business . The margin continues to be driven by direct material savings plant efficiencies , restructuring benefits and volume leverage On an adjusted reported basis , gross margins for the quarter excluding restructuring costs , was 41.9% , down 300 basis points from last year Operating expenses for the quarter were $61.2 million , down 2.9% versus $63 million last year .

We'll continue to evaluate all options, and we'll provide updates as appropriate.

As a reminder, we will not be commenting further or taking questions on this topic during today's Q&A.

Todd: Thank you, Rob. I'll begin by walking through our Q4 financial performance and then the year ended 31 December 2025. Net revenue for the Q4 was $140.7 million, representing growth of 9.1% year-over-year. The increase was driven primarily by wholesale, reflecting a full quarter of expanded Mattress Firm placements and continued momentum with Costco, partially offset by a decline in e-commerce. By channel, direct-to-consumer net revenue for the quarter was $71.9 million, down 9.9% compared to last year. Within DTC, showroom revenue increased approximately 4.5%, up for the second consecutive quarter, and comparable sales were up 8.8%, reflecting continued strength in Rejuvenate 2.0. E-commerce revenue continued to be down, with the decline at 15.3%.

Todd Vogensen: Thank you, Rob. I'll begin by walking through our Q4 financial performance and then the year ended 31 December 2025. Net revenue for the Q4 was $140.7 million, representing growth of 9.1% year-over-year. The increase was driven primarily by wholesale, reflecting a full quarter of expanded Mattress Firm placements and continued momentum with Costco, partially offset by a decline in e-commerce. By channel, direct-to-consumer net revenue for the quarter was $71.9 million, down 9.9% compared to last year. Within DTC, showroom revenue increased approximately 4.5%, up for the second consecutive quarter, and comparable sales were up 8.8%, reflecting continued strength in Rejuvenate 2.0. E-commerce revenue continued to be down, with the decline at 15.3%.

With that, I'll turn the call over to Todd.

Thank you, Rob. I'll begin by walking through our fourth quarter financial performance, and then the year ended December 31st, 2025.

net revenue for the fourth quarter was 140.7 Million representing growth of 9.1% year-over-year,

Speaker #1: The decrease reflects the benefits from restructuring activities and other cost savings initiatives . Our fourth quarter adjusted loss per share was $0.02 compared to an adjusted loss per share of $0.11 last year Adjusted EBITDA in the fourth quarter was $8.8 million , a notable improvement over the $2.9 million EBITDA last year .

Increase was driven primarily by wholesale reflecting a full quarter of expanded Mattress, Firm, placements, and continued. Momentum with Costco

Partially offset by a decline in e-commerce.

By Channel Direct to Consumer net revenue for the quarter was 71.9 Million down 9.9% compared to last year.

Within DTC.

Showroom Revenue increased approximately 4.5% up for the second consecutive quarter.

Speaker #1: Turning now to full year results . Net revenue for the full year 2025 was $468.7 million , reflecting a 3.9% decline versus the prior year .

And comparable sales were up 8.8% reflecting continued strength in rejuvenate 2.0.

Todd: Wholesale revenue increased approximately 39.8%, driven by our expansion with Mattress Firm and Costco. Gross margin for the quarter was approximately 41.9%, remaining well above our 40% quarterly margin target and down 100 basis points from last year. We're pleased with the durability of our gross margin, particularly given the strength of last year's results when gross margin rose 970 basis points, driven by sourcing initiatives and the profitable liquidation of inventories. Viewed over a 2-year period, gross margin increased by nearly 870 basis points, reflecting durable improvements to the business. The margin continues to be driven by direct material savings, plant efficiencies, restructuring benefits, and volume leverage. On an adjusted reported basis, gross margins for the quarter, excluding restructuring costs, was 41.9%, down 300 basis points from last year.

Todd Vogensen: Wholesale revenue increased approximately 39.8%, driven by our expansion with Mattress Firm and Costco. Gross margin for the quarter was approximately 41.9%, remaining well above our 40% quarterly margin target and down 100 basis points from last year. We're pleased with the durability of our gross margin, particularly given the strength of last year's results when gross margin rose 970 basis points, driven by sourcing initiatives and the profitable liquidation of inventories. Viewed over a 2-year period, gross margin increased by nearly 870 basis points, reflecting durable improvements to the business. The margin continues to be driven by direct material savings, plant efficiencies, restructuring benefits, and volume leverage. On an adjusted reported basis, gross margins for the quarter, excluding restructuring costs, was 41.9%, down 300 basis points from last year.

E-commerce revenue continued to be down, with a decline of 15.3%.

Speaker #1: By channel direct to consumer net revenue for the year was 261.3 million , down 7.9% compared to last year . For the full year , showrooms generated strength , with sales up 1.5% versus last year to $78.5 million and comparable revenue was up 6.6% .

Wholesale Revenue increased approximately 39.8%.

Driven by our expansion with Mattress Firm and Costco.

Gross margin for the quarter was approximately 41.9%, remaining well above our 40% quarterly margin target.

And down 100 basis points from last year.

Speaker #1: We delivered net revenue of up 4% or more in three of the past four quarters , with only the second quarter being impacted by the timing related to the rejuvenate 2.0 launch Wholesale has been sequentially improving over the last four quarters , up 1.6% versus last year to 207.4 million , benefiting from expanded partnerships and non-traditional revenue streams For e-commerce remains soft throughout the year .

We're pleased with the durability of our gross margin, particularly given the strength of last year's results, when gross margin rose 970 basis points, driven by sourcing initiatives and the profitable liquidation of inventories.

Viewed over a 2-year period gross margin increased by nearly 870 basis points.

Reflecting durable improvements to the business.

Speaker #1: Full year gross margin increased 310 basis points to 40.2% versus last year , reflecting the impact of restructuring , sourcing initiatives and manufacturing efficiencies on an adjusted basis .

The margin continues to be driven by direct material, savings, plant, deficiencies restructuring, benefits and volume Leverage.

Todd: Operating expenses for the quarter were $61.2 million, down 2.9% versus $63 million last year. The decrease reflects the benefits from restructuring activities and other cost savings initiatives. Our Q4 adjusted loss per share was $0.02, compared to an adjusted loss per share of $0.11 last year. Adjusted EBITDA in the Q4 was $8.8 million, a notable improvement over the $2.9 million EBITDA last year. Turning now to full year results. Net revenue for the full year 2025 was $468.7 million, reflecting a 3.9% decline versus the prior year. By channel, direct-to-consumer net revenue for the year was $261.3 million, down 7.9% compared to last year.

Todd Vogensen: Operating expenses for the quarter were $61.2 million, down 2.9% versus $63 million last year. The decrease reflects the benefits from restructuring activities and other cost savings initiatives. Our Q4 adjusted loss per share was $0.02, compared to an adjusted loss per share of $0.11 last year. Adjusted EBITDA in the Q4 was $8.8 million, a notable improvement over the $2.9 million EBITDA last year. Turning now to full year results. Net revenue for the full year 2025 was $468.7 million, reflecting a 3.9% decline versus the prior year. By channel, direct-to-consumer net revenue for the year was $261.3 million, down 7.9% compared to last year.

On an adjusted reported basis, gross margins for the quarter, excluding restructuring costs, were 41.9%, down 300 basis points from last year.

Speaker #1: Full year gross margin excluding restructuring costs , improved slightly to approximately 40.4% . Up approximately ten basis points year over year . Our cost initiatives delivered $25 million in annual savings in 2025 , with 25 to $30 million of sustainable savings expected going forward .

Operating expenses for the quarter were $61.2 million.

Down 2.9% versus 63 Million last year.

The decrease reflects the benefits from restructuring activities and other cost savings initiatives.

Speaker #1: Giving us greater flexibility to reinvest in marketing and innovation while continuing to expand margins . Just as importantly , it reflects a business that is operating with greater discipline and a structurally stronger cost base .

2 cents, compared to an adjusted loss per share of 11 cents last year.

Adjusted EBITDA in the fourth quarter was $8.8 million, a notable improvement over the $2.9 million EBITDA last year.

Speaker #1: Full year operating expenses declined by 15.3% to 231.6 million , driven by restructuring , savings and productivity initiatives Adjusted net loss was $34.3 million versus an adjusted net loss of $55.1 million in the prior year Adjusted EBITDA for the full year was $1.9 million , representing a significant improvement versus the adjusted EBITDA loss of $20.8 million last year and adjusted net loss per share in 2025 was $0.32 , compared to an adjusted net loss per share of $0.51 in the full year of 2020 .

Turning now to full-year results, net revenue for the full year 2025 was $468.7 million, reflecting a 3.9% decline versus the prior year.

Todd: For the full year, showrooms generated strength with sales up 1.5% versus last year to $78.5 million, and comparable revenue was up 6.6%. We delivered net revenue of up 4% or more in three of the past four quarters, with only Q2 being impacted by the timing related to the Rejuvenate 2.0 launch. Wholesale has been sequentially improving over the last four quarters, up 1.6% versus last year to $207.4 million, while e-commerce remained soft throughout the year. Full year gross margin increased 310 basis points to 40.2% versus last year, reflecting the impact of restructuring, sourcing initiatives, and manufacturing efficiencies.

Todd Vogensen: For the full year, showrooms generated strength with sales up 1.5% versus last year to $78.5 million, and comparable revenue was up 6.6%. We delivered net revenue of up 4% or more in three of the past four quarters, with only Q2 being impacted by the timing related to the Rejuvenate 2.0 launch. Wholesale has been sequentially improving over the last four quarters, up 1.6% versus last year to $207.4 million, while e-commerce remained soft throughout the year. Full year gross margin increased 310 basis points to 40.2% versus last year, reflecting the impact of restructuring, sourcing initiatives, and manufacturing efficiencies.

By channel, Direct-to-Consumer network revenue for the year was $261.3 million, down 7.9% compared to last year.

for the full year showrooms generated strength with sales up 1.5% versus last year to 78.5%

Speaker #1: For now , turning to the balance sheet , we ended the quarter with cash and cash equivalents of $24.3 million versus $29 million on December 31st , 2020 .

We delivered net revenue up 4% or more in three of the past four quarters, with only the second quarter being impacted by the timing related to the Rejuvenate 2.0 launch.

Speaker #1: For net inventories on December 31st , 2025 were $59.7 million , up 5% compared to December 31st , 2020 . For . We're pleased to exit the quarter with cash over $24 million , and we believe we are well positioned from a liquidity standpoint We also extended our debt maturities from December 31st , 2026 to April 30th , 2027 .

Wholesale has been sequentially improving over the last four quarters, up 1.6% versus last year to $207.4 million, benefiting from expanded partnerships in non-traditional revenue streams. However, e-commerce remains soft throughout the year.

Full year, gross margin increased 310 basis points to 40.2% versus last year.

Todd: On an adjusted basis, full year gross margin, excluding restructuring costs, improved slightly to approximately 40.4%, up approximately 10 basis points year-over-year. Our cost initiatives delivered $25 million in annual savings in 2025, with $25 to 30 million of sustainable savings expected going forward, giving us greater flexibility to reinvest in marketing and innovation while continuing to expand margins. Just as importantly, it reflects a business that is operating with greater discipline and a structurally stronger cost base. Full year operating expenses declined by 15.3% to $231.6 million, driven by restructuring savings, and productivity initiatives. Adjusted Net Loss was $34.3 million versus an Adjusted Net Loss of $55.1 million in the prior year.

Todd Vogensen: On an adjusted basis, full year gross margin, excluding restructuring costs, improved slightly to approximately 40.4%, up approximately 10 basis points year-over-year. Our cost initiatives delivered $25 million in annual savings in 2025, with $25 to 30 million of sustainable savings expected going forward, giving us greater flexibility to reinvest in marketing and innovation while continuing to expand margins. Just as importantly, it reflects a business that is operating with greater discipline and a structurally stronger cost base. Full year operating expenses declined by 15.3% to $231.6 million, driven by restructuring savings, and productivity initiatives. Adjusted Net Loss was $34.3 million versus an Adjusted Net Loss of $55.1 million in the prior year.

reflecting the impact of restructuring sourcing initiatives and Manufacturing efficiencies

Speaker #1: Enhancing our financial flexibility and reflecting continued strong support and confidence from our lending partners Now let's turn to the outlook Given that we are through most of the quarter , we will be providing guidance for the first quarter .

On an adjusted basis, pull your gross margin. Excluding restructuring costs, it improved slightly to approximately 40.4%, up approximately 10 basis points year-over-year.

Is delivered 25 million in annual Savings in 2025?

Speaker #1: We plan total revenue to be in the range of 100 to $105 million , and adjusted EBITDA to be in the range of a loss of seven to a loss of $4 million .

With 25 to 30 million of sustainable savings expected going forward, giving us greater flexibility to reinvest in marketing and innovation.

While continuing to expand margins.

Just as importantly, the reflexive business that is operating with greater discipline.

Speaker #1: As Rock walked you through earlier for the year , we expect revenue in the range of 500 million to 520 million and adjusted EBITDA of 20 million to $30 million .

And a structurally stronger cost base.

Pull your operating expenses to decline by 15.3% to 231.6 million.

Speaker #1: We plan for revenue to continue to be driven by strength in rejuvenate 2.0 , as well as our expanded distribution with Mattress Firm and Costco We also anticipate continued improvement in EBITDA , driven by further operational efficiencies and ongoing restructuring actions , benefiting both gross margin and operating expenses .

Driven by restructuring savings and productivity initiatives.

Todd: Adjusted EBITDA for the full year was $1.9 million, representing a significant improvement versus the adjusted EBITDA loss of $20.8 million last year. Adjusted net loss per share in 2025 was $0.32, compared to an adjusted net loss per share of $0.51 in the full year of 2024. Now turning to the balance sheet. We ended the quarter with cash and cash equivalents of $24.3 million versus $29 million on 31 December 2024. Net inventories on 31 December 2025 were $59.7 million, up 5% compared to 31 December 2024. We're pleased to exit the quarter with cash over $24 million, and we believe we are well-positioned from a liquidity standpoint.

Todd Vogensen: Adjusted EBITDA for the full year was $1.9 million, representing a significant improvement versus the adjusted EBITDA loss of $20.8 million last year. Adjusted net loss per share in 2025 was $0.32, compared to an adjusted net loss per share of $0.51 in the full year of 2024. Now turning to the balance sheet. We ended the quarter with cash and cash equivalents of $24.3 million versus $29 million on 31 December 2024. Net inventories on 31 December 2025 were $59.7 million, up 5% compared to 31 December 2024. We're pleased to exit the quarter with cash over $24 million, and we believe we are well-positioned from a liquidity standpoint.

Adjusted. Net loss was 34.3 Million versus an adjusted net loss of 55.1 million in the prior year.

Speaker #1: These initiatives are expected to support improved profitability and cash generation , reflecting the full impact of our cost actions . Product innovation and expanded distribution Thank you , Todd .

For the full year, EVA was $1.9 million, representing a significant improvement versus the adjusted EVA loss of $20.8 million last year. Adjusted net loss per share in 2025 was $0.32 compared to an adjusted net loss per share of $0.51 in the full year of 2024.

Now, turning to the balance sheet.

Speaker #1: This morning we filed our annual report on Form 10-K for the fiscal year ended 2025 . As disclosed in the filing . Our Independent auditor has included a going concern qualification While this notification is not necessarily a surprise given the liquidity challenges of the past year and our historical cash burn .

We ended the quarter with cash and cash equivalents of 24.3 million versus 29 million on December 31202.

Net inventories on December 31st 2025, we're 59.7 million up 5% compared to December 31 2024.

Speaker #1: We want to provide clear context why the decisive , transformative actions we've already taken are expected to continue stabilizing our financial position and driving the business forward .

Todd: We also extended our debt maturities from 31 December 2026 to 30 April 2027, enhancing our financial flexibility and reflecting continued strong support and confidence from our lending partners. Now let's turn to the outlook. Given that we are through most of the quarter, we will be providing guidance for Q1. We plan total revenue to be in the range of $100 to 105 million and Adjusted EBITDA to be in the range of a loss of $7 to $4 million. As Rob walked you through earlier, for the year, we expect revenue in the range of $500 to 520 million and Adjusted EBITDA of $20 to 30 million.

Todd Vogensen: We also extended our debt maturities from 31 December 2026 to 30 April 2027, enhancing our financial flexibility and reflecting continued strong support and confidence from our lending partners. Now let's turn to the outlook. Given that we are through most of the quarter, we will be providing guidance for Q1. We plan total revenue to be in the range of $100 to 105 million and Adjusted EBITDA to be in the range of a loss of $7 to $4 million. As Rob walked you through earlier, for the year, we expect revenue in the range of $500 to 520 million and Adjusted EBITDA of $20 to 30 million.

We're pleased to exit the quarter with cash over 24 million and we believe we are well positioned from liquidity standpoint. We also extended our debt maturities from December 31st 2026 to April 30th 2027

Speaker #1: The fruits of our labors are already evident in our recently improved operating and financial performance Following a rigorous period of restructuring , we achieved profitability levels in the second half of 2025 that we haven't seen since 2021 .

Enhancing our financial flexibility and reflecting continued strong support and confidence from our lending partners.

Now, let's turn to the outlook.

Given that we are through most of the quarter, we will be providing guidance for the first quarter.

Speaker #1: This momentum is driven by three core strategic pillars supply chain reorganization . We've optimized our footprint to ensure a more agile , cost effective flow of goods Disciplined cost management , structural savings initiatives implemented in 2025 have led to significant margin expansion and profitability at revenue targets , meaningfully lower than past years Channel momentum .

We plan total revenue to be in the range of 100 to 105 million and adjusted ibida to be in the range of a loss of 7 to a loss of 4 million.

As Rock walked you through earlier.

Todd: We plan for revenue to continue to be driven by strength in Rejuvenate 2.0, as well as our expanded distribution with Mattress Firm and Costco. We also anticipate continued improvement in EBITDA, driven by further operational efficiencies and ongoing restructuring actions benefiting both gross margin and operating expenses. These initiatives are expected to support improved profitability and cash generation, reflecting the full impact of our cost actions, product innovation, and expanded distribution.

Todd Vogensen: We plan for revenue to continue to be driven by strength in Rejuvenate 2.0, as well as our expanded distribution with Mattress Firm and Costco. We also anticipate continued improvement in EBITDA, driven by further operational efficiencies and ongoing restructuring actions benefiting both gross margin and operating expenses. These initiatives are expected to support improved profitability and cash generation, reflecting the full impact of our cost actions, product innovation, and expanded distribution.

For the year, we expect revenue in the range of $500 million to $520 million and adjusted EBITDA of $20 million to $30 million.

We plan for Revenue to continue to be driven by strength and rejuvenate 2.0, as well as our expanded distribution, with Mattress, Firm and Costco.

Speaker #1: We seeing robust volume growth across both our wholesale and showroom channels as our path to premium sleep strategy takes hold We enter 2026 on much firmer footing .

We also anticipate continued improvement in EBITDA driven by further operational efficiencies and ongoing restructuring actions, benefiting both gross margin and operating expenses.

Speaker #1: We expect to conclude Q1 26 . Historically , our seasonally weakest quarter with neutral cash burn . Furthermore , we're grateful for the strong continued support of our lenders .

Generation.

Reflecting the full impact of our cost actions, product innovation, and expanded distribution.

Speaker #1: Our recent agreement to extend debt maturities to April 20th , 27 provides us with the runway and the financial flexibility to execute our long term vision .

Robert DeMartini: Thank you, Todd. This morning, we filed our annual report on Form 10-K for the fiscal year ended 2025. As disclosed in the filing, our independent auditor has included a going concern qualification. While this notification is not necessarily a surprise, given the liquidity challenges of the past year and our historical cash burn, we want to provide clear context why the decisive transformative actions we've already taken are expected to continue stabilizing our financial position and driving the business forward. The fruits of our labors are already evident in our recently improved operating and financial performance. Following a rigorous period of restructuring, we achieved profitability levels in the H2 2025 that we haven't seen since 2021. This momentum is driven by three core strategic pillars. Supply chain reorganization. We've optimized our footprint to ensure a more agile, cost-effective flow of goods. Disciplined cost management.

Thank you, Todd.

This morning, we filed our annual report on Form 10-K for the fiscal year ended 2025.

Speaker #1: We believe these factors , combined with our improved liquidity profile , directly address the concerns raised in our 10-K and position us for a year of consistent growth and profitability .

As disclosed in the filing, our independent auditor has included a going concern qualification.

Speaker #1: As evidenced by our 2026 guidance . We appreciate the patience and the confidence of our shareholders . Like you . We are disappointed by the current stock price .

Speaker #1: Our team remains focused on executing our clear plan to build on recent business momentum and deliver sustainable shareholder value on your behalf . With that operator , we can turn it over for questions .

While this notification is not necessarily a surprise, given the liquidity challenges of the past year and our historical cash burn, we want to provide clear context on why the decisive, transformative actions we've already taken are expected to continue stabilizing our financial position and driving the business forward.

The fruits of our labors are already evident in our recently improved operating and financial performance.

Speaker #2: At this time , I would like to remind everyone in order to ask a question , please press star . Then the number one on your telephone keypad .

Following a rigorous period of restructuring, we achieved profitability levels in the second half of 2025 that we haven't seen since 2021.

Speaker #2: We will pause for just a moment to compile the Q&A roster Your first question comes from the line of Brad Thomas with KeyBanc Capital Markets .

This momentum is driven by three core strategic pillars.

Supply chain reorganization.

Speaker #2: Your line is open

We've optimized our footprint to ensure a more agile, cost-effective flow of goods.

Speaker #1: Good morning . Thanks for taking the question . Rob , I wanted to start off asking about recent trends . There's no question that the fourth quarter showed some nice momentum in your outlook for this full year is very encouraging .

Robert DeMartini: Structural savings initiatives implemented in 2025 have led to significant margin expansion and profitability at revenue targets meaningfully lower than past years. Channel momentum. We're seeing robust volume growth across both our wholesale and showroom channels as our path to premium sleep strategy takes hold. We enter 2026 on much firmer footing. We expect to conclude Q1 2026, historically our seasonally weakest quarter, with neutral cash burn. Furthermore, we're grateful for the strong, continued support of our lenders. Our recent agreement to extend debt maturities to April 2027 provides us with the runway and the financial flexibility to execute our long-term vision. We believe these factors, combined with our improved liquidity profile, directly address the concerns raised in our 10-K and position us for a year of consistent growth and profitability, as evidenced by our 2026 guidance.

Disciplined cost management.

Structural savings initiatives implemented in 2025 have led to significant margin expansion and profitability at revenue targets meaningfully lower than past years.

Speaker #1: It does look like maybe the first quarter had maybe a step back in the pace of the business . Can you just talk a little bit more about what you've been seeing here Yes .

Speaker #1: Brad , thank you for the question . And I think there's a couple of things going on . We had a very strong fourth quarter .

Channel momentum. We're seeing robust volume growth across both our wholesale and showroom channels as our Path to Premium Sleep strategy takes hold.

We enter 2026 on much, firmer footing.

Speaker #1: And the way the fourth quarter shipped , it did impact demand in January as that sell through and consumption Happenned particularly , we've got the club customer that had a significant buy in in December .

We expect to conclude q1 126. Historically our seasonally weakest quarter with neutral cash burn.

Furthermore, we're grateful for the strong, continued support of our lenders.

Speaker #1: That was part of loading the floor . And so there wasn't much follow up in that As Todd said , we think we'll be between 100 and 105 .

Speaker #1: And I think the momentum also includes all those floor samples at Mattress Firm going out . And that obviously has a short term push down on revenue as they sell in at at floor sample prices .

Our recent agreement to extend debt maturities to April 2027 provides us with the runway and financial flexibility to execute our long-term vision.

We believe these factors combined with our improved liquidity profile directly address the concerns raised in our 10K and position us.

Speaker #1: So we're encouraging . Q1 has always been our weakest quarter . It's not a strong quarter , but we think the momentum in the business dictates the strong rest of the year that we've predicted

Robert DeMartini: We appreciate the patience and the confidence of our shareholders. Like you, we are disappointed by the current stock price. Our team remains focused on executing our clear plan to build on recent business momentum and deliver sustainable shareholder value on your behalf. With that, operator, we can turn it over for questions.

for a year of consistent growth and profitability, as evidenced by our 2026 guidance,

Speaker #3: And just to be clear , Rob , it sounds like aside from the January , you've seen an improvement in trends of late .

Speaker #3: Is that fair to assume ?

Speaker #1: Yeah . I mean , Q1 is not robust by any means , but we've seen us kind of lapping last year right at about equal to comp levels .

We appreciate the patience and the confidence of our shareholders. Like you, we are disappointed by the current stock price. Our team remains focused on executing our clear plan to build on recent business momentum, and deliver sustainable shareholder value on your behalf.

Operator: At this time, I would like to remind everyone, in order to ask a question, please press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brad Thomas with KeyBanc Capital Markets. Your line is open.

With that operator, we can turn it over for questions.

Speaker #1: And obviously we're close to ending March . And we expect kind of the same performance in March

Speaker #3: Great . And then just following up about the outlook for the year , we can obviously back into it a bit through your guidance , but the question is really how to think about the flow through margin .

At this time, I would like to remind everyone in order to ask a question. Please press star then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster.

Your first question comes from the line of broad Farmers with Key Bank. Capital markets. Your line is open.

Brad Thomas: Good morning. Thanks for taking the question. Rob, I wanted to start off asking about recent trends. There's no question that Q4 showed some nice momentum, and your outlook for this full year is very encouraging. It does look like maybe Q1 had maybe a step back in the pace of the business. Can you just talk a little bit more about what you've been seeing here?

Speaker #3: You've done a great job of improving the cost structure of the business . As you start to drive this volume , how do we think about it flowing through to the bottom line

Speaker #4: Yes , through actually should be quite good for us . I , you know , if you look at the guidance we're guiding to revenue , that's 30 to $50 million better than last year .

Speaker #4: And looking at EBITDA , that's going to be around 20 to $30 million better . That's a pretty healthy flow through us . I think on a normal basis , our sales should be generating about a 30% flow through this year will be a little bit more because we're also seeing margin expansion and a lot of cost control .

Robert DeMartini: Yes, Brad, thank you for the question. I think there's a couple of things going on. We had a very strong Q4, and the way the Q4 shipped, it did impact demand in January as that sell-through and consumption happened. Particularly, we've got the club customer that had a significant buy-in in December that was part of loading the floor, and so there wasn't much follow-up in that. As Todd said, we think we'll be between $100 and $105, and I think the momentum also includes all those floor samples at Mattress Firm going out, and that obviously has a short-term push down on revenue as they sell in at floor sample prices. We're encouraged. Q1 has always been our weakest quarter.

Good morning. Thanks for taking the question. Um, Rob, I wanted to start off asking about recent trends. Uh, there's no question that the fourth quarter showed some nice momentum, and your outlook for this full year is very encouraging. It does look like maybe the first quarter had maybe a step back in the pace of the business. Can you just talk a little bit more about what you've been seeing here?

Speaker #4: That is helping us along the way

Speaker #3: Great . And if I could squeeze in just one more regarding the macro environment as it relates to raw materials . Can you just remind us the degree that you have exposure to petrochemicals or other inputs that may be at risk of some price pressure here ?

Speaker #3: And what are you hearing from suppliers ? Thank you

Robert DeMartini: It's not a strong quarter, but we think the momentum in the business dictates the strong rest of the year that we've predicted.

Speaker #4: Yeah . So mixed bag . We are obviously are not importing oil or anything like that directly , but we do have products that have a petroleum base to it .

Yes Brad thank you for the question and I think it there's a couple of things going on. We we had a very strong fourth quarter uh and the way the fourth quarter shipped, it did impact demand in January as that sell through and consumption happened. Particularly we've got the club customer that had a, a significant Buy in in December. That was part of loading the floor. And so there wasn't much follow up in that as Todd said. We think we'll be between 100 and 105 and I think the momentum also includes all those floor samples at Mattress Firm going out and that obviously has a short-term uh push down on Revenue as they sell in at at floor sample prices. So we're encouraging. Q1 has always been our weakest quarter. It's not a strong quarter but we think the momentum in the business dictates the strong rest of the year that we've predicted.

Brad Thomas: Just to be clear, Rob, it sounds like aside from the January, you've seen an improvement in trends of late. Is that fair to assume?

Speaker #4: You can think foam . Some of our lesser degree than mineral oil that's going into the gel . Overall , we've looked at it and you know , if the price of oil stays around that $100 a barrel range , I effectively the savings we're going to get this year off of tariffs from being able to get well , lower rates on tariffs , but also tariff mitigation would roughly offset the exposure from any oil .

Robert DeMartini: Yeah. I mean, Q1 is not robust by any means, but we've seen us kind of lapping last year right at about equal to comp levels. Obviously we're close to ending March, and we expect kind of the same performance in March.

Last year, right at about equal to comp levels. And, um, obviously we're close to ending.

March, and we expect kind of the same performance in March.

Brad Thomas: Great. Just following up about that outlook for the year, we can obviously back into it a bit, through your guidance, but the question is really how to think about the flow-through margin. You've done a great job of improving the cost structure of the business. As you start to drive this volume, how do we think about it flowing through to the bottom line?

Speaker #4: We continue to monitor it . We're hearing noises about price increases , but it's just very , very early on at this point

Great. And then just following up about the outlook for the year. We can obviously back into it a bit uh through your guidance. But the question is really how to think about the flow through margin? You've done a great job of improving the cost structure of the business as you start to drive this volume, how do we think about it, flowing through to the bottom line?

Todd: Yeah. Flow-through actually should be quite good for us. You know, if you look at the guidance, we're guiding to revenue that's $30 to 50 million better than last year. Looking at EBITDA, that's gonna be around $20 to 30 million better. That's a pretty healthy flow-through. I think on a normal basis, our sales should be generating about a 30% flow-through. This year will be a little bit more 'cause we're also seeing margin expansion, and a lot of cost control that is helping us along the way.

Todd Vogensen: Yeah. Flow-through actually should be quite good for us. You know, if you look at the guidance, we're guiding to revenue that's $30 to 50 million better than last year. Looking at EBITDA, that's gonna be around $20 to 30 million better. That's a pretty healthy flow-through. I think on a normal basis, our sales should be generating about a 30% flow-through. This year will be a little bit more 'cause we're also seeing margin expansion, and a lot of cost control that is helping us along the way.

Speaker #3: That's really helpful . Todd , thank you so much . I appreciate it

Speaker #4: You bet . Thank you

Speaker #1: Thank you Brad .

Speaker #2: Your next question comes from the line of Matt Koranda with Ross Capital . Your line is open .

Speaker #5: Hey , guys . Wanted to hear a little bit more about how you're thinking about the seasonality of the year . Just given the visibility you have into product launches with your wholesale partners .

Yeah so through actually should be quite good for us. I you know if you look at the guidance we're guiding to revenue. That's 30 to uh 50 million dollars better than last year and looking at Eva that's going to be round, 20 to 30 million dollars better. That's a pretty healthy flow through. Um,

Speaker #5: So maybe just a little bit more around the ramp that's implied in guidance for the remainder of 26 .

Speaker #4: So you should see revenue growing . Oh , sorry , Rob , you should see revenue growing pretty consistently across the course of the year in Q2 , typically Q2 would be relatively flat to Q1 .

I think on a normal basis, our sales should be generating about a 30% flow-through. This year will be a little bit more because we're also seeing margin expansion, and a lot of cost control that is helping us along the way.

Brad Thomas: Great. If I could squeeze in just one more, regarding the macro environment as it relates to raw materials. Can you just remind us the degree that you have exposure to petrochemicals or other inputs that may be at risk of some price pressure here? You know, what are you hearing from suppliers? Thank you.

Speaker #4: But this year we have the purple Royal launch at Mattress Firm that literally just got out on floors last week , officially . So that will help out the Q2 pace .

Speaker #4: And then we have a natural build that we see virtually every year going into Q3 and Q4 . So it really should build pretty consistently as we go across the course of the year

Great. And if I could squeeze in just 1 more uh regarding uh, the macro environment as it relates to raw materials. Um, can you just remind us the degree that you have exposure to petrochemicals or other inputs? That may be at risk of some price pressure here? And you know what are you hearing from suppliers?

Todd: Yeah. Mixed bag. We obviously are not importing oil or anything like that directly, but we do have products that have a petroleum base to it. You can think foam, some of our, to a lesser degree, the mineral oil that's going into the gel. Overall, we've looked at it, and, you know, if the price of oil stays around that $100 a barrel range, effectively the savings we're gonna get this year off of tariffs from being able to get, well, lower rates on tariffs, but also tariff mitigation would roughly offset the exposure from any oil. We continue to monitor it. We're hearing noises about price increases, but it's just very, very early on at this point.

Todd Vogensen: Yeah. Mixed bag. We obviously are not importing oil or anything like that directly, but we do have products that have a petroleum base to it. You can think foam, some of our, to a lesser degree, the mineral oil that's going into the gel. Overall, we've looked at it, and, you know, if the price of oil stays around that $100 a barrel range, effectively the savings we're gonna get this year off of tariffs from being able to get, well, lower rates on tariffs, but also tariff mitigation would roughly offset the exposure from any oil. We continue to monitor it. We're hearing noises about price increases, but it's just very, very early on at this point.

Yeah, so mixed bag, we—I

Speaker #5: Okay . And then maybe just wanted to hear you unpack the drivers of the flow through you mentioned there's likely some more restructuring actions .

Obviously are not importing oil or anything like that directly, but we do have products that have a petroleum base to it. You can think foam, uh, some of our, to, a lesser degree, the mineral oil, that's going into the gel. Um,

Speaker #5: Does that benefit operating expenses or their gross margin benefits embedded in the actions that you're taking ? Are the actions already taken , or is this incremental stuff that that still needs to , to happen during the second quarter to hit the flow through ?

Overall, we've looked at it, and you know, if the price of oil stays around that $100-a-barrel range,

Speaker #5: Sort of , it's implied in the 26 EBITDA guide

Uh, effectively the savings we're going to get this year off of tariffs, from being able to get, well, lower rates on tariffs, but also tariff mitigation, would roughly offset the exposure from, uh, any oil. Uh.

Speaker #4: Yeah . So the actions that I kind of referenced were actions that have already been taken at this point , we don't have plans for additional actions that are needed right now .

We continue to monitor it. We're hearing noises about price increases, uh, but it's just very, very early on at this point.

Brad Thomas: That's really helpful, Todd. Thank you so much. I appreciate it.

Speaker #4: I feel like we're positioned very well for the full year , but we did take a little bit of an action in January that will continue to benefit the operating expense line , and then from a gross margin perspective , we actually just have a very strong team on the operations side of the world that is always looking for room for improvement from an efficiency perspective .

Todd: You bet. Thank you.

Todd Vogensen: You bet. Thank you.

That's really helpful, Todd. Thank you so much. I appreciate it.

Robert DeMartini: Thank you, Brad.

You bet. Thank you.

Operator: Your next question comes from the line of Matt Koranda with ROTH Capital. Your line is open.

Thank you, Brad.

Matt Koranda: Hey, guys. I wanted to hear a little bit more about how you're thinking about the seasonality of the year, just given the visibility you have into product launches with your wholesale partners. Maybe just a little bit more around the ramp that's implied in guidance for the remainder of 2026.

Your next question comes from the line of Miss Matt Kuranda with Ross Capital. Your line is open.

Hey guys, I wanted to hear a little bit more about how you're thinking about the seasonality of the year, just given the visibility you have in the product launches with your wholesale partners. So maybe just a little bit more around that.

Todd: Yeah. You should see revenue growing.

Todd Vogensen: Yeah. You should see revenue growing.

The ramp that's implied. And and guidance uh, for the remainder of 26,

Speaker #4: Overall , scrapping yield , looking at sourcing opportunities , there's a number of opportunities that should play out across the course of the year to help that flow through

Robert DeMartini: Ben-

Todd: Oh, sorry, Rob.

Todd Vogensen: Oh, sorry, Rob.

Robert DeMartini: Go ahead, Todd.

Todd: You should see revenue growing pretty consistently across the course of the year in Q2. Typically, Q2 would be relatively flat to Q1, but this year we have the Purple Royale launch at Mattress Firm that literally just got out on floors last week officially. That will help out the Q2 pace, and then we have a natural build that we see virtually every year going into Q3 and Q4. It really should build pretty consistently as we go across the course of the year.

Todd Vogensen: You should see revenue growing pretty consistently across the course of the year in Q2. Typically, Q2 would be relatively flat to Q1, but this year we have the Purple Royale launch at Mattress Firm that literally just got out on floors last week officially. That will help out the Q2 pace, and then we have a natural build that we see virtually every year going into Q3 and Q4. It really should build pretty consistently as we go across the course of the year.

Speaker #5: I leave it there . Thanks , guys .

Speaker #4: All right .

Speaker #1: Thank you . Thank you Matt .

Speaker #2: For next question comes from the line of Dan Silverstein with UBS . Your line is open .

Yes, so you should see Revenue growing. Oh, sorry Rob. You should do Revenue growing pretty consistently across the course of the year, uh, in Q2, uh, typically Q2 would be relatively flat to q1, but this year, we have the purple Royale launch at Mattress Firm, that literally just got out on Floors last week. Officially

Speaker #1: Good morning Rob . Good morning Todd . Thanks for taking our question . Maybe just to start . Looking at the sales guidance .

Speaker #1: Up 30 to $50 million this year . I think the mattress Firm expansion was supposed to drive around 70 million of additional sales .

Um, so that will help out the Q2 pace. And then we have a natural build that we see virtually every year going into Q3 and Q4. So it, it really should build pretty consistently as we go across the course of the year.

Matt Koranda: Okay. Maybe just wanted to hear you unpack the drivers of the flow-through. You mentioned there's likely some more restructuring actions. Does that benefit operating expenses, or are there gross margin benefits embedded in the actions that you're taking? Are the actions already taken, or is this incremental stuff that still needs to happen during Q2 to hit the flow-through that's implied in the 26 EBITDA guide?

Speaker #1: And sounds like it's doing really well right off the gate . If this if this is the case , you know what other areas might be driving , driving a bit of a drag to , to kind of net out below 70 million ?

Speaker #1: Yeah . First of all , I think that the 70 million we've got to grow into that number . It's probably somewhere between 50 and 70 .

Speaker #1: And obviously it's just hitting the floor right now . But we've got we expect growth from Costco as well . We expect growth from showrooms modest .

Speaker #1: And then we have assumed a flat e-commerce business in the roll up . We want to do better than that . But given the performance of the last few years , we've tried to show some conservatism there Super helpful .

Okay. Um, and then maybe just wanted to hear you unpack. The drivers of the flow through you mentioned, there's you know likely some more restructuring actions. Does that benefit operating expenses or or their gross margin benefits. Embedded in the, the actions that you're you're taking are the actions already taken or is this incremental stuff that that still needs to to happen during the second quarter to to hit the flow through uh, sort of that's implied in the 26, even a guide.

Todd: Yeah. The actions that I kind of referenced were actions that have already been taken. At this point, we don't have plans for additional actions that are needed right now. We feel like we're positioned very well for the full year. We did take a little bit of an action in January that will continue to benefit the operating expense line. From a gross margin perspective, we actually just have a very strong team on the operations side of the world that is always looking for room for improvement from an efficiency perspective, overall scrap and yield, looking at sourcing opportunities. There's a number of opportunities that should play out across the course of the year to help that flow through.

Todd Vogensen: Yeah. The actions that I kind of referenced were actions that have already been taken. At this point, we don't have plans for additional actions that are needed right now. We feel like we're positioned very well for the full year. We did take a little bit of an action in January that will continue to benefit the operating expense line. From a gross margin perspective, we actually just have a very strong team on the operations side of the world that is always looking for room for improvement from an efficiency perspective, overall scrap and yield, looking at sourcing opportunities. There's a number of opportunities that should play out across the course of the year to help that flow through.

Speaker #1: And that's kind of my second question . Why is the Amazon business doing well relative to your own e-com channel ? How can you capitalize on this and how can you reinvigorate your , your own e-com channel ?

Yeah, so, uh, the actions that I kind of referenced were actions that have already been taken. At this point, we don't have plans for additional actions that are needed right now. We feel like we're positioned very well for the full year, uh, but we did take a little bit of an action in January, uh, that—

Speaker #1: Looking ahead ? Yeah , Dan , I'll separate the two questions because they really are different drivers . I mean , our own e-commerce business , we've got to figure out a way as we've expanded our availability across both our own showrooms and partner showrooms , the specialness of reaching our product online has been , has been challenged .

Side of the world that is always looking for room for improvement from an efficiency perspective—overall scrapping, yield, looking at sourcing opportunities. There's a number of opportunities.

Speaker #1: And the product assortment , while proving to be a benefit in a physical environment , is either a neutral or a negative in a digital environment .

That uh should play out across the course of the year to help that flow through.

Matt Koranda: Yeah, I'll leave it there. Thanks, guys. All right. Thank you.

Robert DeMartini: Thank you, Matt.

I leave it there. Thanks guys.

Speaker #1: And we're still trying to figure that out . So that's what's going on with e-com on Amazon . It's quite a different situation where because of the cube of mattresses , we have a very underdeveloped shape of business at Amazon .

Operator: Your next question comes from the line of Daniel Silverstein with UBS. Your line is open.

All right. Thank you. Thank you, Matt.

Your next question comes from the line of Stacy Turnof with UBS. Your line is open.

Daniel Silverstein: Good morning, Rob. Good morning, Todd. Thanks for taking our question. Maybe just to start, looking at the sales guidance up $30 to 50 million this year, I think the Mattress Firm expansion was supposed to drive around $70 million of additional sales, and it sounds like it's doing really well right off the gate. If this is the case, you know, what other areas might be driving a bit of a drag to kind of net out below $70 million?

Speaker #1: So the progress you're seeing is kind of getting our fair share of relative to the pillow business that we have there . And so it is a bit of a development opportunity and that has to do with availability and Prime badging that we're starting to figure out .

Good morning, Rob. Good morning, Todd. Thanks for taking our question. Maybe just to start, looking at the sales guidance—up $30 to $50 million this year.

Speaker #1: So it really is two different drivers across those otherwise seemingly consistent channels Super helpful . Thank you . I'll pass it on . Thank you Dan .

I think the Mattress Firm expansion was supposed to drive around $70 million of additional sales, and it sounds like it's doing really well right off the gate. Uh, if this is the case, you know, what other areas might be driving a bit of a drag to kind of net out below $70 million?

Robert DeMartini: Yeah, first of all, I think that, you know, the $70 million, we've got to grow into that number. It's probably somewhere between $50 and 70 million, and obviously it's just hitting the floor right now. We've got. We expect growth from Costco as well. We expect growth from showrooms, modest, and then we have assumed a flat e-commerce business in the roll-up. We wanna do better than that, but given the performance the last few years, we've tried to show some conservatism there.

Speaker #2: Before going to the next question again , if you would like to ask a question , please press star . Then the number one on your telephone keypad , your next question comes from the line of Bobby Griffin with Raymond James .

Speaker #2: Your line is open .

Speaker #6: Good morning . This is Alejandro Jimenez on for Bobby Griffin . Thank you for taking our questions . First , I wanted to follow up on current demand trends .

Yeah, first of all, I think that, you know, the 70 million we've got to grow into that number. It's probably somewhere between 50 and 70 and obviously it's just hitting the floor right now but we've got um we expect growth from Costco as well. Uh we expect growth from showrooms modest and then we have assumed a flat e-commerce business. In the roll up we want to do better than that. But given the performance of

Speaker #6: What are you seeing from growth in your retail partners outside of Mattress Firm and the incremental Costco program ?

Last few years, um, we—we tried to show some conservatism there.

Daniel Silverstein: Super helpful, and that was kind of my second question. Why is the Amazon business doing well relative to your own e-com channel? How can you capitalize on this, and how can you reinvigorate your own e-com channel looking ahead?

Speaker #1: Good morning Alessandro . On our own business , you're asking not the overall market .

Super helpful, and that was kind of my second question. Why is the Amazon—

Speaker #7: Yes .

Speaker #1: Yeah . It's a mixed bag . We've got some customers where we're seeing nice growth and we've got others where we've got to figure out why we're not seeing that .

Robert DeMartini: Yeah, Dan, I'll separate the two questions 'cause they really are different drivers. I mean, our own e-commerce business, we've got to figure out a way, as we've expanded our availability across both our own showrooms and partner showrooms, the specialness of reaching our product online has been challenged. The product assortment, while proving to be a benefit in a physical environment, is either a neutral or a negative in a digital environment, and we're still trying to figure that out. That's what's going on with e-com. On Amazon, it's quite a different situation where because of the cube of mattresses, we have a very underdeveloped shape of business at Amazon. The progress you're seeing is kind of getting our fair share relative to the pillow business that we have there.

Business is doing well relative to your own e-com channel. How can you capitalize on this? And how can you reinvigorate your own e-com channel? Looking ahead.

Speaker #1: So it is a bit mixed across total toll sale . I think if you backed out the two customers that we spoke about in our script , we're probably seeing a net down about 5% .

Speaker #1: And I think that's about consistent with the market . But it is definitely mixed in the performance

Yeah Dan. I'll separate the 2 questions because they really are different drivers. I mean the our own e-commerce business. We've got to figure out a way as we've expanded, our availability across both our own showrooms and partner showrooms the specialness of reaching our product online has been CH has been challenged and the product assortment

Speaker #6: Okay . That's helpful . And then what are you expecting from a cash flow perspective for 2026 on the improved EBITDA profitability ? Do you anticipate positive free cash flow for the year

While proving to be a benefit in a physical environment is either a neutral or a negative in a digital environment, and we're still trying to figure that out. So that's what's going on with Ecom.

Speaker #8: Yes , we would expect positive free cash flow for the year . If

On Amazon, it's quite a different situation, where because of the cube—

Speaker #4: Apologies , I was getting an echo Positive free cash flow for the year . And as we look at it , you know , we'll have CapEx that will be reinvesting in and 20 to $30 million of adjusted EBITDA .

Of mattresses. We have a very underdeveloped.

Robert DeMartini: It is a bit of a development opportunity, and that has to do with availability and Prime badge that we're starting to figure out. It really is two different drivers across those otherwise seemingly consistent channels.

Speaker #4: That'll get us modestly positive . And coming off of the Q1 , where we're ending Q1 with our cash , actually equal to where we ended Q4 , that's the first time that we've been in that range in over seven years .

Shape of business at Amazon. So the progress you're seeing is kind of getting our fair share relative to the pillow business that we have there. And so it is a bit of a development opportunity, and that has to do with availability and Prime badging that we're starting to figure out. So it really is two different drivers across those.

Otherwise seemingly consistent channels.

Daniel Silverstein: Super helpful. Thank you. I'll pass it on.

Robert DeMartini: Thank you, Dan.

Super helpful. Thank you. I'll pass it on.

Operator: Before going to the next question, again, if you would like to ask a question, please press star then the number one on your telephone keypad. Your next question comes from the line of Bobby Griffin with Raymond James. Your line is open.

Thank you, Dan.

Speaker #4: So we're off to a good start for the year , for sure

Speaker #6: That's really helpful . And if I can just sneak one more in , I wanted to revisit the Sherm It's encouraging to see that strong comp growth .

Alessandra Jimenez: Good morning. This is Alessandra Jimenez on for Bobby Griffin. Thank you for taking our questions. First, I wanted to follow up on current demand trends. What are you seeing from growth in your retail partners outside of Mattress Firm and the incremental Costco program?

Speaker #6: Can you speak to what you're seeing from a demand perspective and what's kind of accelerating there ? And then how do you think about the roughly 20% of locations that are not yet for all profitable

Before going to the next question, again, if you would like to ask a question, please press star, then the number 1 on your telephone keypad. Your next question comes from the line of Bobby Griffin with Raymond James. Your line is open.

Speaker #1: Yeah . Alessandra , let me try to tackle that . So Scott Kirby , who runs that channel , has been doing an excellent job in establishing a selling system .

Good morning. This is Alexander Hermene on for Bobby Griffin. Thank you for taking our questions. First, I wanted to follow up on current demand trends. What are you seeing from growth in your retail partners outside of Mattress Firm and the incremental Costco program?

Robert DeMartini: Good morning, Alessandra. On our own business, you're asking, not the overall market?

Alessandra Jimenez: Yes.

Uh, good morning, Alessandro. On our own business, you're asking, not the overall market.

Speaker #1: And what's driving the results is positive mix . As I mentioned in the script , our mattress percent to total of the premium line is now over 50% of dollar revenue .

Robert DeMartini: Yeah. It's a mixed bag. We've got some customers where we're seeing nice growth, and we've got others where we've got to figure out, you know, why we're not seeing that. It is a bit mixed across total wholesale. I think if you backed out the two customers that we spoke about in our script, we're probably seeing a net down about 5%, and I think that's about consistent with the market, but it is definitely mixed in the performance.

Yes.

Speaker #1: And so that obviously helps the stores be much more profitable of the 20% of stores , that's about nine stores that are not for wall profitable .

Yeah, it's a mixed bag. We've got some customers where we're seeing nice growth, and we've got others where we've got to figure out, you know, why we're not seeing that. So it is a bit mixed across total wholesale. I think if you backed out the two customers that we, um,

Speaker #1: We think at least five of those can get there with continued development and maybe 3 to 4 of them . We really have to look at and figure out if we have , you know , are we in the right location with the right rent structure .

Alessandra Jimenez: Okay, that's helpful. What are you expecting from a cash flow perspective for 2026 on the improved EBITDA profitability? Do you anticipate positive free cash flow for the year?

Spoke about it in our script. We're probably seeing a net down about 5%, and I think that's about consistent with the market, but it is definitely mixed in the performance.

Speaker #1: But it's been mixed tight . Labor discipline and really looking at the cost structure of those stores that have led to this significant improvement over the last two years

Okay, that's helpful. And then, what are you expecting from a cash flow perspective for 2026 on the improved EBA profitability? Do you anticipate positive free cash flow for the year?

Todd: Yes, we would expect positive free cash flow for the year. Apologies, I was getting an echo. Positive free cash flow for the year, and, as we look at it, you know, we'll have CapEx that we'll be reinvesting in, and, $20 to 30 million of adjusted EBITDA. That'll get us modestly positive and coming off of a Q1 where we're ending Q1 with our cash actually equal to where we ended Q4. That's the first time that we've been in that range in over 7 years. We're off to a good start for the year for sure.

Todd Vogensen: Yes, we would expect positive free cash flow for the year. Apologies, I was getting an echo. Positive free cash flow for the year, and, as we look at it, you know, we'll have CapEx that we'll be reinvesting in, and, $20 to 30 million of adjusted EBITDA. That'll get us modestly positive and coming off of a Q1 where we're ending Q1 with our cash actually equal to where we ended Q4. That's the first time that we've been in that range in over 7 years. We're off to a good start for the year for sure.

Yes, we would expect positive free cash flow for the year. If

Speaker #6: Thank you so much and good luck moving forward .

Apologies. I was getting an echo.

Speaker #1: Thank you , Alessandro .

Speaker #2: Your next question comes from the line of Brian Neo with Oppenheimer . Your line is open .

Speaker #5: Hey , guys . Good morning .

Speaker #3: So I have a couple .

Speaker #1: Questions .

Speaker #3: First off .

Speaker #5: Just with .

Speaker #3: Regard to the newer products , the more innovative products is . that is that rollout . Now complete or should we expect further rollout here ?

Coming off of the Q1, where

Speaker #3: You know , just through 26 . Then my follow up question is mostly for Todd . I mean , maybe just outline the capital needs from an operational standpoint .

We're ending Q1 with our cash actually equal to where we ended Q4. That's the first time that we've been in that range in over 7 years. So we're off to a good start for the year for sure.

Alessandra Jimenez: That's really helpful. If I can just sneak one more in. I wanted to revisit the showroom channel. It's encouraging to see that strong comp growth. Can you speak to what you're seeing from a demand perspective and what's kind of accelerating there? Then how do you think about the roughly 20% of locations that are not yet four-wall profitable?

Speaker #3: The capital needs of the business

Speaker #1: All right , Brian , let me take the first one and then I'll let Todd answer the second one . Yeah , that that rollout is physically completed .

Speaker #1: We completed our , you know , our rejuvenate rollout probably in in the middle of fourth quarter . And then started the Royale , which is a curated version of similar price points .

That's really helpful. And if I can just sneak one more in, I wanted to revisit the Sherm channel. It's encouraging to see that strong, prompt growth. Can you speak to what you're seeing from a demand perspective and what kind of acceleration there is? And then, how do you think about the roughly 20% of locations that are not yet four-wall profitable?

Robert DeMartini: Yeah, Alessandra, let me try to tackle that. Scott Kirby, who runs that channel, has been doing an excellent job in establishing a selling system, and what's driving the results is positive mix. As I mentioned in the script, our mattress percent of total of the premium line is now over 50% of dollar revenue. That obviously helps the stores be much more profitable. Of the, you know, 20% of stores, that's about 9 stores that are not four-wall profitable, we think at least 5 of those can get there with continued development and maybe 3 to 4 of them, we really have to look at and figure out if we have, you know, are we in the right location with the right rent structure?

Speaker #1: The official launch at Mattress Firm was March 20th . It's on all the slots that it was aimed for at this point , but we still have significant opportunity to develop that line .

Speaker #1: I spoke about the percent of total in showrooms . It's much , much lower in wholesale and in e-commerce , and that's a business development opportunity .

Speaker #1: Do we think we can continue to grow that as a percent of total ? But the physical expansion is completed and we're now looking to a very full innovation pipeline for other products starting in early 27 .

Robert DeMartini: It's been mix, tight labor discipline, and really looking at the cost structure of those stores that have led to this significant improvement over the last two years.

Speaker #4: And from a capital needs perspective , I should have said before , our target for the year is 10 to $12 million in capital .

Uh, yeah, I'll let me try to tackle that. So Scott Kirby who runs that channel has been doing an excellent job in establishing a selling system. And what's driving? The results is positive mix. As I mentioned in the script, our mattress, uh, percent of total of the premium Line is now over 50% of dollar Revenue, uh, and So that obviously helps the stores be much more profitable of the, you know, 20% of stores. That's about 9 stores that are not 4-wall profitable. We think, at least 5 of those can get there with continued development and maybe 3 to 4 of them. We really have to look at and figure out if we have, you know, are we in the right location with the right rent structure? But it's been mixed.

Speaker #4: That's just up modestly from the 8 million that we had in 2025 . So the base CapEx is going to always be kind of the the normal maintenance CapEx that we've had for the past several years , particularly in our operations .

Tight labor discipline. Uh, and really looking at the cost structure of those stores that have led to this significant improvement over the last 2 years.

Alessandra Jimenez: Thank you so much, and good luck moving forward.

Robert DeMartini: Thank you, Alessandra.

Thank you so much and good luck moving forward.

Operator: Your next question comes from the line of Brian Nagel with Oppenheimer. Your line is open.

Thank you, Alessandra.

Your next question comes from the line of Brian Nigel.

Speaker #4: We do have a little bit of innovations , CapEx this year as we innovate for new products going forward . And then the probably the big chunks that are incremental versus last year with the new products going out this year , we are looking to expand some of the fixtures that go into stores .

Brian Nagel: Hey, guys. Good morning. I have a couple questions.

Hey guys. Good morning.

Robert DeMartini: Hi, Brian.

Brian Nagel: First off, just with regard to, you know, the newer products, the more innovative products, is that rollout now complete, or should we expect further, you know, rollout here, you know, I guess through 2026? My follow-up question, I guess mostly for Todd, I mean, maybe just outline kind of the capital needs of the business from an operational standpoint.

So, I have a couple questions. Um, first off, just with regard to—

You know, the the, the newer products and the more Innovative products is is, is that, is that roll out now complete or should we expect further? You know, roll out here, you know, I guess through 26, then my follow-up question.

Speaker #4: So you can think about that being the headboards . We have some branded walls that go in a number of things that just help with the overall environment around the purple products that we think help sell the products through , and then Rob mentioned we have five new stores that we're planning for this coming year .

This is mostly for Tommy—maybe just an outline—kind of the capital needs from an operational standpoint, the capital needs of the business.

Robert DeMartini: All right, Brian, let me take the first one, and then I'll let Todd answer the second one. Yeah, that rollout is physically completed. We completed our Rejuvenate rollout, probably in the middle of Q4, and then started the Royale, which is a curated version of similar price points. The official launch at Mattress Firm was 20 March. It's on all the slots that it was aimed for at this point. We still have significant opportunity to develop that line. I spoke about the percent to total in showrooms. It's much lower in wholesale and in e-commerce, and that's a business development opportunity that we think we can continue to grow that as a percent to total.

All right Brian. Let me take the first 1 and then I'll let to answer the second 1. Um yeah that that roll out is

Speaker #4: There's a modest amount of CapEx that goes for those as well

Speaker #3: Okay , I appreciate it . Thank you .

Speaker #4: Thank you .

Speaker #1: Thank you Brian .

Speaker #2: I will turn the call back over to Robert DeMartini for closing remarks

Speaker #1: I just want to thank all of our shareholders and investors and lenders for the we've gotten . And I want to thank the Purple Associates for the hard work they've put in on the business .

Physically completed. We completed our, you know, our Rejuvenate roll out, um, probably in, in the middle of fourth quarter. And then started the Royale, which is a curated version of similar price points. Uh, the official launch at Mattress Firm was March 20th. It's on, uh, all the slots that it was aimed for at this point, but we still have significant opportunity to develop that line. I spoke about the percent, the total in a showroom.

Speaker #1: I believe from the Q3 and Q4 results , you can see our turnaround is taking hold . And I want to say thank you to everybody for that .

Speaker #1: Thank you . Operator .

Robert DeMartini: The physical expansion is completed, and we're now looking to a very full innovation pipeline for other products starting in early 2027.

It's much, much lower in wholesale and in e-commerce, and that's a business development opportunity. So we think we can continue to grow that as a percent to total. But the physical expansion is completed, and we're now looking to a very full innovation pipeline for other products starting in early ’27.

Todd: From a capital needs perspective, I should have said before, our target for the year is $10 to 12 million in capital. That's just up modestly from the $8 million that we had in 2025. The base CapEx is gonna always be kind of the normal maintenance CapEx that we've had for the past several years, particularly in our operations. We do have a little bit of innovations CapEx this year as we innovate for new products going forward. Probably the big chunks that are incremental versus last year, with the new products going out this year, we are looking to expand some of the fixtures that go into stores. You can think about that being the headboards. We have some branded walls that go in.

Todd Vogensen: From a capital needs perspective, I should have said before, our target for the year is $10 to 12 million in capital. That's just up modestly from the $8 million that we had in 2025. The base CapEx is gonna always be kind of the normal maintenance CapEx that we've had for the past several years, particularly in our operations. We do have a little bit of innovations CapEx this year as we innovate for new products going forward. Probably the big chunks that are incremental versus last year, with the new products going out this year, we are looking to expand some of the fixtures that go into stores. You can think about that being the headboards. We have some branded walls that go in.

And from a capital needs perspective, I, I should have said before our Target for the year is 10 to 12 million dollars in capital that's just up modestly from the 8 million that we had in 2025. So the base capex is going to always be uh kind of the the normal maintenance capex that we've had for the past several years. Uh, particularly in our operations.

Todd: We have a number of things that just help with the overall environment around the Purple products that we think help sell the products through. Rob mentioned we have 5 new stores that we're planning for this coming year. There's a modest amount of CapEx that goes for those as well.

Todd Vogensen: We have a number of things that just help with the overall environment around the Purple products that we think help sell the products through. Rob mentioned we have 5 new stores that we're planning for this coming year. There's a modest amount of CapEx that goes for those as well.

We do have a little bit of innovations capex this year, as we innovate for new products going forward. And then, probably the big chunks that are incremental versus last year are with the new products going out. This year, we are looking to expand some of the fixtures that go into stores. So you can think about that being the headboards, we have some branded walls that go in, we have a number of things that just help with the overall environment around the Purple products that we think help sell the products through. And then Rob mentioned we have five new stores that

We're planning for this coming year. Uh, there's a modest amount of capex that goes for those as well.

Brian Nagel: Okay, appreciate it. Thank you.

Todd: Thank you.

Todd Vogensen: Thank you.

I appreciate it. Thank you.

Robert DeMartini: Thank you, Brian.

Thank you.

Operator: I will turn the call back over to Robert DeMartini for closing remarks.

Thank you, Brian.

I will try the call back over to Robert DeMartini for closing remarks.

Robert DeMartini: I just wanna thank all of our shareholders, investors, and lenders for the support we've gotten, and I wanna thank the Purple associates for the hard work they've put in on the business. I believe from the Q3 and Q4 results, you can see our turnaround is taking hold, and I wanna say thank you to everybody for that. Thank you, operator.

Results. You can see our turnaround is taking hold, and I want to say thank you to everybody for that.

Thank you, operator.

Operator: Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

Q4 2025 Purple Innovation Inc Earnings Call

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