Purple’s third quarter was marked by operational improvements and early progress on strategic initiatives, leading to a positive market reaction. Management credited margin recovery to cost savings from last year’s restructuring, higher sales in showrooms and wholesale channels, and the success of the Rejuvenate 2.0 mattress collection. CEO Robert DeMartini stated, “We have reduced our fixed costs and expect to deliver $25 million to $30 million in savings annually,” emphasizing the company’s focus on sustainable profitability. While e-commerce sales remained pressured, management highlighted sequential improvements and strong showroom performance.
Is now the time to buy PRPL? Find out in our full research report (it’s free for active Edge members).
Purple (PRPL) Q3 CY2025 Highlights:
- Revenue: $118.8 million vs analyst estimates of $123.2 million (flat year on year, 3.6% miss)
- Adjusted EPS: -$0.08 vs analyst estimates of -$0.10 (17.9% beat)
- Adjusted EBITDA: $189,000 vs analyst estimates of -$42,500 (0.2% margin, relatively in line)
- The company reconfirmed its revenue guidance for the full year of $475 million at the midpoint
- Operating Margin: -10.2%, up from -39.5% in the same quarter last year
- Locations: 3,590.5 at quarter end, up from 3,350 in the same quarter last year
- Market Capitalization: $82.56 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Purple’s Q3 Earnings Call
- Bradley Thomas (KeyBanc Capital Markets) asked if sales improvements reflected market recovery or internal initiatives. CEO Robert DeMartini responded that results were driven mostly by internal actions, with the broader market remaining flat.
- Bradley Thomas (KeyBanc Capital Markets) questioned margin sustainability as growth initiatives ramp up. CFO Todd Vogensen said gross margins above 40% are sustainable, with incremental revenue now flowing quickly to the bottom line due to lower fixed costs.
- Unknown Analyst (ROTH Capital Partners) requested detail on EBITDA guidance and the impact of seasonal trends. Vogensen explained that Q4 is typically the highest revenue quarter, with direct-to-consumer channels and new wholesale slots driving expected EBITDA acceleration.
- Robert Griffin (Raymond James) inquired about e-commerce strategy given ongoing weakness. DeMartini said Purple remains committed to e-commerce, citing recent improvements from a website refresh and a focus on premium product mix.
- Daniel Silverstein (UBS) asked how wholesale growth, specifically at Mattress Firm, might impact margins. DeMartini replied that premium products should offset mix-related margin pressure, and performance will depend on maintaining strong productivity in new slots.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be closely monitoring (1) the pace of incremental slot growth and sales productivity at Mattress Firm and other wholesale partners, (2) the effectiveness of the Rejuvenate 2.0 and GridC Pillow launches in driving higher average order values, and (3) whether e-commerce channel improvements translate into sustained online growth. Execution on cost savings and margin stability will also remain key areas of focus.
Purple currently trades at $0.79, down from $0.80 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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