Purple Innovation, Inc.
For the period ended Jun 30, 2026. Filed Aug 11, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 11, 2026
PRPL$2.14-15.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-28.
0001213900-26-048619
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001213900-26-087735
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 77 previous paragraphs and 105 current paragraphs.
43 unchanged; 24 reworded; 29 added; 10 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 5 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
We continue building on the progress we made in the past year and remain focused on where we believe we can make the most impact. The demand environment remained challenging in the second quarter of 2026, and we made progress in our showroom and E-commerce channels. Our showroom business was up 16.6% compared to last year. This was driven by improving traffic, stronger conversion and strength in our premium products. E-commerce was down slightly by 1.4% compared to last year, but we are moving in the right direction as we have had three consecutive quarters of sequential improvement. We are improving our management of the channel and the work we are doing across marketing and the website experience is contributing to that progress. Our performance in the wholesale channel remained challenged as revenues were down 19.1% compared to last year. This decrease is due to certain payments to customers and a manufacturer under common control with a customer which represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we experienced lower wholesale sales volumes related to lower industry demand. Operationally, we continue to see the benefits of previous actions taken in areas we can control, reflected in our improved profitability and cash generation, disciplined expense performance and inventory management. We continue to invest in innovation, advertising and consumer experience. Although the demand environment remains uncertain, we believe that we are operating from a stronger foundation. We expect to benefit from continued operational improvements, additional sourcing initiatives and the continued development of our premium product line.
Current report
Reclassification of Merchant and Financing Fees
Current report
In the second quarter of 2026, we changed the presentation of costs associated with merchant credit card processing fees and third-party consumer financing fees. These costs were previously presented within cost of revenues and are now presented within marketing and sales. We believe this presentation will enhance the comparability of our financial statements with those of our industry peers.
Current report
The tables below present the effect of the reclassification on our previously issued financial statements. This change in presentation had no impact on previously reported revenues, operating loss, net loss, or earnings per share. Additionally, the reclassifications did not impact the historical balance sheets or statement of cash flows.
Current report
Pricing Actions
Current report
In the latter part of the second quarter of 2026, we announced a pricing action to increase the sales price of our products across all products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. We expect all price increases will be effective with all customers during the third quarter of 2026.
Current report
Reverse Stock Split
Current report
On July 2, 2026, our stockholders approved a reverse stock split of our Class A common stock and Class B common stock (collectively, the “common stock”) at a ratio ranging from any whole number between 1-for-10 to 1-for-30, with the exact ratio determined by the Company’s Board of Directors. On July 6, 2026, the Board of Directors approved a 1-for-25 reverse stock split (“Reverse Stock Split”) of the Company’s common stock that became effective on July 19, 2026. Following the effect of the Reverse Stock Split, every 25 shares of the Company’s common stock that were issued and outstanding automatically converted into one outstanding share of common stock. All stock awards and warrants of the Company outstanding immediately prior to the Reverse Stock Split were proportionally adjusted.
Current report
The Reverse Stock Split did not change the Company’s authorized number of shares of common stock. The Reverse Stock Split did not change the par value of the common stock and, therefore the Company reclassified an amount equal to the reduction in the number of shares of common stock at par value to additional paid-in capital. No fractional shares of common stock were issued in connection with the Reverse Stock Split. Instead, any fractional share that would otherwise result from the Reverse Stock Split will be rounded up to the next whole share of common stock. Proportionate adjustments were made to the number of shares authorized under the Company’s equity incentive plans, the number of shares subject to any award or purchase right under the Company’s equity incentive plans, and the exercise price or purchase price with respect to any stock award or warrant.
Current report
Net revenues decreased $6.8 million, or 6.5%, to $98.3 million for the three months ended June 30, 2026 compared to $105.1 million for the three months ended June 30, 2025. The decrease in revenue was primarily driven by an $8.8 million or 19.1% decrease in our wholesale revenue due to an increase of $5.3 million in certain payments to customers and a manufacturer under common control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we had a $3.5 million decrease in wholesale sales volume related to lower industry demand. E-commerce net revenues also decreased $0.6 million, or 1.4%. While down against the prior year’s period, E-commerce net revenues for the three months ended June 30, 2026 represented the third quarter of sequential improvement. These decreases were partially offset by a $2.6 million or 16.6% increase in showroom net revenues which continues to outperform the mattress industry.
Current report
Gross profit increased $1.9 million, or 4.5%, to $44.4 million for the three months ended June 30, 2026 compared to $42.5 million for the three months ended June 30, 2025. Our gross profit increased due to the $5.3 million benefit from tariff refunds, partially offset by lower sales. Our gross profit percentage increased to 45.2% of net revenues in the second quarter of 2026 from 40.5% in the second quarter of 2025 primarily due to the tariff refund.
Current report
Net revenues decreased $6.8 million, or 6.5%, to $98.3 million for the three months ended June 30, 2026 compared to $105.1 million for the three months ended June 30, 2025. The decrease in revenue was primarily driven by an $8.8 million or 19.1% decrease in our wholesale revenue due to an increase of $5.3 million in certain payments to customers and a manufacturer under common control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we had a $3.5 million decrease in wholesale sales volume related to lower industry demand. E-commerce net revenues also decreased $0.6 million, or 1.4%. While down against the prior year’s period, E-commerce net revenues for the three months ended June 30, 2026 represented the third quarter of sequential improvement. These decreases were partially offset by a $2.6 million or 16.6% increase in showroom net revenues which continues to outperform the mattress industry.
Current report
Total cost of revenues decreased $8.7 million, or 14.0%, to $53.9 million for the three months ended June 30, 2026, compared to $62.6 million for the three months ended June 30, 2026. This decrease was due primarily to a $5.3 million benefit from our tariff rebates that we received during the quarter, $2.3 million in lower tariff payments and $1.1 million reduction in other costs. Our gross profit percentage increased to 45.2% of net revenues in the second quarter of 2026 from 40.5% in the second quarter of 2025, due mainly to the tariff refund.
Current report
Research and development expense increased $0.3 million, or 14.1%, to $2.5 million for the three months ended June 30, 2026 compared to $2.2 million for the three months ended June 30, 2025. The increase is due to an increase in professional service expenses.
Current report
Revenues, Net
Current report
Net revenues decreased $15.3 million, or 7.3%, to $194.0 million for the six months ended June 30, 2026, compared to $209.3 million for the six months ended June 30, 2025. This decrease was primarily driven by a $13.3 million or 15.3% decrease in our wholesale revenue due to an increase of $11.1 million in certain payments to customers and a manufacturer under common control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we had a $2.2 million decrease in wholesale sales volume related to lower industry demand. E-commerce net revenues decreased $5.4 million, or 6.1% and showroom net revenues increased $3.5 million, or 10.3%.
Current report
Total Cost of Revenues
Current report
Total cost of revenues decreased $11.7 million, or 9.7%, to $109.4 million for the six months ended June 30, 2026, compared to $121.1 million for the six months ended June 30, 2025. This decrease was due primarily to a $5.3 million credit for tariff refunds we received in the second quarter, costs of $5.4 million to a manufacturer under common control that were booked against revenues, $3.0 million in lower tariff payments and a $1.0 million reduction in restructuring costs as the plan ended in 2025. These costs were offset by a $3.0 million increase in material and other costs, primarily logistics due to higher fuel costs and reduced driver supply. Our gross profit percentage increased to 43.6% for the first six months in 2026 from 42.1% in the first six months of 2025.
Current report
Marketing and Sales
Current report
Marketing and sales expense decreased $6.4 million, or 8.3%, to $70.3 million for the six months ended June 30, 2026, compared to $76.7 million for the six months ended June 30, 2025. This decrease is due to a decrease of $2.6 million for payroll related costs, a decrease of $1.2 million in advertising spending, and a decrease of $2.6 million in all other marketing expenses.
Current report
General and Administrative
Current report
General and administrative expense increased $1.0 million, or 3.4%, to $30.5 million for the six months ended June 30, 2026, compared to $29.5 million for the six months ended June 30, 2025. This increase was primarily due to $3.8 million increase in strategic alternative costs, increase in facilities and other expenses of $1.3 million, partially offset by a $4.1 million decrease in employee related expenses due to headcount reductions.
Current report
Research and Development
Current report
Research and development expense increased $0.3 million, or 6.5%, to $4.9 million for the six months ended June 30, 2026, compared to $4.6 million for the six months ended June 30, 2025. This increase is due to an increase in professional services during the period.
Current report
Operating Loss
Current report
Operating loss decreased $7.6 million, or 26.5%, to $21.1 million, for the six months ended June 30, 2026, compared to $28.7 million for the six months ended June 30, 2025. This decrease in our operating loss is the result of the reduced marketing and sales expenses and no restructuring and impairment charges in 2026, partially offset by reduced gross profit due to lower revenues and increases in other operating expenses.
Current report
Interest Expense
Current report
Income Tax (Expense) Benefit
Current report
Debt service has consisted primarily of re-financing or extending the maturity date of the debt as well as paying-in-kind interest payments. As disclosed in Note 10 -Debt, the Company has elected to have interest paid-in-kind and added to the principal amount of the loans under the Amended and Restated Credit Agreement and on March 24, 2026, the Company executed the Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) with the Lenders to extend the maturity date of the Amended and Restated Credit Agreement from December 31, 2026 to April 30, 2027. In addition, certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements were waived (see Note 10 –Debt). Management has implemented plans to both increase its revenues from the sales of its products and to achieve cost savings within the next year, sufficient to generate positive operating cash flow levels. However, the Company cannot guarantee that it will have sufficient cash flow to meet the debt obligations when they become due within the next twelve months. The Company will need to raise additional capital or secure alternative financing arrangements, both of which are uncertain and not within the control of the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
Removed paragraphs (10)
Previous report
We entered 2026 building on the progress we made in the fourth quarter, and our first quarter reflects continued progress and greater consistency across our channels. Trends were solid during the quarter, with growth in our showroom and wholesale channels. The E-commerce channel also improved sequentially declining 10% in the first quarter year over year compared to down 15% in the prior period year over year, reflecting more disciplined marketing execution and early signs of improved conversion. Importantly, we continue to see the benefits of actions taken last year reflected in our operating expense performance. This progress is a direct result of the changes we’ve made to the business, not a recovery of the broader market, reinforcing the durability of the model we’ve been building.
Previous report
Net revenues decreased $8.4 million, or 8.1%, to $95.7 million for the three months ended March 31, 2026 compared to $104.2 million for the three months ended March 31, 2025. The drop in revenue was primarily due to a decrease in e-commerce sales and recognized wholesale revenue. From a sales channel perspective, e-commerce net revenues decreased $4.8 million, or 10.6%, wholesale net revenues decreased $4.5 million or 11.0% and showroom net revenues increased $0.9 million, or 4.8%. The decrease in wholesale revenue was due mainly to $4.9 million in payments to a manufacturer that is under common control with a customer and represents consideration paid to a customer. Accordingly, these payments are recorded as a reduction in revenue. The decreases were partially offset by our showroom net revenue increase of $0.9 million or 4.8%. The increase in our showrooms channel represents a 7.0% year-over-year increase for all stores that have been open for 13 or more months. This is the third consecutive quarter of year-over-year growth in the showrooms channel, driven by increased order values through effective upselling and product bundling.
Previous report
Gross profit decreased $5.9 million, or 14.3%, to $35.2 million for the three months ended March 31, 2026 compared to $41.0 million for the three months ended March 31, 2025. Our gross profit percentage decreased to 36.8% of net revenues in the first quarter of 2026 from 39.4% in the first quarter of 2025 due to our strategic investment in Purple Royale floor models to support the Mattress Firm rollout, as well as modest manufacturing overhead deleverage driven by lower production volumes and less favorable absorption of fixed costs.
Previous report
Net revenues decreased $8.4 million, or 8.1%, to $95.7 million for the three months ended March 31, 2026 compared to $104.2 million for the three months ended March 31, 2025. This decrease was primarily driven by our e-commerce and wholesale recognized revenue. From a sales channel perspective, e-commerce net revenues decreased $4.8 million, or 10.6%, wholesale net revenue decreased $4.5 million or 11.0% and showroom net revenues increased $0.9 million, or 4.8%. The decrease in wholesale revenue was due mainly to $4.9 million in payments to a manufacturer that is under common control with a customer and represents consideration paid to a customer. Accordingly, these payments are recorded as a reduction in revenue.
Previous report
Total cost of revenues decreased $2.6 million, or 4.1%, to $60.5 million for the three months ended March 31, 2026, compared to $63.1 million for the three months ended March 31, 2025. This decrease was due primarily to $4.9 million in costs associated with a manufacturer that is affiliated with a customer recorded as reduction of revenue. This decrease was partially offset by less favorable absorption of fixed costs from lower production volumes. Our gross profit percentage decreased to 36.8% of net revenues in the first quarter of 2026 from 39.4% in the first quarter of 2025, due to our strategic investment in Purple Royale floor models to support the Mattress Firm rollout, as well as modest manufacturing overhead deleverage driven by lower production volumes and less favorable absorption of fixed costs.
Previous report
Research and development expense was flat to prior year at $2.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Previous report
Noncontrolling Interest
Previous report
We had cash and cash equivalents of approximately $25.0 million and an accumulated deficit of $655.8 million at March 31, 2026. We incurred a net loss of $30.5 million and net cash provided by operating activities and net cash used in investing activities was $3.0 million and $2.0 million, respectively, for the three months ended March 31, 2026. We have a history of recurring net losses and cash used in operations, an accumulated deficit, and requiring additional capital to fund our operations.
Previous report
The funds we have on hand and any follow-on capital, if needed, will be used to fund our operations and invest in the business to expand sales and marketing efforts, as well as to invest in innovation. As described below, we have implemented plans that we believe will both increase our revenues from the sales of our products and achieve cost savings within the next year, sufficient to generate positive operating cash flow levels. However, we may be adversely impacted by uncertain market conditions and there can be no assurance that we will be successful in this regard. If such plans are not successful, we may need to raise additional capital in order to support operations and business initiatives. Access to additional capital is uncertain and not within our control. Accordingly, there is substantial doubt about our ability to continue as a going concern.
Previous report
Additionally, in May 2025, we entered into an agreement with Mattress Firm, Inc. (“Mattress Firm”), a business unit of Somnigroup International, Inc. (“SGI”) to expand its inventory of the Company’s products across SGI’s national store network from approximately 5,000 mattress slots to a minimum of 12,000 mattress slots (see Note 13 —*Commitments and Contingencies, SGI Commercial Arrangements).*We are now represented in Mattress Firm’s full store network and with the recent launch of Purple Royale, the exclusive Luxe product for Mattress Firm, we have expanded to all 12,000 committed slots. We have also expanded into more Costco clubs in the fourth quarter of 2025.
Reworded paragraphs (24)
Previous wording
We caution and advise readers that these statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict, including those included in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements and investors are cautioned not to place undue reliance on any such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Current wording
We caution and advise readers that these statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict, including those included in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2026. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements and investors are cautioned not to place undue reliance on any such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Previous wording
Revenue for certain product arrangements is presented differently depending on the nature of the underlying manufacturing relationships and the application of ASC 606—Revenue from Contracts with Customers. Under the guidance, payments to third-party manufacturers, including manufacturers under common control with certain customers, are evaluated to determine whether they are economically linked to an underlying customer arrangement. For certain customer-specific or exclusive product programs where the manufacturer is under common control with the customer, the Company has concluded that payments to the manufacturer are economically linked to the customer relationship and therefore represent consideration payable to a customer. As a result, these payments are recorded as a reduction of revenue, and revenue is presented on a net basis. The Company recorded $4.9 million in consideration paid as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three months ended March 31, 2026. This presentation results in reported revenue being lower than the gross amount billed to the customer. While the net presentation affects reported revenue, it does not impact gross profit dollars for these arrangements. The distinction reflects the application of GAAP to different fact patterns rather than a difference in the underlying economics of the transactions.
Current wording
Revenue for certain product arrangements is presented differently depending on the nature of the underlying manufacturing relationships and the application of ASC 606—Revenue from Contracts with Customers. Under the guidance, payments to third-party manufacturers, including manufacturers under common control with certain customers, are evaluated to determine whether they are economically linked to an underlying customer arrangement. For certain customer-specific or exclusive product programs where the manufacturer is under common control with the customer, the we have concluded that payments to the manufacturer are economically linked to the customer relationship and therefore represent consideration payable to a customer. As a result, these payments are recorded as a reduction of revenue, and revenue is presented on a net basis. We recorded $0.5 million and $5.4 million in consideration paid as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three months and six months ended June 30, 2026, respectively. This presentation results in reported revenue being lower than the gross amount billed to the customer. While the net presentation affects reported revenue, it does not impact gross profit dollars for these arrangements. The distinction reflects the application of GAAP to different fact patterns rather than a difference in the underlying economics of the transactions.
Previous wording
On March 24, 2026, the Loan Parties entered into the Third Amendment with the Lenders, which revised the maturity date under the Amended A&R Credit Agreement from December 31, 2026, to April 30, 2027 and waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. In connection with the Third Amendment, the Loan Parties agreed to pay to the Lenders an amendment fee in the aggregate amount of $1.6 million, equal to 1.25% pro rata based on each Lender’s outstanding principal amount (the “Amendment Fee”). Of the Amendment Fee, approximately $1.3 million is payable-in-kind by adding such amount to the 2025 Lenders’ outstanding principal amount. The remaining $0.3 million of the Amendment Fee was paid in cash to the other lenders. In connection with the Third Amendment, the Loan Parties also agreed to reimburse the 2025 Lenders for certain expenses in the amount of $0.3 million.
Current wording
On March 24, 2026, the Loan Parties entered into the Third Amendment with the Lenders, which revised the maturity date under the Amended A&R Credit Agreement from December 31, 2026, to April 30, 2027 and waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. In connection with the Third Amendment, the Loan Parties agreed to pay to the Lenders an amendment fee in the aggregate amount of $1.6 million, equal to 1.25% pro rata based on each Lender’s outstanding principal amount (the “Amendment Fee”). Of the Amendment Fee, approximately $1.3 million was paid-in-kind by adding such amount to the 2025 Lenders’ outstanding principal amount. The remaining $0.3 million of the Amendment Fee was paid in cash to the other lenders. In connection with the Third Amendment, the Loan Parties also agreed to reimburse the 2025 Lenders for certain expenses in the amount of $0.3 million.
Previous wording
We continue to actively manage the impact of recent United States tariff policies. Importantly, all of our mattresses are manufactured in the United States, and about 15% of our cost of goods is tied to products sourced from overseas. This limited exposure is primarily concentrated in the textile side of the business, which includes sheets and mattress covers, but also includes the import of bases and foundations. Tariffs impacted us by approximately $1.0 million during the three months ended March 31, 2026 due to our mitigation efforts which have reduced the overall impact to our initial expectations. The tariff landscape remains fluid, and we are actively evaluating sourcing alternatives and pricing strategies on a case-by-case basis. We believe that our vertically integrated model and strong vendor relationships give us the flexibility to remain agile and responsive to changes in tariff policies, and we believe that we will be able to partially mitigate these impacts through a combination of supply chain repositioning, vendor collaborations, and selective pricing actions. On March 6, 2026, we filed a lawsuit in the U.S. Court of International Trade against the U.S. Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of the $5.3 million in tariffs imposed under the International Emergency Economic Powers Act that the Company has paid to the United States (See Note 13 –Commitments and Contingencies, Legal Proceedings).
Current wording
We continue to actively manage the impact of recent United States tariff policies. Importantly, all of our mattresses are manufactured in the United States, and about 15% of our cost of goods is tied to products sourced from overseas. This limited exposure is primarily concentrated in the textile side of the business, which includes sheets and mattress covers, but also includes the import of bases and foundations. Tariffs impacted us by approximately $0.9 million and $1.8 million during the three and six months ended June 30, 2026, respectively, due to our mitigation efforts which have reduced the overall impact to our initial expectations. The tariff landscape remains fluid, and we are actively evaluating sourcing alternatives and pricing strategies on a case-by-case basis. We believe that our vertically integrated model and strong vendor relationships give us the flexibility to remain agile and responsive to changes in tariff policies, and we believe that we will be able to partially mitigate these impacts through a combination of supply chain repositioning, vendor collaborations, and selective pricing actions. On March 6, 2026, we filed a lawsuit in the U.S. Court of International Trade against the U.S. Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of the tariffs imposed under the International Emergency Economic Powers Act that the Company has paid to the United States. During the second quarter of 2026, we received $5.5 million in tariff refunds plus interest (See Note 2 –Summary of Significant Accounting Policies, Refund of Tariffs).
Previous wording
Operating expenses decreased $3.5 million, or 6.3% to $52.0 million for the three months ended March 31, 2026 compared to $55.5 million for the three months ended March 31, 2025. This decrease was driven by a $3.3 million decrease in advertising spending, a $2.8 million decrease in employee related expenses and $2.0 million decrease in restructuring related costs from last year, partially offset by $4.6 million in strategic alternative and other costs.
Current wording
Operating expenses decreased $8.1 million, or 14.3% to $48.7 million for the three months ended June 30, 2026 compared to $56.8 million for the three months ended June 30, 2025. This decrease was driven by a $4.1 million decrease in restructuring related costs from last year, a $4.0 million decrease in employee related expenses and $2.1 million decrease in professional services and all other operating expenses, partially offset by a $2.1 million increase in advertising spending.
Previous wording
Total other expense, net increased $9.0 million, or 194.6% to $13.7 million for the three months ended March 31, 2026 compared to $4.6 million for the three months ended March 31, 2025. The other expense, net in the first quarter of 2026 consists of interest expense of $8.2 million and a $7.0 million loss on change in fair value of warrants, partially offset by $1.5 million in other income. The other expense, net in the first quarter of 2025 consists of interest expense of $4.8 million, partially offset by $0.2 million in other income and gain on change in fair value of warrants.
Current wording
Total other income (expense), net was $1.0 million net other income for the three months ended June 30, 2026, compared to $3.1 million net other expense for the three months ended June 30, 2025. The other income, net for the three months ended June 30, 2026 consists of $7.4 million gain from the change in the fair value of warrants, $1.4 million in other income, partially offset by $7.8 million in interest expense. The other expense, net in the three months ended June 30, 2025 consists of interest expense of $7.5 million, partially offset by $4.4 million in other income due to the gain on the change in the fair value of warrants.
Previous wording
Net loss attributable to Purple Inc. was $30.5 million for the three months ended March 31, 2026 compared to a net loss of $19.1 million for the three months ended March 31, 2025. The $11.4 million increase in net loss was primarily due to lower gross margins and the increase in loss from change in fair value of the warrants, partially offset by reduced operating expenses.
Current wording
Net loss attributable to Purple Inc. was $3.2 million for the three months ended June 30, 2026 compared to a net loss of $17.3 million for the three months ended June 30, 2025. The $14.1 million decrease in net loss was primarily due to higher margins, reduced operating expenses and the increase in gain from change in fair value of the warrants.
Previous wording
There is no guarantee that we will be able to effectively execute on these initiatives, which are subject to risks, uncertainties, and assumptions that are difficult to predict, including the risks described in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026 and elsewhere herein. Therefore, actual results may differ materially and adversely from those described above. In addition, we may, in the future, adapt these focuses in response to changes in the market or our business.
Current wording
There is no guarantee that we will be able to effectively execute on these initiatives, which are subject to risks, uncertainties, and assumptions that are difficult to predict, including the risks described in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2026. Therefore, actual results may differ materially and adversely from those described above. In addition, we may, in the future, adapt these focuses in response to changes in the market or our business.
Previous wording
Marketing and sales expense decreased $5.1 million, or 13.8%, to $31.6 million for the three months ended March 31, 2026 compared to $36.6 million for the three months ended March 31, 2025. This decrease primarily consisted of a $3.3 million decrease in advertising spend, a $1.3 million decrease in employee related expenses due to head count reductions and $0.2 million decrease in all other marketing and sales expenses.
Current wording
Marketing and sales expense decreased $1.7 million, or 4.8%, to $33.7 million for the three months ended June 30, 2026 compared to $35.4 million for the three months ended June 30, 2025. This decrease primarily consisted of a $2.3 million decrease in various marketing activities and professional services, a $1.2 million decrease in employee-related expenses due to headcount reductions and $0.3 million decrease in all other marketing and sales expenses, partially offset by a $2.1 million increase in advertising spending.
Previous wording
General and administrative expense increased $3.5 million, or 24.5%, to $18.0 million for the three months ended March 31, 2026 compared to $14.5 million for the three months ended March 31, 2025. This increase was due to a $4.3 million increase in strategic alternative costs and an increase of $0.7 million in all other general and administrative costs, partially offset by a $1.4 million decrease in employee related costs due to headcount reductions.
Current wording
General and administrative expense decreased $2.5 million, or 17.0%, to $12.4 million for the three months ended June 30, 2026 compared to $15.0 million for the three months ended June 30, 2025. This decrease was due to a $2.7 million decrease in employee related costs due to headcount reductions and $0.5 million reduction in strategic alternative costs, partially offset by a $0.7 million increase in all other general and administrative costs.
Previous wording
There were no restructuring, impairment and other related charges for the three months ended March 31, 2026 as all restructuring activities were completed in 2025. We incurred $2.0 million of restructuring, impairment and other related charges during the three months ended March 31, 2025.
Current wording
There were no restructuring, impairment and other related charges for the three months ended June 30, 2026 as all restructuring activities were completed in 2025. We incurred $4.1 million of restructuring, impairment and other related charges during the three months ended June 30, 2025.
Previous wording
Operating loss increased $2.4 million, or 16.3%, to $16.8 million, for the three months ended March 31, 2026 compared to $14.5 million for the three months ended March 31, 2025. This increase in our operating loss is the result of a lower gross profit percent and increases in strategic alternative costs, partially offset by reduced advertising spend and lower headcount costs.
Current wording
Operating loss decreased $9.9 million, or 70.1%, to $4.3 million, for the three months ended June 30, 2026 compared to $14.2 million for the three months ended June 30, 2025. This decrease in our operating loss is the result of a higher gross profit percent, lower operating expenses and no restructuring costs in 2026.
Previous wording
Other income increased to $1.5 million for the three months ended March 31, 2026 compared to $0.1 million for the three months ended March 31, 2025. This increase was mainly due to $1.3 million received for sublease rent payments on facilities we are no longer using and have subleased to other parties.* *
Current wording
Other income was $1.5 million for the three months ended June 30, 2026 compared to a de minimis amount for the three months ended June 30, 2025. This increase was mainly due to $1.2 million received for sublease rent payments on facilities we are no longer using and have subleased to other parties.
Previous wording
Our Warrants contain certain provisions that did not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date. We incurred a $7.0 million loss on the change in fair value of our warrant liabilities for the three months ended March 31, 2026 related to the increase in fair value from the previous reporting date. For the three months ended March 31, 2025, we recognized a negligible gain related to the net decrease in fair value of the warrant liability.
Current wording
Our warrants contain certain provisions that did not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date. We incurred a $7.4 million gain on the change in fair value of our warrant liabilities for the three months ended June 30, 2026 related to the decrease in fair value from the previous reporting date, due mainly to the reduction in stock price. For the three months ended June 30, 2025, we recognized a $4.4 million gain related to the decrease in fair value of the warrant liability during that period.
Previous wording
We had a de minimis income tax expense for the three months ended March 31, 2026 and 2025. The income tax expense amounts in both the first quarter of 2026 and 2025 were related to various state taxes.
Current wording
We had a de minimis income tax expense for the three months ended June 30, 2026 and 2025. The income tax expense amounts in both the second quarter of 2026 and 2025 were related to various state taxes.
Previous wording
Interest expense totaled $8.2 million for the three months ended March 31, 2026 compared to $4.8 million for the three months ended March 31, 2025. This increase was primarily due to additional interest incurred on a higher principal balance on the Related Party Loan as the Company elected the paid-in-kind option on monthly interest over the past 12 months.
Current wording
Interest expense totaled $16.0 million for the six months ended June 30, 2026, compared to $12.2 million for the six months ended June 30, 2025. This increase was primarily due to additional interest incurred on a higher principal balance on the Related Party Loan as the Company elected the paid-in-kind option on monthly interest over the past 12 months.
Previous wording
Our principal sources of funds are cash flows from operations and cash and cash equivalents on hand, supplemented with borrowings made pursuant to various loan agreements. Principal uses of funds consist of capital expenditures, working capital needs, operating lease payment obligations and investing in innovation. In accordance with the terms of our various loan agreements, we have elected to pay interest in kind on our loans to reduce cash obligations. Our working capital needs depend largely upon the timing of cash receipts from product sales, payments to vendors and others, changes in inventories, and operating lease payment obligations. Our cash and cash equivalents and working capital positions were $25.0 million and $22.4 million, respectively, as of March 31, 2026 compared to $24.3 million and $35.2 million, respectively, as of December 31, 2025. Cash used for capital expenditures was $2.0 million and $2.1 million for the three months ended March 31, 2026 and 2025. Our capital expenditures in 2026 have primarily consisted of additional investments made in our manufacturing operations and showroom facilities. Additional details regarding our current debt are described above in Note 10 -Debt.
Current wording
Our historical principal sources of funds are cash flows from operations and cash and cash equivalents on hand, supplemented with borrowings made pursuant to various loan agreements. Principal uses of funds consist of capital expenditures, working capital needs, operating lease payment obligations and investing in innovation. In accordance with the terms of our various loan agreements, we have elected to pay interest in kind on our loans to reduce cash obligations. Our working capital needs depend largely upon the timing of cash receipts from product sales, payments to vendors and others, changes in inventories, and operating lease payment obligations. Our cash and cash equivalents and working capital positions were $23.3 million and $(105.2) million, respectively, as of June 30, 2026 compared to $24.3 million and $35.2 million, respectively, as of December 31, 2025. The change in working capital position at June 30, 2026 is due to our debt maturity date now within the next 12 months. We had an accumulated deficit of $659.1 million at June 30, 2026. We incurred a net loss of $33.8 million for the six months ended June 30, 2026, with net cash provided by operating activities of $3.6 million. Cash used for capital expenditures was $3.6 million for the six months ended June 30, 2026. Our capital expenditures in 2026 have primarily consisted of additional investments made in our manufacturing operations and showroom facilities. Additional details regarding our current debt are described above in Note 10 -Debt.
Previous wording
Our financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the consolidated financial statements for the year ended December 31, 2025, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to our ability to continue as a going concern within one year after the date of the issuance of such financial statements.
Current wording
We have a history of recurring net losses and cash used in operations, an accumulated deficit, and requiring additional capital to fund our operations, invest in the business to expand sales and marketing efforts and invest in innovation. Our financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the consolidated financial statements for the year ended December 31, 2025, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to our ability to continue as a going concern within one year after the date of the issuance of such financial statements.
Previous wording
We have taken a number of actions to increase cash flow and support our operations and strategies. In August 2024, we implemented the Restructuring Plan (as defined below) to consolidate manufacturing operations resulting in cost savings. We have realized and plan to continue to realize direct material cost savings by concentrating efforts on driving gross margin improvement through various methods such as selective pricing actions, continued mix shift towards the Restore and Rejuvenate collections, and by driving cost savings through supply chain initiatives and manufacturing efficiency. We have delivered direct material cost savings from our supplier diversification efforts, improved scrap and yield results from continuous improvements, and outbound freight costs reflect cost improvements along with improved delivery reliability. We have been successful in subleasing the two manufacturing facilities that were vacated as part of the Restructuring Plan. We have also taken additional cost-saving initiatives in 2025 and the beginning of 2026 to reduce headcount and streamline responsibilities and reporting structure. Further, our plans include additional actions intended to improve liquidity and reduce costs, including planned optimization of advertising spend, limiting the number of new store openings, efforts to mitigate tariff impacts by managing the country of origin, and other cost-saving initiatives. We have elected to have interest paid-in-kind and added to the principal amount of the loans under the Amended and Restated Credit Agreement. On March 24, 2026, we executed the Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) with the Lenders to extend the maturity date of the Amended and Restated Credit Agreement from December 31, 2026 to April 30, 2027. We are currently evaluating potential strategic alternatives and opportunities to achieve additional liquidity through one or more future debt refinancings.
Current wording
The Company has taken a number of actions to increase cash flow and support its operations and strategies. In August 2024, the Company implemented the Restructuring Plan to consolidate manufacturing operations resulting in cost savings. The Company has realized and plans to continue to realize direct material cost savings by concentrating efforts on driving gross margin improvement through various methods such as pricing actions, continued mix shift towards the Restore and Rejuvenate collections, and by driving cost savings through supply chain initiatives and manufacturing efficiency. The Company has delivered direct material cost savings from its supplier diversification efforts, improved scrap and yield results from continuous improvements, and outbound freight costs reflect cost improvements along with improved delivery reliability. The Company has been successful in subleasing the two manufacturing facilities that were vacated as part of the Restructuring Plan. The Company has also taken additional cost-saving initiatives in 2025 and the beginning of 2026 to reduce headcount and streamline responsibilities and reporting structure. Further, management’s plans include additional actions intended to improve liquidity and reduce costs, including a planned optimization of advertising spending, pacing the number of new store openings, efforts to mitigate tariff impacts by managing the country of origin, and other cost-saving initiatives. In the latter part of the second quarter of 2026, the Company announced a pricing action to increase the sales price of our various products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. The Company is currently evaluating potential strategic alternatives and opportunities to achieve additional liquidity through one or more future debt refinancings.
Previous wording
Cash Flows for the Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025
Current wording
Cash Flows for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Previous wording
The following summarizes our cash flows for the three months ended March 31, 2026 and 2025 as reported in our unaudited condensed consolidated statements of cash flows (in thousands):
Current wording
The following summarizes our cash flows for the six months ended June 30, 2026 and 2025 as reported in our unaudited condensed consolidated statements of cash flows (in thousands):
Previous wording
Cash provided by operating activities was $3.0 million for the three months ended March 31, 2026 compared to cash used in operating activities was $23.1 million for the three months ended March 31, 2025. The $26.1 million increase in year-over-year cash provided by operating activities included a $28.5 million increase in cash provided from the changes in operating assets and liabilities and an $8.8 million increase in non-cash cash adjustments, partially offset by a $11.4 million increase in net loss.
Current wording
Cash provided by operating activities was $3.6 million for the six months ended June 30, 2026 compared to cash used in operating activities of $27.1 million for the six months ended June 30, 2025. The $30.7 million increase in year-over-year cash provided by operating activities included a $26.4 million increase in cash provided from the changes in operating assets and liabilities, a $2.7 million decrease in net loss and a $1.6 million increase in non-cash cash adjustments.
Previous wording
Cash used in investing activities reflected net capital expenditures of $2.0 million and $2.1 million for the three months ended March 31, 2026 and 2025, respectively. Capital expenditures in the first three months of 2026 primarily consisted of additional investments made in our manufacturing operations.
Current wording
Cash used in investing activities reflected net capital expenditures of $3.6 million and $5.2 million for the six months ended June 30, 2026 and 2025, respectively. Capital expenditures in 2026 consisted primarily additional investments made in our manufacturing operations and showroom facilities.
Previous wording
Cash used in investing activities was $0.3 million for the three months ended March 31, 2026 compared to cash provided in investing activities of $17.8 million during the three months ended March 31, 2025. Cash used in financing activities for 2026 consist of amendment fess paid in cash to certain lenders for the Third Amendment. Financing activities during the first three months of 2025 included $19.0 million of proceeds from the 2025 Amendment financing offset in part by $1.2 million in payments for debt issuance costs.
Current wording
Cash used in financing activities was $0.3 million for the six months ended June 30, 2026 compared to cash provided by financing activities of $37.4 million during the six months ended June 30, 2025. Cash used in financing activities for 2026 consist of amendment fess paid in cash to certain lenders for the Third Amendment. Financing activities during the first six months of 2025 included $39.0 million of proceeds from the additional financing in 2025 offset in part by $1.6 million in payments for debt issuance costs.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
Interest expense totaled $7.8 million for the three months ended June 30, 2026 compared to $7.5 million for the three months ended June 30, 2025. This increase was primarily due to additional interest incurred on a higher principal balance on the Related Party Loan as the Company elected the paid-in-kind option on monthly interest over the past 12 months along with additional debt issuance costs to amortize over the life of the loan.
Current report — wording carried from elsewhere
Operating Results for the Six Months Ended June 30, 2026, and 2025
Current report — wording carried from elsewhere
The following table sets forth for the periods indicated, our results of operations and the percentage of total revenue represented in our unaudited condensed consolidated statements of operations (dollars in thousands):
Current report — wording carried from elsewhere
Restructuring, Impairment and Other Related Charges
Current report — wording carried from elsewhere
There were no restructuring, impairment and other related charges for the six months ended June 30, 2026 as all restructuring activities were completed in 2025. We incurred $6.1 million of restructuring, impairment and other related charges during the six months ended June 30, 2025.
Current report — wording carried from elsewhere
Change in Fair Value – Warrant Liabilities
Current report — wording carried from elsewhere
Our warrants contain certain provisions that did not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date. We incurred a $0.4 million gain on the change in the fair value of our warrant liabilities for the six months ended June 30, 2026. For the six months ended June 30, 2025, we recognized a $4.4 million gain related to the decrease in fair value of the warrant liability during that period.
Current report — wording carried from elsewhere
We had a $0.1 million income tax expense for the six months ended June 30, 2026, compared to $0.1 million income tax expense for the six months ended June 30, 2025. The income tax expense amounts in the six months ended June 30, 2026 and 2025 were related to various state taxes.
Current report — wording carried from elsewhere
We calculate net income or loss attributable to noncontrolling interests on a quarterly basis using the weighted average ownership percentage. Net loss attributed to noncontrolling interests was de minimis for the six months ended June 30, 2026 and 2025.