Purple Innovation, Inc.
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
View on SEC.govAbout this filing
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.
Sep 30, 2026 · Filed Nov 4, 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 2026-06-30; filed 2026-08-11.
0001213900-26-087735
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001213900-26-115919
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 105 previous paragraphs and 111 current paragraphs.
60 unchanged; 38 reworded; 13 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 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 (13)
Current report
We own or have rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect the content of our products and the formulations for such products. Solely for convenience, some of the trademarks, trade names and copyrights referred to in this Form 10-Q are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trademarks and trade names.
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 third quarter of 2026 as overall revenue was down 18.7% across all channels. E-commerce revenues were down 6.3%, showroom revenues were down 15.7% and wholesale revenues were down 31.0% compared to the third quarter of 2025. Industry trends remain under pressure as higher interest rates and financing costs, along with increasing costs continue to weigh on housing and mattress demand. DTC performance early in the quarter was weak as the price increases we implemented in June had a greater impact on demand than anticipated. However, business improved in the second half of the quarter with better performance during the holiday promotional period. Wholesale revenues were down mainly due to the performance of our regional and independent partners, and an increase in reductions of revenue due to certain payments to customers and a manufacturer under common control with a customer. Operationally, we continue to see the benefits of previous actions taken in areas we can control and we believe that we are operating from a stronger foundation than a year ago. We continue to invest in innovation with new mattresses expecting to roll out over the next two quarters across our Essentials and Hybrid collections.
Current report
Impairment Charges
Current report
In September 2026, we relocated our corporate headquarters to one of our other facilities in Draper, Utah and began efforts to sublease the vacated office building. We determined this was a triggering event for potential impairment of one of our long-lived assets and a recoverability test was required. We performed the recoverability test by comparing the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges). When the estimated undiscounted cash flows are less than the carrying value of the assets, we calculate an impairment loss. The impairment loss calculation compared the carrying value of its assets to the estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. The resultant assessment we performed determined there was an impairment and we recorded an impairment loss of $1.1 million for the three and nine months ended September 30, 2026. When we recognize an impairment loss, the carrying amount of the impaired asset is reduced to estimated fair value.
Current report
Nasdaq Matters
Current report
On August 7, 2026, we were formally notified by The Nasdaq Stock Market LLC that we had demonstrated compliance with the $1.00 bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) and all other applicable criteria for continued listing on The Nasdaq Global Select Market. Accordingly, the previously disclosed listing matter before the Nasdaq Hearings Panel (the “Panel”) has been closed. The Panel has imposed a Mandatory Panel Monitor for a period of one year, through August 7, 2027. If during the monitoring period, our closing bid price falls below $1.00 per share for 30 consecutive business days, we will not be eligible for a 180-day compliance period otherwise available under the Nasdaq Listing Rules. Rather, Nasdaq would issue a delist determination, which we could then appeal by requesting a hearing before the Panel. Our securities may be at that time delisted from Nasdaq.
Current report
On September 30, 2026, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that for the last 30 consecutive business days, our Market Value of Publicly Held Shares (“MVPHS”) was below the minimum of $15 million required for continued listing on the Nasdaq Global Select Market pursuant to Nasdaq Listing Rules 5450(b)(2)(C) and 5450(b)(3)(C) (the “MVPHS Requirement”). The notification of noncompliance has no immediate effect on the listing or trading of our Class A common stock on The Nasdaq Global Select Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(D), we are given 180 calendar days from the date of the notification (the “Compliance Period”), or until March 29, 2027 (the “Compliance Date”), to regain compliance with respect to the MVPHS Requirement. To regain compliance with the MVPHS Requirement, our MVPHS must close at $15 million or more for a minimum of ten consecutive business days during the Compliance Period. If we do not regain compliance by the Compliance Date, Nasdaq will notify us that our securities are subject to delisting. At that time, we may appeal any such delisting determination to a hearings panel. However, there can be no assurance that, if the Staff issues a delisting determination and we appeal the delisting determination, such appeal would be successful. Alternatively, we may consider applying for transfer to the Nasdaq Capital Market, provided we meet all the continued listing requirements of the Nasdaq Capital Market.
Current report
Net revenues decreased $22.3 million, or 18.7%, to $96.5 million for the three months ended September 30, 2026 compared to $118.8 million for the three months ended September 30, 2025. The decrease in revenue was driven by a $16.0 million or 31.0% decrease in our wholesale revenue, a $3.4 million or 15.7% decrease in showroom net revenues and a $2.9 million or 6.3% decrease in E-commerce net revenues. Wholesale revenues were down mainly due to lower industry demand and the performance of our regional and independent partners, and an increase in reductions of revenue due to certain payments to customers and a manufacturer under common control with a customer. The other decreases were due mainly to weak DTC performance early in the quarter as the price increases we implemented in June had a greater impact on demand than anticipated. However, business improved in the second half of the quarter with better performance during the holiday promotional period.
Current report
Net revenues decreased $22.3 million, or 18.7%, to $96.5 million for the three months ended September 30, 2026 compared to $118.8 million for the three months ended September 30, 2025. The decrease in revenue was driven by a $16.0 million or 31.0% decrease in our wholesale revenue, a $3.4 million or 15.7% decrease in showroom net revenues and a $2.9 million or 6.3% decrease in E-commerce net revenues. Wholesale revenues were down $12.0 million related to lower industry demand mainly in our regional and independent partners and an increase of $4.0 million in reductions of revenue due to certain payments to customers and a manufacturer under common control with a customer. The DTC decreases were due mainly to weak DTC performance early in the quarter as the price increases we implemented in June had a greater impact on demand than anticipated. However, business improved in the second half of the quarter with better performance during the holiday promotional period. In addition, there was a shift in timing in the prior year as Rejuvenate orders in the second quarter were delivered in the third quarter.
Current report
Research and development expense remained flat at $2.4 million for the three months ended September 30, 2026 and 2025.
Current report
Other income was $2.2 million for the three months ended September 30, 2026 compared to $1.7 million for the three months ended September 30, 2025. This increase was mainly due to a $0.7 million patent infringement settlement partially offset by a $0.2 million decrease in other income items.
Current report
Net revenues decreased $37.5 million, or 11.4%, to $290.5 million for the nine months ended September 30, 2026, compared to $328.0 million for the nine months ended September 30, 2025. This decrease was primarily driven by a $29.3 million or 21.1% decrease in our wholesale revenue due to a $14.2 million decrease in wholesale sales volume related to lower industry demand mainly in our regional and independent partners and an increase of $15.1 million in reductions of revenue due to 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, E-commerce net revenues decreased $8.3 million, or 6.2% due to overall market demand and showroom net revenues remained flat.
Current report
Impairment charges were $1.1 million for the nine months ended September 30, 2026 due to the impairment of one of our leases as we moved our headquarters to an existing facility. We incurred $11.4 million of restructuring, impairment and other related charges during the nine months ended September 30, 2025.
Removed paragraphs (7)
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 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%.
Previous report
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.
Reworded paragraphs (38)
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 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.
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 and our Quarterly Report on Form 10-Q filed with the SEC on August 11, 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
Our business consists of Purple Inc. and its consolidated subsidiary, Purple LLC. As the sole managing member of Purple LLC, Purple Inc., through its officers and directors, is responsible for all operational and administrative decision making and control of the day-to-day business affairs of Purple LLC without the approval of any other member. At June 30, 2026, Purple Inc. had a 99.85% economic ownership interest in Purple LLC while Class B unit holders had the remaining 0.15%.
Current wording
Our business consists of Purple Inc. and its consolidated subsidiary, Purple LLC. As the sole managing member of Purple LLC, Purple Inc., through its officers and directors, is responsible for all operational and administrative decision making and control of the day-to-day business affairs of Purple LLC without the approval of any other member. At September 30, 2026, Purple Inc. had a 99.94% economic ownership interest in Purple LLC while Class B unit holders had the remaining 0.06%.
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 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.
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, 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 $1.7 million and $7.2 million in consideration paid as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three months and nine months ended September 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
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).
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 $0.1 million and $1.9 million during the three and nine months ended September 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
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 wording
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 mattress and pillow products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. All price increases were in effect with all customers by the end of the third quarter of 2026.
Previous wording
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 wording
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 Board of Directors. On July 6, 2026, the Board of Directors approved a 1-for-25 reverse stock split (“Reverse Stock Split”) of our common stock that became effective on July 19, 2026. Following the effect of the Reverse Stock Split, every 25 shares of our common stock that were issued and outstanding automatically converted into one outstanding share of common stock. All stock awards and warrants outstanding immediately prior to the Reverse Stock Split were proportionally adjusted.
Previous wording
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 wording
The Reverse Stock Split did not change our authorized number of shares of common stock. The Reverse Stock Split did not change the par value of the common stock and, therefore we 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 our equity incentive plans, the number of shares subject to any award or purchase right under our equity incentive plans, and the exercise price or purchase price with respect to any stock award or warrant.
Previous wording
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 wording
Gross profit decreased $14.6 million, or 25.8%, to $41.9 million for the three months ended September 30, 2026 compared to $56.5 million for the three months ended September 30, 2025. Our gross profit decreased $10.6 million due to lower sales and $4.0 million due to lower gross profit percentage. Our gross profit percentage decreased to 43.4% of net revenues in the third quarter of 2026 from 47.6% in the third quarter of 2025 primarily due to reduced production volumes and increases in material costs, partially offset by reduced tariff costs.
Previous 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.
Current wording
Operating expenses decreased $16.9 million, or 24.7%, to $51.7 million for the three months ended September 30, 2026 compared to $68.6 million for the three months ended September 30, 2025. This decrease was driven by a $5.4 million decrease in employee and wholesale marketing related expenses, a $5.3 million decrease in restructuring related costs from last year, a $3.7 million decrease in advertising spending and $3.6 million decrease in all other operating expenses, partially offset by a $1.1 million increase in impairment on our leases.
Previous 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.
Current wording
Total other income (expense), net was $8.4 million net other income for the three months ended September 30, 2026, compared to $0.4 million net other income for the three months ended September 30, 2025. The other income, net for the three months ended September 30, 2026 consists of a $14.3 million gain from the change in the fair value of warrants, $2.2 million in other income, partially offset by $8.1 million in interest expense. The other income, net in the three months ended September 30, 2025 consists of a $6.9 million gain from the change in the fair value of warrants, $1.7 million in other income, partially offset by $8.2 million in interest expense.
Previous 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.
Current wording
Net loss attributable to Purple Inc. was $1.4 million for the three months ended September 30, 2026 compared to a net loss of $11.7 million for the three months ended September 30, 2025. The $10.3 million decrease in net loss was primarily due to reduced operating expenses and the increase in gain from change in fair value of the warrants partially offset by lower margins.
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 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.
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 Reports on Form 10-Q filed with the SEC on April 28, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on August 11, 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
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 wording
Total cost of revenues decreased $7.7 million, or 12.4%, to $54.6 million for the three months ended September 30, 2026, compared to $62.3 million for the three months ended September 30, 2025. This decrease was due primarily to lower revenue volumes and $2.0 million in lower tariff payments. Our gross profit percentage decreased to 43.4% of net revenues in the third quarter of 2026 from 47.6% in the third quarter of 2025, due mainly to reduced production volumes and inventory adjustments, partially offset by reduced tariff costs and favorable channel mix.
Previous 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.
Current wording
Marketing and sales expense decreased $9.5 million, or 20.7%, to $36.3 million for the three months ended September 30, 2026 compared to $45.8 million for the three months ended September 30, 2025. This decrease primarily consisted of a $3.7 million decrease in advertising spending, a $3.2 million decrease in various marketing activities and professional services, a $1.7 million decrease in employee-related expenses due to headcount reductions and $0.9 million decrease in all other marketing and sales expenses.
Previous 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.
Current wording
General and administrative expense decreased $3.2 million, or 21.3%, to $12.0 million for the three months ended September 30, 2026 compared to $15.2 million for the three months ended September 30, 2025. This decrease was due to a $1.7 million decrease in employee related costs due to headcount reductions, a $0.7 million reduction in professional and legal fees and a $0.8 million decrease in all other general and administrative costs.
Previous 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.
Current wording
Impairment charges were $1.1 million for the three months ended September 30, 2026 due to the impairment of one of our leases as we moved our headquarters to an existing facility. We incurred $5.3 million of restructuring, impairment and other related charges during the three months ended September 30, 2025.
Previous 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.
Current wording
Operating loss decreased $2.3 million, or 19.4%, to $9.8 million, for the three months ended September 30, 2026, compared to $12.1 million for the three months ended September 30, 2025. This decrease in our operating loss is the result of lower operating expenses partially offset by lower gross profits.
Previous wording
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 wording
Interest expense totaled $8.1 million for the three months ended September 30, 2026 compared to $8.2 million for the three months ended September 30, 2025. This decrease was primarily due to lower amortization of debt issuance costs, partially offset by additional interest incurred on a higher principal balance on the outstanding debt.
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 $7.4 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.
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 $14.3 million gain on the change in fair value of our warrant liabilities for the three months ended September 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 September 30, 2025, we recognized a $6.9 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 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.
Current wording
We had a $0.1 million income tax expense for the three months ended September 30, 2026 and de minimis tax expense for 2025. The income tax expense amounts in both the third quarter of 2026 and 2025 were related to various state taxes.
Previous wording
Operating Results for the Six Months Ended June 30, 2026, and 2025
Current wording
Operating Results for the Nine Months Ended September 30, 2026, and 2025
Previous wording
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 wording
Total cost of revenues decreased $19.4 million, or 10.6%, to $163.9 million for the nine months ended September 30, 2026, compared to $183.4 million for the nine months ended September 30, 2025. This decrease was due primarily due to lower sales volumes, increases in material and freight costs, a $5.3 million credit for tariff refunds we received in the second quarter and costs of $7.2 million to a manufacturer under common control that were booked against revenues. Our gross profit percentage decreased to 43.6% for the first nine months in 2026 from 44.1% in the first nine months of 2025.
Previous wording
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 wording
Marketing and sales expense decreased $15.9 million, or 13.0%, to $106.6 million for the nine months ended September 30, 2026, compared to $122.4 million for the nine months ended September 30, 2025. This decrease is due to a decrease of $6.8 million in professional fees and other marketing costs, a decrease of $4.9 million in advertising spending, and a decrease of $4.2 million for payroll related costs.
Previous wording
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 wording
General and administrative expense decreased $2.2 million, or 5.0%, to $42.4 million for the nine months ended September 30, 2026, compared to $44.7 million for the nine months ended September 30, 2025. This decrease was primarily due to a $5.8 million decrease in employee-related expenses due to headcount reductions and a $0.1 million decrease in other expenses, partially offset by a $3.6 million increase in strategic alternative costs.
Previous wording
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 wording
Research and development expense increased $0.3 million, or 4.2%, to $7.3 million for the nine months ended September 30, 2026, compared to $7.0 million for the nine months ended September 30, 2025. This increase is due to an increase in professional services during the period.
Previous wording
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 wording
Operating loss decreased $10.0 million, or 24.4%, to $30.8 million, for the nine months ended September 30, 2026, compared to $40.8 million for the nine months ended September 30, 2025. This decrease in our operating loss is the result of the reduced marketing and sales expenses and restructuring and impairment charges in 2026, partially offset by reduced gross profit due to lower revenues and lower gross profit margins.
Previous 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.
Current wording
Interest expense totaled $24.1 million for the nine months ended September 30, 2026, compared to $20.4 million for the nine months ended September 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 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 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 $14.8 million gain on the decrease in the fair value of our warrant liabilities for the nine months ended September 30, 2026. For the nine months ended September 30, 2025, we recognized an $11.3 million gain related to the decrease in fair value of the warrant liability during that period.
Previous wording
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 wording
We had a $0.2 million income tax expense for the nine months ended September 30, 2026, compared to $0.1 million income tax expense for the nine months ended September 30, 2025. The income tax expense amounts in the nine months ended September 30, 2026 and 2025 were related to various state taxes.
Previous wording
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.
Current wording
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 nine months ended September 30, 2026 and 2025.
Previous 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.
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 $28.3 million and $(117.6) million, respectively, as of September 30, 2026 compared to $24.3 million and $35.2 million, respectively, as of December 31, 2025. The change in working capital position at September 30, 2026 is due to our debt maturity date now being within the next 12 months. We had an accumulated deficit of $660.4 million at September 30, 2026. We incurred a net loss of $35.2 million for the nine months ended September 30, 2026, with net cash provided by operating activities of $10.6 million. Cash used for capital expenditures was $5.2 million for the nine months ended September 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
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.
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 condensed consolidated financial statements for the three and nine months ended September 30, 2026, 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
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.
Current wording
Debt service has consisted primarily of refinancing 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.
Previous wording
Cash Flows for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Current wording
Cash Flows for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Previous 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):
Current wording
The following summarizes our cash flows for the nine months ended September 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 $3.6 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.
Current wording
Cash provided by operating activities was $10.6 million for the nine months ended September 30, 2026 compared to cash used in operating activities of $28.0 million for the nine months ended September 30, 2025. The $38.6 million increase in year-over-year cash provided by operating activities included a $36.3 million increase in cash provided from the changes in operating assets and liabilities, a $13.0 million decrease in net loss partially offset by a $10.7 million decrease in non-cash adjustments.
Previous 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.
Current wording
Cash used in investing activities reflected net capital expenditures of $5.2 million and $6.1 million and investment in intangibles of $1.1 million and $0.5 million for the nine months ended September 30, 2026 and 2025, respectively. The nine months ended September 30, 2025 was partially offset by $0.5 million for the sale of certain property and equipment. Capital expenditures in 2026 consisted primarily of additional investments made in our manufacturing operations and showroom facilities.
Previous 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.
Current wording
Cash used in financing activities was $0.3 million for the nine months ended September 30, 2026 compared to cash provided by financing activities of $37.4 million during the nine months ended September 30, 2025. Cash used in financing activities for 2026 consisted of amendment fees paid in cash to certain lenders for the Third Amendment. Financing activities for 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.