Executive Summary

Q2 2025 delivered modest sequential stabilization but continued YoY contraction: revenue $44.0M (+1.1% QoQ, -15.5% YoY), gross margin 55.4% (+150 bps YoY), adjusted EBITDA $(0.9)M (vs. $1.1M LY), and positive operating cash flow $1.0M .
Results were pressured by eCommerce platform migration (weighing on AOV and order flow) and a smaller active subscriber base due to lower 2024 ad spend; order volume improved sequentially (+3.4% QoQ), while net revenue per order fell to $65.22 .
FY25 guidance maintained on revenue (down mid-single-digit to low double-digit %) and narrowed on Adjusted EBITDA (now negative low single-digit millions to breakeven), reflecting increased ad spend to restore growth; management still expects slight YoY revenue growth in Q4 2025 .
Wall Street (limited coverage) showed small beats: Q2 revenue $44.03M vs. $43.83M*; EPS $(0.087) vs. $(0.10)*; Q1 had missed both revenue and EPS; coverage remains thin (1 estimate) which can amplify stock moves on incremental news and guidance/tone shifts [Values retrieved from S&P Global].
Potential stock catalysts: progress resolving platform-migration frictions and rebuilding AOV/repeat rates, visible sequential revenue growth in 2H, gross margin resilience, positive cash generation, and any updates on HumanCo’s value-creation engagement with the Board .

What Went Well and What Went Wrong

What Went Well
- Sequential improvement in revenue (+1.1% QoQ) and orders (+3.4% QoQ) as teams worked through platform migration issues; management emphasized cost discipline and positive operating and total cash flow in the quarter .
- Gross margin expanded 150 bps YoY to 55.4% on improved promotional efficiency and higher third-party vendor funding, despite tariff uncertainty and lower revenue base .
- Strategic positioning reinforced: expanded third‑party assortment (brands +47% YoY; products +59% YoY) and deepened focus on health/sustainability education and verified claims (e.g., Novi partnership; microplastics advocacy) .
What Went Wrong
- Migration-related friction pressured AOV and revenue; management said the Q2 revenue shortfall vs. plan was “100% driven by this platform migration,” with AOV particularly impacted .
- Adjusted EBITDA turned negative $(0.9)M (vs. +$1.1M LY) on lower revenue/gross profit, and DTC net revenue per order declined 3.7% YoY to $65.22 .
- Active customers fell 10.9% YoY to 664k and total orders fell 12.6% YoY to 640k due to lagging effects from reduced 2024 ad spend and transition disruptions .

Financial Results

Quarterly trend (actuals)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$49.5	$43.55	$44.03
Gross Margin %	52.4%	53.0%	55.4%
Adjusted EBITDA ($M)	$(1.6)	$(1.60)	$(0.91)
Net Loss ($M)	N/A	$(3.55)	$(3.63)
Diluted EPS ($)	N/A	$(0.10)	$(0.10)

Consensus vs. actuals (limited coverage)

Metric	Q1 2025 Est.*	Q1 2025 Actual	Q2 2025 Est.*	Q2 2025 Actual
Revenue ($M)	$47.01*	$43.55	$43.83*	$44.03
Primary EPS ($)	$(0.03)*	$(0.052)	$(0.10)*	$(0.087)

Values retrieved from S&P Global.

KPIs and operating metrics

KPI	Q1 2025	Q2 2025
DTC Total Orders (000s)	622	640
DTC Active Customers (000s)	678	664
DTC Net Revenue per Order ($)	66.49	65.22
Operating Cash Flow ($M)	$(6.87)	$1.00
Plastic Intensity (lbs/$100 revenue)	0.99	0.93

Notes:

YoY variances primarily reflect lower 2024 ad spend (smaller active base) and temporary disruptions from the platform migration; sequential gains reflect higher orders offset by lower AOV .

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025)	Current Guidance (Q2 2025)	Change
Revenue	FY 2025	Decline approx. mid‑single‑digit to low double‑digit % YoY	Decline approx. mid‑single‑digit to low double‑digit % YoY	Maintained
Adjusted EBITDA	FY 2025	Negative low single‑digit millions to positive low single‑digit millions	Negative low single‑digit millions to breakeven	Narrowed lower (removed positive)
Quarterly Trajectory	2H 2025	Q1 lowest; improve Q2–Q3; slight YoY growth in Q4	Q1 lowest; improve Q3; slight YoY growth in Q4	Maintained

Rationale: Company is prioritizing topline rebuild via higher advertising investment while maintaining financial discipline; narrowing of EBITDA outlook reflects this choice .

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Platform migration / CX	Shopify transition underway; expected near-term challenges, long-term scalability	$2–$3M Q1 revenue headwind; most critical issues addressed; focus on experience, content, offers	Migration caused AOV/revenue shortfall; largest issues resolved by end-Q2/early-Q3; continue optimization	Improving execution post-migration
Revenue trajectory	First sequential growth since 2022; Q1 seasonally lower; target YoY growth in Q4’25	Reiterated Q1 revenue trough; rebuilding with assortment/content; acquisitions to help	Sequential growth (rev/orders); still targeting slight YoY growth in Q4’25	Stabilizing, gradual recovery
Advertising strategy	Disciplined spend; focus on ROI and channels	Increased spend with improved first-order economics; CTV/influencers ahead	$2.7M spend (+11.6% YoY) with stronger paybacks; plan to lean in	Re-accelerating with discipline
Gross margin	52.4% (Q4) with promo mix/inventory actions	53.0% (Q1) down 260 bps YoY on fee removal	55.4% (Q2) +150 bps YoY on vendor funding/less discounting	Strengthening
Assortment expansion	+30% 3P brands YoY in 2024; push beyond cleaning	+41% brands, +54% products YoY; expand beauty, personal care, pantry, baby, wellness	+47% brands, +59% products YoY; emphasis on human health/VMS/clean beauty	Accelerating breadth
Tariffs / macro	Monitoring; exploring sourcing shifts; retail exit by 1H’25	Tariffs embedded in outlook; mitigation via pricing/suppliers/sourcing	Margin resilience despite tariff uncertainty	Managed headwind
Balance sheet / liquidity	Term debt fully repaid; ABL $7.5M outstanding	ABL amended/extended to 2028 post-Q1	ABL amended/extended; positive operating/total cash flow; inventory down QoQ	Improved flexibility
Shareholder matters	—	—	NYSE compliance plan accepted; 18 months to cure; market cap currently above threshold; HumanCo engagement working group	De-risked listing; active engagement

Management Commentary

“Adjusted EBITDA for the second quarter was negative $900,000… the decline was primarily driven by the short term revenue impact of our e‑commerce platform migration. Importantly… we delivered positive operating and total cash flow” — CEO Jeff Yurcisin .
“Our gross margin was 55.4%, up 150 basis points… due to higher third‑party vendor funding and more targeted promotional strategies” — Interim CFO Tom Siragusa .
“We continued our third‑party assortment expansion growing the number of brands offered by 47% and individual products by 59% year over year” — CEO .
“We are maintaining our full‑year revenue guidance, while narrowing our adjusted EBITDA outlook… prioritizing growth while maintaining financial discipline” — CFO .
“The revenue drop in Q2 compared to our previous forecast was 100% driven by this platform migration, and it impacted AOV in particular” — CEO (Q&A) .

Q&A Highlights

AOV pressure and migration: Management attributed lower net revenue per order to migration-related issues that impacted subscribers with long lists and those placing smaller orders; they rebuilt specialized experiences and expect improvements in repeat behavior and AOV as issues resolve .
Marketing payback and spend: The company is seeing better LTV/CAC post‑migration and intends to lean into channels where paybacks meet higher standards than prior years, supporting H2 growth ambitions .
Category mix shift: Grove is moving beyond cleaning into personal care, VMS, and clean beauty, guided by its standards and customer demand; category breakout not disclosed, but human health is the #1 strategic push in 2025 .

Estimates Context

Q2 2025: Revenue $44.03M vs. $43.83M*, EPS $(0.087) vs. $(0.10)* — small beats; coverage thin (1 estimate for each) [Values retrieved from S&P Global].
Q1 2025: Revenue $43.55M vs. $47.01M*, EPS $(0.052) vs. $(0.03)* — both missed amid migration headwinds [Values retrieved from S&P Global] .
Implication: With only a single estimate, small operational changes or guidance tone shifts can drive outsized moves; consensus recalibration could follow if sequential growth and margin resilience persist into Q3/Q4.

Key Takeaways for Investors

Platform migration headwinds are receding; management expects sequential revenue growth into H2 and slight YoY growth in Q4, a key milestone after sustained declines .
Gross margin durability (55.4%) despite macro/tariff noise, aided by higher vendor funding and tighter promotions, supports earnings power as volume rebuilds .
Positive operating cash flow and ABL extension to 2028 provide liquidity runway to invest in growth while pursuing profitability discipline .
Re‑accelerating, higher‑ROI advertising is intended to rebuild the active base and orders; watch for AOV normalization and repeat-rate recovery as migration issues fade .
Strategic narrative broadened from “beyond plastic” to human health; assortment growth into beauty, personal care, VMS, and verified claims (Novi) may lift basket size and frequency over time .
Governance/activism: HumanCo’s public letter and Board working group could surface strategic alternatives and operational catalysts; listing compliance plan acceptance reduces a technical overhang .
Near-term trading setup: Low estimate coverage and a path to a Q4 return to YoY growth mean prints and guidance updates (plus proof of AOV/order normalization) are likely stock movers .

Appendix: Additional Data Points

Q2 2025 P&L excerpts (company): Revenue $44.026M; Gross profit $24.395M; Operating loss $(3.490)M; Net loss $(3.626)M; EPS $(0.10) .
Q2 2025 operating metrics (company): DTC Orders 640k; Active Customers 664k; DTC Net Revenue per Order $65.22; Operating cash flow $1.0M .
Q1 2025 migration impact estimate: $2–$3M revenue headwind; GM 53.0%; Adj. EBITDA $(1.6)M .

Sources: Company press releases and earnings call transcripts as cited. All estimates marked with an asterisk are Values retrieved from S&P Global.

Citations

Q2 2025 press release:
Q2 2025 earnings call:
Q1 2025 press release and call:
Q4 2024 call:
Other releases (context): Novi partnership ; Microplastics survey ; HumanCo letter .

Grove Collaborative Holdings, Inc. (GROV)·Q2 2025 Earnings Summary