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Grove Collaborative Holdings, Inc. (GROV)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $43.7M, down 9.4% YoY and 0.7% QoQ; gross margin improved to 53.3% while Adjusted EBITDA was a loss of $1.2M, reflecting e-commerce migration friction and an intentional advertising pullback to protect liquidity .
  • Versus S&P Global consensus, revenue missed ($43.7M vs $44.6M*) while EPS beat (-$0.08 vs -$0.14*); EBITDA underperformed consensus (-$2.31M* actual vs -$0.48M* estimate), noting definitional differences vs company’s “Adjusted EBITDA” *.
  • Guidance changed: full-year revenue now $172.5–$175M (lower end of prior range) and management no longer expects YoY growth in Q4; Q4 Adjusted EBITDA is expected to be positive .
  • Near-term stock reaction catalysts: guide-down on Q4 revenue growth and ad pullback could pressure shares; cost actions (RIF ~$5M annualized savings) and “strategic options” review may support sentiment; positive Q4 Adjusted EBITDA is a potential upside catalyst .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded 30 bps YoY to 53.3% on improved promotional efficiency and favorable mix .
  • Cost discipline: Operating expenses fell 19.5% YoY; SG&A reductions, lower SBC/depreciation, and a November RIF expected to save ~$5M annually .
  • Management sharpened focus on fixing core CX (mobile app, subscriptions, payments); “we know the fixes, and we're executing with urgency” (CEO) .

What Went Wrong

  • Revenue missed consensus and declined YoY/QoQ due to e-commerce migration issues and intentional ad pullback; DTC orders fell 12.5% YoY and active customers -7% YoY .
  • Adjusted EBITDA negative (-$1.2M), reflecting lower revenue and associated gross profit; Operating cash flow was a $1.0M outflow vs prior-year inflow .
  • Guidance reset: management no longer anticipates YoY growth in Q4 and guided full-year revenue to the lower end of the range ($172.5–$175M) .

Financial Results

Core P&L and Margins vs Prior Quarters and Consensus

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$43.5 $44.0 $43.7
Gross Margin (%)53.0% 55.4% 53.3%
Net Loss ($USD Millions)$(3.547) $(3.626) $(2.960)
Adjusted EBITDA ($USD Millions)$(1.598) $(0.912) $(1.201)
Diluted EPS ($USD)$(0.10) $(0.10) $(0.08)

Consensus vs Actual (S&P Global)

MetricQ3 2025 Consensus*Q3 2025 ActualSurpriseQ4 2025 Consensus*
Revenue ($USD)$44.601M*$43.734M Miss ($0.867M)*$42.862M*
Primary EPS ($USD)-$0.14*-$0.08406 (~-$0.08) Beat (~$0.06)*-$0.09*
EBITDA ($USD)-$0.475M*-$2.310M*Miss (-$1.835M)*$2.850M*

Values retrieved from S&P Global.

Operating KPIs

KPIQ1 2025Q2 2025Q3 2025
DTC Total Orders (000s)622 640 619
DTC Active Customers (000s)678 664 660
DTC Net Revenue per Order ($)$66.49 $65.22 $66.76
Plastic Intensity (lbs per $100 revenue)0.99 0.93 0.94
Advertising Spend ($USD Millions)$2.807 $2.722 $3.154

Segment breakdown: N/A (single curated marketplace/DTC model).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025Decline ~mid-single-digit to low-double-digit YoY $172.5–$175M Specified range; lower-end of prior range
RevenueQ4 2025Slight YoY growth expected Roughly flat sequentially; no longer expecting YoY growth Lowered
Adjusted EBITDAFY 2025Negative low single-digit millions to breakeven Within prior range Maintained
Adjusted EBITDAQ4 2025Not specifiedPositive New positive Q4 target
AdvertisingFY 2025/Q4Continue investing to drive topline Pullback to protect liquidity while fixing CX Strategy pivot

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3 2025)Trend
AI/Technology initiativesMigration to third-party e-commerce platforms; new capabilities for landing pages and promotion “Leaning into AI, automation” and disclosing AI-related carbon footprint via Gravity Climate partnership Improving (broader tech use, ESG transparency)
Supply chain/operationsFulfillment network optimized; inventory management improved; positive operating cash flow in Q2 Focus on mobile app, subscription, payments “whack-a-mole” fixes; urgency to stabilize CX Stabilizing (execution ongoing)
Tariffs/macroDetailed tariff mitigation (pricing, sourcing shifts) No macro headwind cited; shortfall “100%” from ad pullback and CX disruptions (CEO) Neutral (macro not driving quarter)
Product performance/assortment41–61% YoY expansion in third-party brands/SKUs; VMS and baby highlights Shift from SKU expansion to improving discovery/mobile; continued VMS/baby category interest Mixed (selection broad, focus moves to discovery)
Regulatory/listingNYSE plan accepted (market cap cure period) Continued “strategic options” evaluation with advisors Watch (corporate actions possible)
Environmental & human healthMicroplastics advocacy and content; “Your home, healthier” positioning AI carbon disclosure; continued leadership emphasis Improving (ESG narrative deepening)

Management Commentary

  • CEO: “We take accountability for the technology disruptions and have sharpened our focus on fixing the core customer experience, especially the mobile app, subscription management, and payments.”
  • CEO: “We’ve identified the issues, we know the fixes, and we're executing with urgency.”
  • CFO: “We executed a headcount reduction… expected to deliver roughly $5 million in annualized savings.”
  • CEO: “We are assessing opportunities that could accelerate our path to scale… including additional acquisitions, partnerships, divestitures, and other strategic options.”
  • CFO: “We no longer anticipate year-over-year growth in the fourth quarter… We expect fourth-quarter adjusted EBITDA to be positive.”

Q&A Highlights

  • Drivers of miss and outlook revision: Management emphasized the shortfall was entirely due to ad pullback and CX issues (mobile app, subscriptions, payments), not macro headwinds .
  • CX remediation timeline: Teams are “closing the gap every week,” with a one to two quarter focus; acknowledge ongoing issue emergence and rapid fixes .
  • Cohort behavior: Cohorts flattening as expected; improved paybacks anticipated once core experience is fixed, enabling higher ad spend .
  • M&A and funding: Evaluating accretive subscale targets in wellness, baby, beauty/personal care; funding could be cash or capital raise if justified by paybacks .
  • Assortment strategy: Strong demand from wellness brands; selection expansion ongoing but near-term pivot to discovery/mobile experience over adding SKUs .

Estimates Context

  • Q3 2025 vs consensus: Revenue missed ($43.7M vs $44.6M*), EPS beat (-$0.08 vs -$0.14*), EBITDA below consensus (-$2.31M* actual vs -$0.48M* estimate). Drivers: intentional ad pullback and e-commerce migration friction dampened orders; cost actions moderated EPS loss *.
  • Q4 2025 consensus: Revenue $42.9M*, EPS -$0.09*, EBITDA $2.85M*—management guides revenue roughly flat QoQ and positive Q4 Adjusted EBITDA; Street may need to trim revenue growth assumptions while acknowledging margin/cash discipline *.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term revenue growth de-emphasized to prioritize liquidity and profitability while fixing core CX—expect muted top-line but improving bottom-line trajectory (Q4 Adjusted EBITDA positive) .
  • Gross margin resilience suggests promotional discipline and mix benefits can offset volumes; watch discovery/mobile fixes for order recovery .
  • Active customers and orders are pressured; improved cohort paybacks post-fixes are the gating factor for scaling ad spend and resuming growth .
  • Corporate actions optionality (M&A, partnerships, divestitures) and formal “strategic options” review create potential catalysts amid valuation concerns .
  • Cost actions (RIF ~$5M annual savings) and SG&A discipline support Adjusted EBITDA within guidance despite lower revenue .
  • Risk monitor: execution on CX fixes; discovery/mobile improvements; tariff/sourcing changes; NYSE compliance plan remains in background .
  • Trading implications: Guide-down on Q4 revenue growth and revenue miss likely weigh on sentiment; confirmation of positive Q4 Adjusted EBITDA and visible CX progress could be the near-term positive pivot .