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Grove Collaborative Holdings, Inc. (GROV)·Q4 2024 Earnings Summary

Executive Summary

  • Sequential revenue growth returned for the first time since early 2022 ($49.5M, +2.5% QoQ), while operating cash flow remained positive ($0.3M), marking three consecutive quarters of cash generation .
  • Profitability mixed: Adjusted EBITDA turned to a loss (-$1.6M, -3.3% margin) on targeted discounting and debt extinguishment, though FY2024 finished positive (+$1.3M) and term debt was fully repaid ($72M total) .
  • Guidance introduced for 2025: Q1 expected to be the lowest revenue quarter (Shopify transition headwind), FY2025 revenue ~flat to down mid-single-digit %, and Adjusted EBITDA breakeven to low-single-digit millions; Q4 2025 targeted for low-single-digit % YoY growth .
  • Strategic catalysts: expansion into wellness via 8Greens and home cleaning via Grab Green, continued third‑party assortment growth (+30% y/y brands in Q4), and shift to “Your home, healthier” positioning—supportive of a DTC-led turnaround narrative .

What Went Well and What Went Wrong

  • What Went Well

    • “For the first time since the first quarter of 2022, we grew revenue sequentially, while maintaining positive operating cash flow” (CEO Jeff Yurcisin) .
    • Balance sheet strengthened: fully eliminated term debt ($72M total), leaving only $7.5M ABL outstanding; interest expense reduction expected .
    • Assortment expansion (third‑party brands +30% y/y in Q4) and acquisitions (Grab Green, 8Greens) broaden category reach and are expected to support margin accretion and future growth .

  • What Went Wrong

    • Year-over-year pressure: revenue down 17.4% to $49.5M and gross margin down 200 bps to 52.4%, reflecting fewer repeat orders from lower advertising and higher third‑party mix .
    • Sequential profitability decline: Adjusted EBITDA fell to -$1.6M (from breakeven), driven by targeted discounting to move aged inventory and a non‑cash loss on extinguishment of debt .
    • Shopify transition expected to weigh on Q1 2025 revenue; platform migration challenges noted on the call (near-term execution risk) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$59.857 $48.280 $49.501
Gross Margin (%)54.4% 53.0% 52.4%
Operating Expenses ($USD Millions)$40.5 $32.3 $34.3
Net Loss ($USD Millions)$(9.485) $(1.336) $(12.635)
Net Loss Margin (%)(15.8)% (2.8)% (25.5)%
Diluted EPS ($USD)$(0.27) $(0.04) $(0.34)
Adjusted EBITDA ($USD Millions)$0.137 $(0.032) $(1.618)
Adjusted EBITDA Margin (%)0.2% (0.1)% (3.3)%

Segment/mix and operational KPIs

KPIQ4 2023Q3 2024Q4 2024
Grove Brands % of Net Revenue44.8% 38.5% 40.1%
DTC Total Orders (000s)864 708 717
DTC Active Customers (000s)920 710 688
DTC Net Revenue Per Order ($USD)$67.00 $67.02 $66.94
Plastic Intensity (lbs per $100 revenue)1.07 1.06 1.02
Inventory ($USD Millions)—$24.5 $19.4
Operating Cash Flow ($USD Millions)—$0.8 $0.3
Cash, Cash Equivalents & Restricted Cash ($USD Millions)—$55.6 $24.3

Notes:

  • Sequential revenue growth driven by higher repeat orders, increased first orders on incremental advertising, and retail revenue timing (markdowns booked in Q3) .
  • Gross margin decline reflects increased promotions and higher third‑party mix; Grove Brands mix ticked up QoQ on seasonal discounting .
  • Adjusted EBITDA deterioration tied to targeted discounting to clear inventory and debt extinguishment; OCF remained positive aided by $5.1M inventory reduction .

Estimates vs. Actuals

  • S&P Global Wall Street consensus for Q4 2024 revenue and EPS was unavailable at time of writing; therefore, no beat/miss determination can be provided. Consensus retrieval attempts failed due to provider request limits.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025Not provided“Expected to be the lowest revenue quarter in 2025,” including negative impact from Shopify transition Introduced
RevenueQ4 2025Not providedYoY growth targeted in low-single-digit % range Introduced
RevenueFY 2025Not providedApproximately flat to down mid‑single‑digit % YoY Introduced
Adjusted EBITDAFY 2025Not providedBreakeven to positive low‑single‑digit millions Introduced
Brick‑and‑Mortar ExitH1 2025—Grove Co. exit expected to be fully wound down in H1 2025 Operational milestone

Context: FY2024 revenue “landed within revised full‑year guidance” issued in Q3, and FY2024 Adjusted EBITDA margin was 0.6% .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Shopify migrationAnnounced transition; completion targeted Q1 2025 In transition; early-stage performance/customer experience challenges acknowledged Progressing; near-term headwind to Q1 revenue
Third‑party assortmentBrands +12% y/y (Q2); Subscribe & Save at 63% of products Brands +18.3% y/y (Q3) Brands +30% y/y (Q4); focus on clean beauty, personal care, kitchen/pantry, baby, wellness
Brick‑and‑mortar exitAnnounced exit; <4% of revenue; unprofitable Exit reiterated; Q4 guidance framed around DTC focus Fully wound down by H1 2025 per outlook
Advertising disciplinePlanned ramp in Q4 subject to ROI (Q2) +15.6% QoQ in Q3; shift to DTC +4.7% QoQ in Q4; focus on repeat orders and improving conversion
Profitability/EBITDA+$1.1M (Q2) Breakeven (Q3) -$1.6M (Q4), but FY2024 +$1.3M
Operating cash flow+$1.0M (Q2) +$0.8M (Q3) +$0.3M (Q4)
Tariffs/macro——Monitoring tariffs across China/Mexico/Canada; supply chain mitigation discussed
Debt reduction$42M paydown (post‑Q2) Planned remaining $30M payoff Completed $72M repayment; only $7.5M ABL outstanding
Brand positioning (human health)Expanded definition to include human health (Q3) —Tagline updated to “Your home, healthier”

Management Commentary

  • CEO Jeff Yurcisin: “For the first time since the first quarter of 2022, we grew revenue sequentially, while maintaining positive operating cash flow… We see a path to year‑over‑year net revenue growth in the fourth quarter of 2025” .
  • On strategic M&A: “We’re also excited about our recent acquisitions of Grab Green and 8Greens… aligned with our commitment to sustainability, innovation, and human health” .
  • Interim CFO Tom Siragusa on margin/op-ex: “In 2025, there’s going to be both accretive and dilutive impacts to our gross margin… we will remain disciplined as it relates to our expenses” .
  • On DTC mix disclosure: “We plan to stop sharing [Grove Brands %] after this quarter, given our focus on [DTC] order economics” .
  • On tariffs: “Our projections take into account the current tariff environment… exploring strategic alternatives to mitigate any potential cost impacts” .

Q&A Highlights

  • Repeat order drivers: Improved shopping experience and expanded 3P assortment increased reasons to shop; targeted discounts helped move aged inventory, supporting OCF .
  • Assortment pipeline: Focused expansion across wellness (with 8Greens), kitchen/home, baby, pet—emphasis on a trusted, non‑toxic marketplace rather than an “everything store” .
  • Brand/marketing pivot: Moving from “Beyond Plastic” to human-health centric messaging; plan to lean into content, education, and guided shopping post‑Shopify transition .
  • P&L moving parts and Shopify impact: No line-item guidance; 2025 gross margin mixed (exit retail vs. 2024 inventory reserves; M&A accretive), expenses disciplined; Q1 2025 revenue impact from migration .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS was unavailable due to provider request limits at time of writing; no beat/miss comparison can be made. Attempts to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q4 2024 and Q1 2025 failed due to daily limit errors.
  • Given the absence of consensus, investor focus should shift to: sequential stabilization, margin trajectory, and execution vs. 2025 qualitative revenue/EBITDA targets .

Key Takeaways for Investors

  • Sequential revenue growth returned and OCF stayed positive—evidence the DTC turnaround is advancing despite near-term profitability pressure from discounting and debt extinguishment .
  • The Shopify migration is a tactical headwind (Q1 2025 lowest quarter) but strategically unlocks scalability and cost efficiency; monitor execution and any conversion recovery in Q2–Q3 .
  • Mix is shifting toward third‑party brands and wellness/home categories; acquisitions (8Greens, Grab Green) bolster assortment and should be margin accretive—watch contribution in 2H25 .
  • Balance sheet de-risked: term debt repaid; interest expense should decline—supports the path to breakeven/positive Adjusted EBITDA in FY2025 .
  • Gross margin pressure from promotions and 3P mix vs. tailwinds from exiting retail and acquisitions—expect variability; management emphasized expense discipline .
  • Narrative pivot to “Your home, healthier” positions Grove against mass e-commerce peers with a trust-led, non‑toxic marketplace; content and guided shopping should aid cohort stabilization over time .
  • With consensus estimates unavailable, trading likely keys off execution breadcrumbs: Q2/Q3 revenue progression, Shopify transition updates, and margin cadence toward the FY2025 EBITDA target .

Additional Supporting Documents:

  • Q4 2024 8-K/Press Release and financials .
  • Q4 2024 earnings call transcripts and .
  • Q3 2024 press release and call .
  • Q2 2024 press release and call .
  • Acquisition press releases (8Greens; Grab Green) .