GROV - Earnings call transcript Q2 2024 | Grove Collaborative Holdings, Inc.

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Operator

Good afternoon, and thank you for standing by. Welcome to Grove Collaborative Holdings, Inc.'s Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Hosting today's call are Grove's CEO, Jeff Yurcisin and CFO, Sergio Cervantes.

Before they begin their prepared remarks, I will review the forward-looking statements safe harbor.

considered made trends future successfully of and business may statements business financial replatforming in projected date, the respond the statements and and net growth and fourth sequential plan risks to adjusted industry its including strategy, quarter, revenue Grove's guidance. be the quarter of fourth their Shopify EBITDA today the increase prospects, to revenue their about results, to relating Some to looking, impacts completion forward ability in advertising margin spend to their based Securities and those actual including are risks Exchange and results a statements and on subject of the materially, differ factors Such Commission. current discussed expectations beliefs number cause to are in and uncertainties our could that with to filings

view or statements Grove applicable required as statement, whether under All are and obligation update new Grove's of otherwise, security events result laws. on based information, any today, to these future except as forward-looking no assumes be of may a

more For to discussed factors risk Gap] the [Audio please information, refer

Jeff Yurcisin

[Audio conscientious consumers in while for wallets prioritizing experience their the the for planet. transformed the want profitability. In have families, XX the their last also best e-commerce months, who we Gap]

with turnaround, we by improving be the we our to amidst the which ultimately date. revenue our I'm work growth refocused financial why and sustainability, driving proud ourselves business is with As us. and stability, our customer priorities of reshape and to balance elements have this customers profitability foundational of strength, sheet stabilizing shop differentiating revenue experience

experience the profitability have strengthened innovations customer our sheet on balance have and We delivering and are energized our team. in our

our on updates the into X priority dive pillars. Let's

profitability. First,

the cash X journey. in which adjusted quarters X positive first and steps of positive delivered profitability flow operating X consecutive our the are have quarters, in EBITDA in last We

vendor pursuing leverage. and increase operating to contract continue negotiations We

our new our center During signed Reno, increase significant rent in we operations the avoiding current a fulfillment in for quarter, lease facility. a Nevada,

on expense quarters. Two, reduces our great step St. January burden. million consistently the savings customers growth Three, of Peters, overall be interest until Subsequent our in encourages and delivering engage visit, which will seized debt our of This payments in of is journeys. our reducing officially also sheet experience $XX reflected delayed the for of XXXX. voluntarily is them with debt coming and principal meet term our center, that to channels a Missouri first operations browse repaid We growth. shopping balance fulfillment towards strength. the natural a identifying to term we revenue output with in their to quarter, end advertising debt efficient shop the coupled and regularly Revenue and P&L

Our because products. they customers planet-first shop us high-performing us to trust with curate

on to We third-party number sold quarter compared continue expand selection second during increasing the brands to Co the XX% XXXX. of of the by quarter, our second product Grove

build We rate, also to all XX% incentive of wallet-friendly an products program, to now customers discounted continued a providing and customers to expand our for to with at Subscribe subscribe larger and boxes. available planet Save

health and care, not revenue and expansion strong data selection home overall wellness internal personal and revenue order linking net We essentials, growth. higher but have We trust earned beauty. in per in ultimately, just see with

be recertification, since is fourth our the published and sustainability, platform than report, of serve resources XXXX B and our enable completed score e-commerce X% improved We've This for to significant giving been turn revitalize differentiation. trusted fifth comprehensive which began them to further our we our as our most to first replatforming also continues future Corporation in our overall Grove July Grove This the to where will we joining providing that of their XXXX, mission to saw by journeys, Corp XX.X% them our customers' annual we'll we and of announced a years. B now certification while infrastructure to partnerships Grove. to B scalable, expected simultaneously June sustainability progress free on transition In as from and business partner have up we reporting platform. that May, fuel technology XXXX. And Shopify's XXX.X%. to final customer shop become help innovative a experience and marks we point milestone for commitments, Today, our key announcing and direct-to-consumer company migrating companies we of optimize and to a As the growth. Corp sustainability more on foundation, are pillar, leverage at even transition quarter reasons more of major our maintained in XX

from more go ability and meet brand done. evolve turn the now Sergio will our our to our ongoing I of is future continue work to towards a is handful and more to disclosed of financial support coming, metrics incremental in to customers. plastic. and growth far sustainable the there confident results our change long-term which for far, also we this our detail. of providing remain earnings revenue the needs just to and the These profitable deliver I in latest the plastic changes Sergio, pace our from afternoon so intensity decouple release and call have results ahead. review are please use our made but in over at we accountability We the current

Sergio Cervantes

second profitable Starting year-over-year, partially was have calls, trends steps will Revenue the changes to Thank continue XX.X% position provide year-over-year you, believe XXXX in revenue order. X.X% of the a we quarter provide with comparisons sustainable million, taken a down from from and measure to addition increase the offset the business reflect the in per long-term first the decline we quarter an top to Jeff. the comparisons as of Similar and in in of sequential growth. $XX.X resulting net in the ourselves quarter-over-quarter by line. to we for previous orders, effectiveness and

we quarter-over-quarter, it improvement due but for inventory the offset fees accounting declines up mostly $X.X the points XXXX. and The from strength to were an of is and year-over-year customer see decrease year-over-year sequential The was by is the order sell-through quarter advertising of the in prioritizing quarter. count to of The higher-priced is offset base the quarter-over-quarter The quarter-over-quarter fewer and net stabilize, on recur, core decision smaller net deployment the due decline depreciation longer expand increase allowances million. the first transform increases active accounting lower a severance customer than mostly and sequential the our transition impacted on XXXX to XX.X% $X.X were first spend basis in Since minerals revenue to Grove XX.X%. been mainly in $X.X in decrease was as have is professional and as to customer the starting revenue orders, professional transformed our XX.X% second year-over-year vendors be million. orders and increased repeat has down down care. disciplined adjustment, reserved restructuring to a the in are and cost customers to to primarily sequential third-party to a was XX.X% accelerated no increase to personnel to quarter confidence acquisition advertising year. efficiency e-commerce active advertising reductions customer new to and higher XX.X% the did recognized fourth Grove due in were fulfillment this that revenue first increase XX.X% quarter a year-over-year the stock-based able to a in we relates and first million Subscribe our quarter, baskets of our discontinuation fees. SG&A primarily improvements the and X.X% million to onboards to year-over-year basis our and The quarter vendor support our and dollars, transformation of to of advertising wellness are reflect XX.X% in of to experience per XXX total expansion costs note, XXXX up and recorded EBITDA lower DTC second orders largely in allowances year-over-year down in we've to The vendor our X.X% retail-specific from first XX.X% year-over-year And fulfillment quarter focus the and true-up to The to especially offering the efficiency year-over-year extent and $XX.X continue year-over-year development was $X.X in spend $X.X million the increased year-over-year due then the a order the one sequential spend fewer and increase we costs growth orders Both to as included The Brands home recommended year-over-year in experience. sequential valuable of first ensure that lower offering, the company increased of To XXXX, DTC million. lower Shopify. of launch in to more year-over-year in spend third-party million. rebranded payback $X.X drive quarter XX.X% products, to in are our and be quarter-over-quarter category the a sales to percentage experience, of $X.X was customers in and from previous million of and of compared points recent quarter-over-quarter the expense XX.XX%. that plan is The decrease quarter, costs due decreased quarter-over-quarter and pullback and product sequential in of points compared to to quarter personal third-party from and second expense gain which we products. of and assets vendor XXX but as a health Save increase resulting quarter decrease margin decline vitamins, of by discounts. Of absent and to X.X% million. Total XXX period. a in in head Grove $X.X will quarter-over-quarter, to in to and improvements, the continues our not see the and mostly Product year-to-date as due increased allowances, our lower Co most we in customers of in continue quarter-over-quarter the in to X.X% XXXX, XXX unit XX.X%. fourth right quarter. We for to loss basis the XXXX. quarter in significant certain result advertising sequential beyond the per an expense as of decreased first order is decline we down due utilizes orders platform due advertising by percentage products. the lower of new Gross including compared product previously The an compensation basis fees. Adjusted increase Brands our increase revenue. year-over-year due supplements net Advertising factor products Branded costs of an second XXXX Grove percentage expense and revenue to points but program. second

positive second second compared Our X.X% quarter first positive X.X% of the negative was of quarter in adjusted EBITDA XXXX. margin quarter in the for XXXX the and to X%

delivered flow. last demonstrating to positive As proud having each mentioned, commitment adjusted Jeff of positive the ultimately, are our in cash EBITDA and of profitability quarters, X we

equivalents $XX.X of expense. with cash working Turning from a an We quarter to due the offset net the balance now quarter, to million mainly in million restricted previous increase by capital, cash, the in reduction sheet. partially $X and interest ended cash,

an $X.X our by the driven mainly position. ended ownership million Grove inventory also quarter in we quarter-over-quarter, We Branded a inventory down to improve balance as $XX.X million, with continue reduction inventory of

of This Jeff a as so term and quarter, the also the XX, debt term months, next payments save January Form details XXXX. SEC until More the our us with XXXX. on cash X-K to at our least debt made repayment end $XX specific found paydown XX burn. million we will over mentioned, principal in of delay of the the Lastly, sequent be July can expense in reducing interest $X.X million voluntary filed

our Now turning outlook. to

EBITDA net period of a increase revenue the be December from $XXX million. million to Adjusted XX, $XXX XXXX, X% to million, For XX-month we to million an to X%. $XXX to revised X.X%, ending have from of $XXX decrease margin X.X% our guidance

the guidance Our longer year, business that. revenue taken beginning therefore, to have lowered at transformation of we anticipated reflect model than has the our and

Our increasing the plan had spend than also fourth advertising sooner quarter.

of orders However, decided current have important evaluate maintain we our more customers, us part repeat an to to at efficiency advertising time of levels, spend acquired giving equation.

plan are We e-commerce Despite trends we have to than guidance, spend we our model. these adjusted We increased evaluating business a only delivering quarters ensure confidence EBITDA X payback with metrics increase growing are we into the periods. ensure our right revenue these in we and carefully reshaping to less we guidance. the experience, lower are sustainable have margin when to are

to the consecutive the declining EBITDA. maintain a energized now back turn parallel trend some expense performance. positive for is line second I our over importance, by quarter as revenue that margin to quarter proud business bottom of We believe would and well Jeff are flow in positive cash like throughout continue and We fourth our we closing of consistent the but to of remarks. the and adjusted discipline strict delivered reversing as call

Jeff Yurcisin

Thank you, Sergio.

Grove. that we pursuing a for X community past transformation reported are For we the bold to our shareholder quarters,

conscientious Our the these is hungry that leader but clearly that for be to sustainable. towards their we true a that customers partner a our for and help trusted show journey have being industry consumers. a sustainable and platform steady Today's marketplace of a One CEO, as I to my rings progress serve those first can can said we everyday we them and essentials, on quarter seek business, leader In the the for and chase more without sustainable later, today. destination more goal results sustainability customers. do, confident can't conscientious I'm mission year business is still sustainable a

updates in the is while quarters positive straight revenue consistent also Sergio's adjusted reiterate in transformation any have. done, multiyear around I and questions. sequential that, X comments to answer expect be our step for share revenue and profitable With calls. we're strengthening sheet next be to open to balance EBITDA, in excited of the sequentially to questions is I'm that growth. future delivered want QX, work deliver anticipate we corner. sustainable, line to Operator, more please happy have that to growth which We our growing the you There's

Operator

that have Susan first we Anderson comes Instructions] The question Genuity. Canaccord from [Operator of

Alec Legg

Sergio, just half? step quarter? for versus into line about top would you think Jeff Susan and guess wondering fourth to I know Alec I'm on sequentially. cadence up how think I the today. second second how about said should it's we But quarter quarter third

Jeff Yurcisin

we the we believe that for the the XXXX. bottom marketing In we're spent back question. we on heavily you Thank in nearing comps short, of unusual had when

were we're QX, But be by sequentially. X.X%. were then at year, going to down XX.X%. from we our And So QX you if QX to of look only growing down QX to we QX, were quarter-over-quarter growth from at this to

And latter to can cohort it's out, So think in or sequentially growing of into see since probably you superior inefficiently. energy when I spend were experience. marketing much curves you so if will we marketing and of the And efficiency, launched I growth, think customer revenue that this experience that you are putting customer flattening we on about with investors with then also is been spend what the terms we will plan week-over-week efficient the those and trust QX. spend want that February new not we in last modeling a have just our the on in you XX. And we say we earned X seeing improvement grow months.

we growth. sequential are really QX, revenue by that, with So planning for

Alec Legg

with reaching That's record now. really the can see order average we right helpful. it And revenue per

drive you So white quick to and add addition wellness guess, just sizes? that there see could to space order continue on to basket a sizes I follow-up just is help higher you that. in that any

Jeff Yurcisin

Yes.

see that We trust We customers relevant able than of see it brands. we our product. because I it that -- grow to are categories. XP We to I and XX than beauty. us. own our health selling remain we in extends categories, of X what we our more what product. that just faster customers about our revenue not remain other faster think is us trust it of more you'll excited type grows look launch proud owned at But customers are wellness brand mix And And retailers we're finding continues on in of other to faster. see personal care. when But wellness. in really I'm is you think our it in SKUs see to trust when

we are And about trusted they make that so new what learning, that the and the we that plan. their family that see testing will be receive will trusted trusted looking who you are right brand is customers so follow platform, destination, but to the the conscientious for follow decision and for comments we'll that keep regular we products trying can for a customer,

Alec Legg

just third-party vendor. follow-up kind the then of last And around that

a promo from of some year-over-year a support talked to in quarter, guess much last dollars some gross conceptualize how that of So the big leverage was you companies. about I that? way or third-party and any initiative to getting that margin contribution

Jeff Yurcisin

have. I proud Like, third-party customer better new are but look, of partnerships our launching about we a just that partnering brands offer appreciate When not we think are we're I'm brands, really to our we brands, experience. with how partnering with you that, existing too.

when for is all already offered now, exceptional. of fair of have And prices build is the competitive on boxes, most there. they customer planet-friendly, experience Save. out box build We as So Grove customers eligible Subscribe revenue can the subscribe of and a XX% wallet-friendly and sudden and

site unique to in SKUs terms of we in on So the sold improvement continue our week-over-week. see of third-party number products,

customers continue possible. sure and conscientious that brands and Fresh we COGS a and these fairly to with and contra great we serving are from as partner margin make these competitively as We partnership as and and we perspective are a Caboo, launching then to Freestyle gross and make World headwinds Wave new brands Nellie’s see like perspective,

Operator

this At questions. Instructions] to no will there sir. stage, hand ahead, the now call Please Yurcisin. back [Operator go further I Jeff are

Jeff Yurcisin

again our have hope Thank you a all for you. I and great call, everyone want to thank Thank you. joining night.

Operator

Ladies that then you. today's and gentlemen, joining you conference. for Thank concludes us. Thank

lines. disconnect You may now your

Grove Collaborative (GROV) 8 Aug 242024 Q2 Earnings call transcript