Grove Collaborative (GROV) Q4 2023 earnings summary

Executive summary

• Q3 and Q4 2023 marked two consecutive quarters of positive Adjusted EBITDA; Q4 also delivered positive operating cash flow and record DTC net revenue per order, despite lower revenue and customer activity.

• FY2023 Adjusted EBITDA remained negative at $9.2M; 2023 was positioned as a transition year after restructuring and cost reductions to stabilize the core business and support profitable growth.

• 2024 priorities include improving customer experience, expanding categories, launching lower-plastic products and returning to sequential revenue growth in H2; growth and profitability are targeted for 2025.

Financial highlights

• FY2023 net revenue was $259.3M, down 19.4% YoY; FY2022 revenue was $322M.

• Q4 net revenue was $59.9M, down 3.1% QoQ and 19.2% YoY; quarterly revenue declined from $71.6M in Q1, with fewer DTC orders partly offset by higher revenue per order.

• Q4 gross margin was 54.4%, up 60 bps QoQ and 740 bps YoY; FY2023 gross margin was 53.0%, versus 48.1% in FY2022.

• FY2023 operating expenses fell 41.6% to $172.6M; Q4 operating expenses were $40.5M, down 35.9% YoY.

• FY2023 net loss was $43.2M and Adjusted EBITDA loss was $9.2M; net loss margin was (16.7%) and Adjusted EBITDA margin was (3.5%).

Outlook and guidance

• FY2024 guidance: net revenue of $215M–$225M and Adjusted EBITDA margin of 0.0%–1.0%; full-year Adjusted EBITDA profitability is expected.

• Revenue is expected to decline in Q1 2024, followed by sequential quarterly growth in H2; the illustrated quarterly trajectory is potential and not quarterly guidance.

• The 2025 plan targets full-year growth and profitability.