Raises Full-Year Guidance
Please replace the release dated Aug. 11, 2022 with the
following corrected version. In the Condensed Consolidated
Statements of Operations table, please note the addition of (As
Restated) to the 2021 columns. Also note that the 2021 figures in
the last two rows of the table have been replaced, as the
weighted-average shares outstanding used in computing net loss per
share attributable to common stockholders, basic and diluted for
the three and six months ended June 30, 2021 were incorrect. As a
result of this error, the net loss per share attributable to common
stockholders, basic and diluted, was overstated by $0.59 and $0.96
for the three and six months ended June 30, 2021, respectively.
The updated release reads:
GROVE ANNOUNCES FISCAL SECOND QUARTER 2022
FINANCIAL RESULTS
Raises Full-Year Guidance
Grove Collaborative Holdings, Inc. (NYSE: GROV) (“Grove” or “the
Company”), a leading sustainable consumer products company and
certified B Corp™, today reported financial results for its fiscal
second quarter ended June 30, 2022.
Fiscal Second Quarter 2022 Financial
Highlights:
Our financial highlights represent the beginnings of our efforts
to eliminate unprofitable revenue and drive improved margins, on a
sequential basis, in order to be profitable in 2024
- Net revenue of $79.3 million, down 12% from the first quarter
of 2022, and down 20% year-over-year
- Gross margin of 49.1%, up 190 basis points from the first
quarter of 2022, and down 40 basis points year-over-year
- Net loss margin of (44.5)%, an improvement from (52.4)% in the
first quarter of 2022. This is compared to net loss margin of
(28.8)% in the second quarter of 2021
- Adjusted EBITDA margin(1) of (26.6)%, an improvement from
(43.8)% in the first quarter of 2022. This is compared to Adjusted
EBITDA margin of (21.2)% in the second quarter of 2021
(1)
Adjusted EBITDA margin is a non-GAAP
financial measure. See “Non-GAAP Financial Measures” for additional
information. A reconciliation to the most comparable GAAP measure
can be found in the tables at the end of this press release.
Stuart Landesberg, Chief Executive Officer of Grove, said, “I’m
proud of our accomplishments in the second quarter which include
expanding our retail footprint by entering into three new retailers
and increasing our assortment at Target by over 100%; partnering
with Drew Barrymore on our first multi-channel brand campaign,
“Wish-cycling”; and successfully completing our business
combination with Virgin Group Acquisition Corp. II. While revenues
in the quarter were down year-over-year as consumers return to
pre-pandemic shopping patterns and as we scale back on inefficient
advertising spend and refocus on profitable growth, second quarter
results came in ahead of internal expectations and we are pleased
to raise our full-year guidance.”
Landesberg continued, “As we look ahead, we see a clear path to
sustainable profitable growth despite near-term uncertainty in the
macro environment. Change in the CPG industry is inevitable, and
Grove is in pole position to lead that change. Our disruptive and
innovative brand has a tremendously loyal following, we are just
beginning to bring our products to the retail channel where over
90% of purchases in our categories are made, and we are laser
focused on driving profitability. We strive every day to help
consumers make more sustainable choices. As we all know,
sustainability is the only future.”
Fiscal Second Quarter 2022 Key Business
Highlights:
- DTC net revenue per order was $58.28 in the second quarter of
2022, up 3% year-over-year from $56.43 in the second quarter of
2021
- Grove Brand products represented 48.2% of net revenue in the
second quarter of 2022, an increase of 30 basis points from 47.9%
in the second quarter of 2021
- In the second quarter, 60% of Grove Brands net revenue came
from either zero-plastic, re-usable or refillable and zero plastic
waste products, determined as meeting the Company’s Beyond Plastic™
standard, up significantly from 47% in the second quarter of 2021
as Grove’s no- and low-plastic assortment grows and continues to be
adopted by customers
- Grove believes that publishing plastic intensity (pounds of
plastic sold per $100 in revenue) enables the Company to hold
itself accountable for the pace at which it decouples revenue from
its use of plastic
- Across the Grove.co site and through retail partners, plastic
intensity was 1.07 pounds of plastic per $100 in revenue in the
second quarter of 2022 as compared to 1.34 in the second quarter of
2021, following the intended trajectory
- Across all Grove Brands, plastic intensity was 0.87 pounds of
plastic per $100 in revenue in the second quarter of 2022 as
compared to 1.18 pounds in the second quarter of 2021, as Grove
Brands are designed for sustainability
Fiscal Second Quarter 2022 Operational
Highlights:
- Implemented four-pronged value creation plan, encompassing:
- Improved marketing efficiency
- Partnered with Drew Barrymore, Grove investor and first-ever
Global Brand and Sustainability Advocate, and launched first
multi-channel brand campaign, “Wish-cycling”, to build brand
awareness
- Began roll out of new marketing technology stack
- Omni-channel expansion
- Expanded retail footprint in the second quarter with entry into
three retail partners – Kohl’s, Giant Eagle, and Meijer – and more
than doubled product assortment at Target compared to the second
quarter last year
- Net revenue management
- Implemented net revenue management processes in all functions
and conducted analyses on pricing, maximizing category mix, and
enhancing promotional sell through
- Operating expense discipline
- Initiated full vendor audit, evaluating ways to reduce fixed
expenses such as real estate, and reduced hiring plans for the
balance of 2022 and 2023
- Completed business combination with Virgin Group Acquisition
Corp. II and began trading on the New York Stock Exchange
- Strengthened leadership team with the appointment of Sergio
Cervantes as Chief Financial Officer
- Enhanced Board of Directors with the addition of Virgin Group
Investment Director Rayhan Arif, former eBay Chief Strategy Officer
Kristine Miller, and GitHub Chief of Staff Naytri Shroff
Sramek
- Published annual Plastic Scorecard and sustainability report,
which can be found at grove.co/plasticscorecard and
grove.co/sustainabilityreport2021
Subsequent Events:
On July 18, 2022, Grove entered into a Standby Equity Purchase
Agreement (the “Purchase Agreement”) with an affiliate of Yorkville
Advisors Global, LP (“Yorkville”), enabling the Company to sell up
to $100 million of shares of Class A common stock to Yorkville at
Grove’s request during the 36 months following the execution of the
Purchase Agreement, subject to certain conditions. As of August 11,
2022, the conditions precedent allowing the Company to sell shares
under the Purchase Agreement have not yet been met.
Financial Outlook:
“We believe that the performance of the DTC business will
solidify in the second half of 2022 on the back of more efficient
advertising spend and higher average order value for existing
customers. Additionally, our guidance reflects the implementation
of our value creation plan, which will result in significant
improvement in profitability in the back half of the year as
compared to the front half,” said Sergio Cervantes, Chief Financial
Officer.
Based on performance to date and current expectations, Grove is
raising guidance as follows:
For the 12-month period ending December 31, 2022, we expect:
- Net revenue of $302.5 to $312.5 million, up from $300 to $310
million previously
- Adjusted EBITDA margin(1) of (27.5)% to (30.5)%, up from (29)%
to (32)% previously
(1)
Adjusted EBITDA margin is a non-GAAP
financial measure. See “Non-GAAP Financial Measures” for additional
information.
Conference Call
Information:
The Company will host a conference call to discuss second
quarter 2022 financial results and other business updates today,
August 11, 2022, at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific
Time. The conference call will be available via live audio webcast
on the Company’s investor relations website at investors.grove.co.
To participate via telephone, interested parties may dial (888)
428-7458, or (404) 267-0368 if calling internationally. A replay of
the call will be available until September 9, 2022 and can be
accessed by dialing (877) 660-6853 or (201) 612-7415, access code:
13731824. The webcast will also be available on Grove’s investor
relations website for 90 days following the conference call.
About Grove Collaborative Holdings,
Inc.
Launched in 2016 as a Certified B Corp, Grove Collaborative
Holdings, Inc. (NYSE: GROV) is transforming consumer products into
a positive force for human and environmental good. Driven by the
belief that sustainability is the only future, Grove creates and
curates more than 150 high-performing eco-friendly brands of
household cleaning, personal care, laundry, clean beauty, baby and
pet care products serving millions of households across the U.S.
each year. With a flexible monthly delivery model and access to
knowledgeable Grove Guides, Grove makes it easy for everyone to
build sustainable routines.
Every product Grove offers — from its flagship brand of
sustainably powerful home care essentials, Grove Co., plastic-free,
vegan personal care line, Peach Not Plastic, and zero-waste pet
care brand, Good Fur, to its exceptional third-party brands — has
been thoroughly vetted against Grove’s strict standards to be
beautifully effective, supportive of healthy habits, ethically
produced and cruelty-free. Grove is a public benefit corporation on
a mission to move Beyond Plastic™ and in 2021, entered physical
retail for the first time at Target stores nationwide, making
sustainable home care products even more accessible. Grove is the
first plastic neutral retailer in the world and is committed to
being 100% plastic-free by 2025.
For more information, visit www.grove.com.
Caution Concerning Forward-Looking
Statements
This press release contains "forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include, but are not limited to, statements
about the acceleration of the DTC business in the second half of
2022, the efficiency of our advertising spend, the anticipated
increase in the average order volume of our DTC business, and our
or our management team’s expectations, hopes, beliefs, intentions,
plans, prospects or strategies regarding the future, including
revenue growth and financial performance, profitability, product
expansion and services. Any statements contained herein that are
not statements of historical fact may be deemed to be
forward-looking statements. In addition, any statements that refer
to projections, forecasts or other characterizations of future
events or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. The forward-looking
statements contained in this press release are based on our current
expectations and beliefs made by our management in light of their
experience and their perception of historical trends, current
conditions and expected future developments and their potential
effects on the Company as well as other factors they believe are
appropriate in the circumstances. There can be no assurance that
future developments affecting the Company will be those that we
have anticipated. These forward-looking statements involve a number
of risks, uncertainties (some of which are beyond our control) or
other assumptions that may cause actual results or performance to
be materially different from those expressed or implied by these
forward-looking statements, including changes in domestic and
foreign business, market, financial, political and legal
conditions; risks relating to the uncertainty of the projected
financial information with respect to Grove; Grove’s ability to
successfully expand its business; competition; the uncertain
effects of the COVID-19 pandemic; risks relating to growing
inflation and rising interest rates; and those factors discussed in
documents of Grove filed, or to be filed, with the U.S. Securities
and Exchange Commission (the “SEC”). Should one or more of these
risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking statements.
All forward-looking statements in this press release are made as of
the date hereof, based on information available to Grove as of the
date hereof, and Grove assumes no obligation to update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
Non-GAAP Financial
Measures
Some of the financial information and data contained in this
press release, such as adjusted EBITDA and adjusted EBITDA margin,
have not been prepared in accordance with United States generally
accepted accounting principles (“GAAP”). These non-GAAP measures,
and other measures that are calculated using such non-GAAP
measures, are an addition to, and not a substitute for or superior
to, measures of financial performance prepared in accordance with
GAAP and should not be considered as an alternative to revenue,
operating income, profit before tax, net income or any other
performance measures derived in accordance with GAAP. A
reconciliation of historical adjusted EBITDA to Net Income is
provided in the tables at the end of this press release. The
reconciliation of projected adjusted EBITDA and adjusted EBITDA
Margin to the closest corresponding GAAP measure is not available
without unreasonable efforts on a forward-looking basis due to the
high variability, complexity, and low visibility with respect to
the charges excluded from these non-GAAP measures, such as the
impact of depreciation and amortization of fixed assets,
amortization of internal use software, the effects of net interest
expense (income), other expense (income), and non-cash stock based
compensation expense. Grove believes these non-GAAP measures of
financial results, including on a forward-looking basis, provide
useful information to management and investors regarding certain
financial and business trends relating to Grove’s financial
condition and results of operations. Grove’s management uses these
non-GAAP measures for trend analyses and for budgeting and planning
purposes. Grove believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in
evaluating projected operating results and trends in and in
comparing Grove’s financial measures with other similar companies,
many of which present similar non-GAAP financial measures to
investors. Management of Grove does not consider these non-GAAP
measures in isolation or as an alternative to financial measures
determined in accordance with GAAP. However, there are a number of
limitations related to the use of these non-GAAP measures and their
nearest GAAP equivalents. For example, other companies may
calculate non-GAAP measures differently, or may use other measures
to calculate their financial performance, and therefore Grove’s
non-GAAP measures may not be directly comparable to similarly
titled measures of other companies.
We calculate adjusted EBITDA as net loss, adjusted to exclude:
(1) stock-based compensation expense; (2) depreciation and
amortization; (3) remeasurement of convertible preferred stock
warrant liability; (4) changes in fair values of Additional Shares,
Earn-out Shares and Public and Private Placement Warrant
liabilities; (5) transaction costs allocated to derivative
liabilities upon Business Combination; (6) interest expense; (7)
provision for income taxes, (8) restructuring expenses and (9) loss
on extinguishment on debt. We define Adjusted EBITDA Margin as
Adjusted EBITDA divided by revenue.
Grove Collaborative Holdings,
Inc. Condensed Consolidated Balance Sheets (In thousands)
June 30, 2022
December 31,
2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
132,393
$
78,376
Inventory, net
53,494
54,453
Prepaid expenses and other
current assets
7,491
8,104
Total current assets
193,378
140,933
Property and equipment, net
15,831
15,932
Operating lease right-of-use assets
19,581
21,214
Other long-term assets
1,249
4,394
Total assets
$
230,039
$
182,473
Liabilities, Convertible Preferred
Stock and Stockholders’ Deficit
Current liabilities:
Accounts payable
$
17,714
$
21,346
Accrued expenses
40,830
20,651
Deferred revenue
12,575
11,267
Operating lease liabilities,
current
3,788
3,550
Other current liabilities
854
1,650
Debt, current
22,708
10,750
Total current liabilities
98,469
69,214
Debt, noncurrent
43,694
56,183
Operating lease liabilities,
noncurrent
18,106
20,029
Derivative liabilities
76,686
—
Other long-term liabilities
1,562
5,408
Total liabilities
238,517
150,834
Commitments and contingencies
Convertible preferred stock
—
487,918
Stockholders’ deficit:
Common stock
16
1
Additional paid-in capital
564,343
33,863
Accumulated deficit
(572,837
)
(490,143
)
Total stockholders’ deficit
(8,478
)
(456,279
)
Total liabilities, convertible preferred
stock and stockholders’ deficit
$
230,039
$
182,473
Grove Collaborative Holdings,
Inc. Condensed Consolidated Statements of Operations (In thousands,
except share and per share amounts) (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021 (As Restated)
2022
2021 (As Restated)
Revenue, net
$
79,279
$
99,023
169,758
201,243
Cost of goods sold
40,322
49,957
88,064
99,985
Gross profit
38,957
49,066
81,694
101,258
Operating expenses:
Advertising
17,898
22,516
50,691
58,152
Product development
5,922
5,688
12,162
10,850
Selling, general and
administrative
57,895
46,971
108,865
94,509
Operating loss
(42,758
)
(26,109
)
(90,024
)
(62,253
)
Interest expense
2,285
1,096
4,372
2,059
Loss on extinguishment on debt
—
1,027
—
1,027
Change in fair value of Additional Shares
liability
2,015
—
2,015
—
Change in fair value of Earn-Out
liability
(17,345
)
—
(17,345
)
—
Change in fair value of Public and Private
Placement Warrants liability
(1,180
)
—
(1,180
)
—
Other expense, net
6,775
268
4,783
1,044
Interest and other expense
(income), net
(7,450
)
2,391
(7,355
)
4,130
Loss before provision for income taxes
(35,308
)
(28,500
)
(82,669
)
(66,383
)
Provision for income taxes
2
16
25
28
Net loss
$
(35,310
)
$
(28,516
)
$
(82,694
)
$
(66,411
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(1.06
)
$
(3.38
)
$
(3.86
)
$
(8.17
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
33,384,292
8,446,353
21,419,222
8,125,747
Grove Collaborative Holdings,
Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six Months Ended June
30,
2022
2021
Cash Flows from Operating
Activities
Net loss
$
(82,694
)
$
(66,411
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Remeasurement of convertible
preferred stock warrant liability
(1,616
)
1,308
Stock-based compensation
24,534
7,269
Depreciation and
amortization
2,864
2,337
Changes in fair value of
derivative liabilities
(16,510
)
—
Transaction costs allocated to
derivative liabilities upon Business Combination
6,673
—
Non-cash interest expense
312
313
Inventory reserve
1,693
1,719
Loss on extinguishment of
debt
—
1,027
Other non-cash expenses
139
387
Changes in operating assets and
liabilities:
Inventory
(734
)
(11,320
)
Prepaids and other assets
613
(3,059
)
Accounts payable
(3,495
)
(3,426
)
Accrued expenses
525
7,327
Deferred revenue
1,308
1,788
Operating lease right-of-use
assets and liabilities
(52
)
45
Other liabilities
302
(1,103
)
Net cash used in operating
activities
(66,138
)
(61,799
)
Cash Flows from Investing
Activities
Purchase of property and equipment
(2,610
)
(2,845
)
Net cash used in investing
activities
(2,610
)
(2,845
)
Cash Flows from Financing
Activities
Proceeds from issuance of
common stock upon Closing of Business Combination
97,100
—
Proceeds from issuance of
contingently redeemable convertible common stock
27,500
—
Payment of transaction costs
related to the Closing of the Business Combination and convertible
preferred stock issuance costs
(1,267
)
(340
)
Proceeds from the issuance of
debt
—
25,000
Repayment of debt
(562
)
(21,165
)
Payment of debt
extinguishment
—
(2,499
)
Payment of debt issuance
costs
(211
)
(375
)
Proceeds from exercise of stock
options, net of withholding taxes paid related to common stock
issued to employees
237
525
Repurchase of common stock
(32
)
(297
)
Net cash provided by
financing activities
122,765
849
Net increase (decrease) in cash
and cash equivalents
54,017
(63,795
)
Cash and cash equivalents at
beginning of period
78,376
176,523
Cash and cash equivalents at
end of period
$
132,393
$
112,728
Grove Collaborative Holdings,
Inc. Non-GAAP Financial Measures (Unaudited) (In thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Reconciliation of Net Loss to Adjusted
EBITDA
Net loss
$
(35,310
)
$
(28,516
)
$
(82,694
)
$
(66,411
)
Stock-based compensation
20,074
3,809
24,534
7,269
Depreciation and amortization
1,454
1,209
2,864
2,337
Remeasurement of convertible preferred
stock warrant liability
270
376
(1,616
)
1,308
Change in fair value of Additional Shares
liability
2,015
—
2,015
—
Change in fair value of Earn-Out
liability
(17,345
)
—
(17,345
)
—
Change in fair value of Public and Private
Placement Warrants liability
(1,180
)
—
(1,180
)
—
Transaction costs allocated to derivative
liabilities upon Business Combination
6,673
—
6,673
—
Interest expense
2,285
1,096
4,372
2,059
Restructuring expenses
—
—
1,636
—
Loss on extinguishment on debt
—
1,027
—
1,027
Provision for income taxes
2
16
25
28
Total Adjusted EBITDA
$
(21,062
)
$
(20,983
)
$
(60,716
)
$
(52,383
)
Net loss margin
(44.5
) %
(28.8
) %
(48.7
) %
(33.0
) %
Adjusted EBITDA margin
(26.6
) %
(21.2
) %
(35.8
) %
(26.0
) %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220811005115/en/
Investor Relations Contact: Alexis
Tessier ir@grove.co
Media Relations Contact: Meika
Hollender meika@grove.co
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