Grove (GROV) Q2 2026 Earnings Call Transcript

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DATE

Thursday, Aug. 6, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer - Jeff Yurcisin
• Chief Financial Officer - Tom Siragusa

TAKEAWAYS

• Net Revenue -- $36.6 million, representing a 16.9% decrease versus last year but a 1% increase sequentially from the first quarter.
• Adjusted EBITDA -- $500,000, or a 1.3% margin, marking the third consecutive quarter of positive adjusted EBITDA for the company.
• Net Loss -- $900,000, or a 2.5% net loss margin, which represents an improvement from the $3.6 million net loss reported in the prior year.
• DTC Total Orders -- 489,000, a 23.6% decline versus last year driven by a smaller active customer base and previous platform disruptions.
• DTC Active Customers -- 509,000 as of June 30, 2026, down 23.3% versus the prior year reflecting reduced advertising investment and customer attrition.
• DTC Net Revenue per Order -- $69.19, an increase of 6.1% versus last year reflecting a higher mix of higher-priced items and category expansion.
• Gross Margin -- 53.6%, a decrease of 190 basis points from 55.4% in the second quarter of 2025 due to one-time inventory disposals.
• Advertising Spend -- $1.2 million, a 54.6% decrease versus last year as the company prioritized profitability over rapid acquisition.
• Operating Expenses -- $20.4 million, a 27% decrease versus last year reflecting structural headcount reductions and lower fulfillment costs.
• Operating Cash Flow -- $1.3 million, driven by working capital reductions including a decrease in inventory levels.
• Cash and Cash Equivalents -- $11.4 million as of June 30, 2026, an increase from $10.4 million at the end of the first quarter.
• Full Year 2026 Net Revenue Guidance -- $142.5 million to $152.5 million, reaffirmed by management based on projected sequential growth.
• Full Year 2026 Adjusted EBITDA Guidance -- Breakeven to positive low single digit millions, maintained for the fiscal year.
• SG&A Expense -- $17.6 million, a 23.2% decrease versus last year following personnel cost structure improvements and lower fulfillment rates.
• Product Development Expense -- $1.5 million, down 31.4% versus last year as resources shifted from owned brand innovation toward core technology.
• Plastic Intensity -- 0.84 pounds per $100 of net revenue, improving from 0.93 pounds in the second quarter of 2025.
• Inventory -- $19.5 million as of June 30, 2026, compared to $18.4 million at the end of 2025.
• Noncurrent Debt -- $7.5 million as of June 30, 2026, up from $6.7 million at the end of the previous fiscal year.
• Plastic Collection -- 18.7 million pounds of nature-bound plastic collected through Repurpose Global since the program's inception in 2020.

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RISKS

• Siragusa stated, "These declines reflect the lagging effects of reduced advertising investment and customer attrition tied to the eCommerce platform disruptions, experienced throughout 2025," explaining the year-over-year decrease in active customers and orders.

SUMMARY

Management of Grove Collaborative Holdings, Inc. (NYSE:GROV) reported sequential revenue growth for the first time since the company's recent restructuring began, noting the completion of major technology migrations. The company reaffirmed its full-year outlook, focusing on shifting toward human health standards and expanding product selection through drop-ship capabilities. Operational improvements included reduced shipping costs and increased revenue per order through category expansion into higher-priced items.

• CEO Yurcisin noted that 90% of surveyed customers "trust Grove more than Amazon and mass retailers to sell safe and healthy products."
• Management launched drop-ship capabilities with two brands, planning to expand into larger format categories such as mattresses and air purification systems.
• The company introduced an updated subscription experience in the second quarter, which currently represents more than 80% of total customer orders.
• CEO Yurcisin confirmed the search for a new Chief Financial Officer is underway following Siragusa's departure scheduled for Aug. 16, 2026.
• Management plans to shift toward "upper funnel investments" in advertising to build broader brand awareness throughout the remainder of the year.
• Yurcisin highlighted the focus on human health standards, stating that the company screens products against "thousands of banned ingredients," which he described as the most stringent standard in the industry.

INDUSTRY GLOSSARY

• DTC: Direct-to-Consumer, a retail model where a company sells products directly to customers without third-party retailers.
• Adjusted EBITDA: A non-GAAP financial measure that excludes certain items like stock-based compensation, depreciation, and interest to assess operating performance.
• Plastic Intensity: A metric measuring pounds of plastic used per $100 of net revenue to track the decoupling of revenue from plastic use.
• Drop-ship: A fulfillment method where a company sells products and has them shipped directly from the vendor to the customer, avoiding inventory ownership costs.
• Net Revenue per Order: The average dollar amount generated from a single customer order after accounting for discounts and returns.

Full Conference Call Transcript

Operator: Good afternoon. Thank you for standing by. Welcome to Growth Collaborative Holdings Inc. Second Quarter 26 Earnings Conference Call. At this time, all lines have been placed on listen-only mode to prevent any background noise. Following the speakers' remarks, we will open up your lines for questions. As a reminder, this conference call is being recorded. Hosting today's call are Grove's CEO, Jeff Yurcisin and CFO, Tom Siragusa.

Some of the statements made today about future prospects financial results, business strategies, industry trends and Grove's ability to successfully respond to business risks may be considered forward looking, including statements relating to moving to customer first innovation, expansion of drop ship capabilities, the focus on sales through Amazon in the second half of this year, the ability for its liquidity position to fund its 26 plan, plans to take a full funnel approach to customer acquisition, the expectation that it will grow advertising spending in future quarters, the impact of customer experience improvements, the impact of an improved subscription experience, sequential net revenue improvement in each remaining quarter in 2026 and guidance for 2026 including guidance related to revenue adjusted EBITDA.

Such statements are based on current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including those risks discussed in Grove's filings with the Securities and Exchange Commission. All of these statements are based on Grove's views today 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. During today's call, Grove will also discuss certain non GAAP financial measures, which adjust GAAP results to eliminate the impact of certain items.

You will find additional information regarding these non GAAP financial measures and a reconciliation of these non GAAP items to the most directly comparable GAAP financial measures in Grove's earnings release, which is also available on Grove's Investor Relations website. I would now like to turn the call over to Jeff Yurcisin to begin.

Jeff Yurcisin: Thank you, operator, and thank you all for joining us. Last quarter, we told you we expected the first quarter to represent the revenue trough for the year. This quarter's results came in as we expected. Net revenue grew 1% sequentially to $36.6 million Adjusted EBITDA was $500 thousand, our third consecutive quarter of positive adjusted EBITDA. And operating cash flow was positive $1.3 million proving that we are delivering on the plan we set out at the beginning of the year. We saw progress across many elements of the business last quarter.

Net revenue per order grew 6% year over year, We launched an updated subscription experience that enhances the customer journey and reordering essentials, and we continue to drive structural improvements to our unit economics. Including efficiencies from our updated outbound shipping strategy, which improved our outbound shipping costs in the second quarter. That progress is happening against the backdrop of a much larger opportunity. The 57 million conscientious consumers we serve are not just choosing a lifestyle, They are making a health decision every time they choose what comes into their home including what they put in their bodies. A dish soap, a lotion, a cleaning spray with synthetic chemicals, or microplastics. Is a small exposure on its own.

A vitamin or supplement with unverified sourcing carries the same kind of risk. that is the problem Grove exists to solve. And it is why we hold the products we carry across home personal care, vitamins, minerals, supplements as a few examples, to a higher bar including thousands of banned ingredients. The most stringent standard we know of in the industry. As we deepen our customer experience and continue to expand our focus on human health, that standard is what guides every decision we make. We are making progress toward translating the opportunity into durable, profitable growth. The durable business model is built on trust. And that trust is validated in a recent growth survey from February 2026.

Of approximately 1 thousand growth customers, showing that 9 out of 10 trust Grove more than Amazon and mass retailers to sell safe and healthy products. Which I believe is the most important data point to support our moat as the trusted destination for conscientious consumers. As we have done throughout this transformation, we are organizing our progress around the same 4 strategic pillars, and I want to walk through each of them. Starting with sustainable profitability. We delivered adjusted EBITDA of $500 thousand in the second quarter or a 1.3% margin, our third consecutive quarter of positive adjusted EBITDA.

Operating expenses were down 27% year over year, reflecting the structural headcount reductions we described last quarter and the lower shipping costs from our updated carrier strategy. We remain disciplined on expenses as we continue our transformation and balance top and bottom line performance. The next pillar is balance sheet strength. We ended the quarter with $11.4 million in cash equivalents and restricted cash, up from $10.4 million at the end of the first quarter. Operating cash flow was positive $1.3 million reflecting a decrease in inventory along with non cash items more than offsetting our net loss for the quarter.

The discipline we have applied across the business is what is made it possible to manage this transformation over the last several quarters. We are comfortable with our liquidity position to fund the plan we have laid out this year. The third pillar is revenue growth. Net revenue of $36.6 million was down 16.9% year over year, but up 1% quarter over quarter. DTC revenue declined slightly quarter over quarter, while total net revenue grew, driven by growth in our non-DTC channels including Amazon and QVC. We are also seeing continued progress growing DTC net revenue per order built on the category expansion work we have done over the past 3 years.

Expanding a bit more on category expansion, we recently launched drop ship capabilities. This lets us further expand selection into new categories without the inventory ownership cost of traditional vendor relationships, an important lever as we broaden assortment while maintaining balance sheet discipline. We launched with 2 brands this past week, but plan to expand into larger format categories including mattresses and air filtration and water purification systems. Natural extensions of our platform that help customers make healthier choices throughout their home. We will share more detail on the pace and scope of this expansion in future quarters.

In addition, our revenue is stabilizing as we move further past last year's commerce platform migration and the pullback in advertising investment we made in prior years. As we accelerate that investment, we are holding a high bar on payback periods. Earning growth through an improved customer experience that drives repeat orders. We continued to invest with discipline through the second quarter. As the customer experience improvements strengthen retention and unit economics we are planning to take a more full funnel approach to acquisition. Not just performance channels, but upper funnel investments that build broader brand awareness. We expect disciplined increases through the rest of the year as these improvements support new customer acquisition.

Next, as promised last quarter, we delivered a meaningfully improved subscription experience during the second quarter. Subscriptions are core to our business. Present in more than 80% of orders. Unlike subscription models built around a single item, hours lets customers build and adjust their entire basket of household essentials, delivered on a cadence that works for them, not 7 separate packages. But 1 seamless shopping experience for the products their home and family needs. We believe this experience will be a meaningful driver of retention and loyalty going forward. Lastly, we continue to build out our presence in other online channels like Amazon. Expanding our own brand business without cannibalizing our DTC platform.

We believe there is a substantial addressable market of Amazon shoppers looking for the same kind of curated trustworthy brands like our Grove brand, and we have seen other mission driven brands build meaningful scale on the platform. Which reinforces our conviction. it is still early, and we are watching closely to make sure this is additive to the business. This is 1 of the areas we will be leaning into as part of our second half strategy, and we will share more as it develops. Our fourth and final pillar is human and environmental health. You may have noticed that we flipped the order of human and environmental health because we are continuing to focus more on human health.

At Grove, our mission has always been to create and curate products for healthier homes and a healthier planet. And we are leaning further into the human at the center of that promise. Because human and environmental health are inseparable, The same ingredients that burden the planet also too often end up in our homes and in our bodies. That conviction drives a strict curation protocol. Every product we carry is screened against a higher bar. Thousands of banned ingredients spanning hormone disruptors, microplastics, respiratory irritants, skin, and allergy triggers, and hidden contaminants. It is the most stringent standard we know of in the industry. Consumers are moving in the same direction.

A recent survey of 1 thousand people indicated that 90% of consumers say they are concerned about microplastics. And 86% are ready for action, especially from companies. You will see growth more and more focused on enabling customers to build a healthier home for the people they love. During the quarter, we also released our 2025 annual sustainability report. Advancing our leadership in plastic reduction and human health standards. A few data points from the report. First, 2025 marked a new company low plastic intensity score of 0.9 pounds per $100 of net revenue.

And since 2020, growth has surpassed 18.7 million pounds of nature bound plastic collected through Repurpose Global, while customers purchasing plastic reducing products have helped avoid over 8.5 million pounds of plastic to date. Together, these 4 pillars remain our guiding principles, and they are building the foundation for growth's next chapter. Durable, profitable growth. Finally, I want to acknowledge Tom's transition. As we briefly disclosed, Tom will be leaving Grove on August 16, to pursue a new opportunity. Tom has been instrumental to the progress we have discussed today. Including our expense and balance sheet discipline in recent quarters, that is positioned us for long term growth. We are grateful for his contributions and wish him well.

Our search for his successor is underway, and we will provide updates as appropriate. I will turn it over to Tom to review our financial results for the second quarter in more detail.

Tom Siragusa: Thank you, Jeff, and welcome, everyone. Before jumping into the results, I want to say a word on my own transition. Serving as Grove's CFO through this stretch of the company's history, has been 1 of the privileges of my career thus far. I am grateful to Jeff and the board for the trust they have placed in me and to this team for the work we have done together to put Grove on a stronger financial footing. Now turning to the results. Our results this quarter are consistent with the outlook we provided last quarter. We grew revenue sequentially. We continue to see improvements in unit economics.

Our cost structure remained lean following the changes we have made over the past several quarters. And the team executed against the road map we have laid out at the start of the year. Starting at the top line, net revenue for the second quarter was $36.6 million, down 16.9% year over year. But an increase of 1% quarter over quarter. The year over year decline was primarily driven by a smaller active customer base entering the year, reflecting the compounding effects of lower advertising investment. Consistent with the strategy to prioritize profitability and customer experience improvements before reaccelerating growth. And customer attrition tied to the eCommerce platform disruptions experienced throughout 2025.

Partially offset by an increase in DTC net revenue per order. Sequential increase was driven by growth from non-DTC channels partially offset by a slight decline in DTC revenue. DTC total orders were 489 thousand a decline of 23.6% year over year. Active customers totaled 509 thousand at quarter end, down 23.3% versus the prior year. These declines reflect the lagging effects of reduced advertising investment and customer attrition tied to the eCommerce platform disruptions, experienced throughout 2025. DTC net revenue per order was $69.19, an increase of 6.1% year over year.

The improvement was driven primarily by a larger mix of higher priced items and customer orders reflecting our continued category expansion, as well as greater efficiency and promotional spend following the launch of our new loyalty program, Grow Green Rewards, launched in the fourth quarter of 2025. The year over year comparison also benefited from a prior year test that temporarily increased the volume of smaller value orders which did not reoccur in the second quarter of 2026. Gross margin was 53.6%, a decrease of 190 basis points compared to 55.4% in the second quarter of 2025.

The decrease was primarily driven by 1 time disposals in the quarter, as well as the sell through of previously reserved inventory in the prior year that did not reoccur. These decreases were partially offset by a more targeted promotional strategy enabled in part by Green Rewards. Turning to advertising. We invested $1.2 million in the quarter. A 54.6% decrease year over year, but a slight increase compared to the first quarter, increasing advertising spend from 3.2% of revenue to 3.4%. With an enhanced ecommerce experience in place, we expect to grow our advertising investment with discipline in future quarters. Product development expense was $1.5 million, down 31.4% year over year reflecting lower personnel spend on owned brands settlement.

At present, we have been more selective in owned brand innovation, prioritizing resources, toward improving our core technology and customer experience. SG&A was $17.6 million, a 23.2% decrease versus the prior year. The decrease was driven by improvements to our personnel cost structure, lower fulfillment costs from fewer orders, and lower outbound shipping rates tied to our carrier change. As well as continued ongoing cost optimization across the organization. Net loss was $900 thousand or a 2.5% net loss margin compared to a net loss of $3.6 million or an 8.2% net loss margin in the prior year.

The year over year improvement reflects lower operating expenses from the structural changes we have made over the past several quarters, partially offset by lower revenue. Adjusted EBITDA was positive $500 thousand or a 1.3% margin compared to negative $900 thousand or a negative 2.1% margin in the prior year. The year over year improvements reflect lower operating expenses, consistent with the net loss improvement. This is our third consecutive quarter of positive adjusted EBITDA. Turning to the balance sheet and liquidity. We ended the quarter with $11.4 million in cash, cash equivalents and restricted cash. An increase from $10.4 million at the end of the first quarter.

Primarily reflecting cash generated from operating activities partially offset by higher capitalized expenditures as a result of continued investment in our eCommerce platform enhancements. Operating cash flow was positive 1.3 million reflecting working capital reduction in the quarter, primarily a decrease in inventory. Coupled with positive net income net of non cash expenses. This compares favorably to positive $1 million in the prior year period. Now turning to our outlook. The second quarter was in line with our expectations on both revenue and adjusted EBITDA. Therefore, we are reaffirming the top and bottom line guidance we raised during the first quarter.

Full year 2026, we continue to expect net revenue of $142.5 million to $152.5 million and adjusted EBITDA breakeven to positive low single digit millions. Furthermore, we still expect sequential revenue improvement in each remaining quarter in 2026. In closing, we are continuing to see progress on the top line while executing with financial discipline that we committed to at the start of the year. Protecting liquidity while laying the groundwork for the growth we expect to continue. The cost structure is more efficient, our unit economics are improving, and we are managing cash flow consistent with our liquidity. I am encouraged by where we stand and our ability to deliver on the plan we laid out for 2026.

With that, I will turn the call back over to Jeff for closing remarks.

Jeff Yurcisin: Thank you, Tom. 2 quarters into 2026, we are seeing our discipline translate into results. Sequential revenue growth, consecutive quarters of positive adjusted EBITDA, positive cash flow, and a customer experience that we have meaningfully reinvested in over the last several quarters, including category expansion, our loyalty program, the relaunched mobile application, and now an updated subscription experience we committed to delivering this quarter. At the same time, we are clear eyed that our revenue is still down year over year. And that reaccelerating it remains the work in front of us. it is where the customer experience improvements and advertising investment we have described today are aimed.

These improvements also give us a greater ability to reengage lapsed customers and invest in advertising to bring in new customers seeking a trusted curated destination for a healthier home. that is what gives me confidence in the path forward. Not just the progress we have made, but the fact that we are building towards something durable, the trusted destination for families, who care about what comes into their home. I want to thank all of you for your continued interest in Grove. We look forward to updating you on the progress next quarter. Thank you.

Operator: Will now be conducting a question and answer session. We have reached the end of the question and answer session. I would like to turn the floor back over to Jeff Yurcisin for closing comments.

Jeff Yurcisin: Thank you for joining us. Hope you have a great night.

Operator: Thank you.

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