Grove Collaborative (GROV) Earnings Transcript

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DATE

Thursday, March 5, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

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

TAKEAWAYS

• Revenue -- $42.4 million for the quarter, representing a 14.3% decrease year over year, mainly attributed to fewer orders resulting from reduced advertising and e-commerce platform migration effects.
• Adjusted EBITDA -- $1.6 million positive, marking the first positive quarter in six quarters, driven by cost controls and expense alignment.
• Operating Cash Flow -- Breakeven for the quarter, consistent with five of the last eight quarters, indicating disciplined cash management.
• Active Customers -- 599,000 at quarter-end, a 13% decline from the prior year, with churn linked to customer experience disruptions during the e-commerce migration.
• DTC Total Orders -- 539,000 during the quarter, down 25% year over year, reflecting headwinds from lower acquisition and repeat purchases.
• DTC Net Revenue Per Order -- $69.50, rising 4.1% year over year due to improved promotional targeting and a shift toward higher-priced items.
• Gross Margin -- 53%, an increase of 60 basis points from 52.4%, primarily from lower promotional activity.
• Advertising Expense -- $1.0 million, a 65.2% reduction year over year as the company scaled back spend for liquidity and profitability.
• Product Development Expense -- $1.9 million, 59.2% lower year over year following technology cost optimization and lower amortization.
• SG&A Expense -- $21.2 million, down 20.8% from the prior year, reflecting reduced fulfillment, cost optimization, and the impact of a fourth-quarter reduction in force.
• Net Loss -- $1.6 million for the quarter, narrowing from a $12.6 million loss in the prior year period.
• Quarter-End Cash Balance -- $11.8 million in cash, cash equivalents, and restricted cash, compared to $12.3 million at the previous quarter-end.
• 2026 Revenue Guidance -- Full-year net revenue is expected in the $140 million to $150 million range, with adjusted EBITDA projected at approximately breakeven.
• Loyalty Program Launch -- Grove Green Rewards began in the fourth quarter, designed to drive customer engagement and repeat transactions through differentiated benefits and points-based promotions.
• Mobile App Relaunch -- February saw the debut of a rebuilt mobile app to address prior customer experience disruptions and restore lost functionality.
• Subscription Metrics -- Subscription units accounted for 60% of revenue, and orders with subscriptions comprised 79% of total orders during the year.
• Ingredient Standards Expansion -- Over 10,000 ingredients now banned or restricted across all categories, including more than 3,000 outright bans, positioning the company for stricter curation than competitors.
• Reduction in Force Savings -- The November workforce reduction is expected to result in $5 million of annualized expense savings going forward.

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RISKS

• "we saw more churn in 2025 than we originally expected," directly attributed to e-commerce platform disruptions impacting the mobile app, subscriptions, and VIP program.
• Fourth-quarter revenue and customer orders both declined materially, with DTC orders down 25% and active customers declining 13% year over year.
• Management noted customer base declines set a lower starting point for 2026, with the expectation that 2026 will be a year focused on rebuilding momentum.

SUMMARY

Management delivered positive adjusted EBITDA and breakeven operating cash flow despite notable revenue and customer base declines attributed to e-commerce platform migration challenges. New strategic initiatives, including the Grove Green Rewards loyalty program, an overhauled mobile app, and planned subscription enhancements, are positioned as foundational for restoring engagement and stabilizing the business. The company projects sequential revenue growth after a first-quarter trough, expecting full-year 2026 net revenue between $140 million and $150 million and breakeven adjusted EBITDA.

• The company intends to increase advertising investment as customer experience improvements support higher retention and better marketing paybacks.
• Expansion into drop-ship capabilities is planned to support higher average order value categories and broaden the product assortment within stringent ingredient standards.
• Management continues to evaluate strategic alternatives, including possible acquisitions, divestitures, or partnerships, with all decisions anchored in the stated mission and financial discipline.

INDUSTRY GLOSSARY

• DTC: Direct-to-consumer; the company’s own online sales channel, distinct from third-party retail or wholesale.
• VIP Program: Grove’s premium customer subscription service offering enhanced benefits.
• QVC: Quality Value Convenience, a televised and digital home shopping network channel referenced as a complementary sales avenue.
• SKU: Stock keeping unit; a unique identifier for each distinct product sold.

Full Conference Call Transcript

Hosting today's call are Grove Collaborative Holdings, Inc.’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 Collaborative Holdings, Inc.’s ability to successfully respond to business risks may be considered forward-looking, including statements relating to reactivation of lapsed customers, future increases in advertising spend, stabilization of our e-commerce platform, sequential revenue growth throughout the year while maintaining profitability discipline, increased capacity to execute additional growth initiatives, savings from reduction in force, improved subscription experience, future increases in product development, guidance for 2026 including guidance related to revenue and adjusted EBITDA, net revenue reaching a low point in 2026, seasonality and advertising investment in 2026, sequential improvement in revenue, and acceleration of advertising investment.

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 Collaborative Holdings, Inc.’s filings with the Securities and Exchange Commission. All of these statements are based on Grove Collaborative Holdings, Inc.’s views today, and Grove Collaborative Holdings, Inc. 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 Collaborative Holdings, Inc. will also discuss certain non-GAAP financial measures that adjust GAAP results to eliminate the impact of certain items.

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

Jeff Yurcisin: Thank you, operator. Thank you to everyone joining us. I want to start with the financial headline. We delivered on our revised full year 2025 revenue and adjusted EBITDA guidance, and we returned to positive adjusted EBITDA in the fourth quarter. This was our first positive adjusted EBITDA quarter in the last six quarters, and the result reflects a deliberate choice to prioritize liquidity and adjusted EBITDA profitability while we work through customer experience disruptions tied to our e-commerce platform migration. Stepping back, Grove Collaborative Holdings, Inc.’s focus remains the same: driving long-term shareholder value by building a stronger, more resilient business—one that can deliver sustainable growth and consistent profitability over time.

Our mission is also unchanged: to be the leading destination for clean, sustainable, non-toxic products for every room in the home. To earn that position in a market dominated by scaled digital platforms, we have to win where it matters by delivering a customer experience that is meaningfully differentiated, with unit economics that support profitable growth. That starts with execution in the near term. Today’s consumer is navigating a fragmented, often confusing marketplace crowded with options, inconsistent standards, and marketing claims that are hard to verify.

I have higher conviction than ever that Grove Collaborative Holdings, Inc. is positioned to capitalize on this consumer problem by building a platform of curated and highly vetted products, leading with transparency, and making it easier for customers to align everyday purchases with their values without sacrificing efficacy. For the conscientious 57 million consumers who care about ingredients, performance, and sustainability, shopping can feel like a trade-off between convenience and trust. We believe Grove Collaborative Holdings, Inc. is uniquely positioned to simplify that decision. We curate and vet products to a higher standard, we lead with transparency, and we make it easier for customers to align everyday purchases with their values without sacrificing efficacy.

That positioning matters because it is not just a brand promise—it is a business model that we believe can drive durable unit economics over time. When customers trust the curation and feel confident in the experience, we earn repeat behavior. When we earn repeat behavior, we can invest more efficiently and scale more profitably. However, 2025 was a challenging year, and a meaningful part of that came from our e-commerce platform migration early in the year. While the migration was strategically important, the transition created real friction in the customer experience, most notably across the mobile app, subscriptions, and our VIP program. When those areas did not perform consistently, we saw more churn in 2025 than we originally expected.

That was particularly disappointing because we entered 2025 with real momentum. We had delivered our first quarter of sequential revenue growth in Q4 2024 and our first full year of positive adjusted EBITDA. The migration issues interrupted that progress. We ended 2025 with 599,000 active customers, down 13% from 689,000 at the end of 2024. That ending customer base is the starting point for our 2026 revenue expectations. Importantly, we do not view the customers who churned as gone forever. As we continue to stabilize our e-commerce platform and restore reliability in the customer experience, we believe we have an opportunity to reactivate a meaningful portion of them over time.

But first, we need to build the best possible shopping experience for clean, sustainable products that arrive regularly in one’s home. That is what 2026 is for us: a year of rebuilding that momentum. We are encouraged by the direction because we now have clarity on the root e-commerce platform issues, and we are making tangible progress fixing them. As those fixes take hold, we expect to stabilize active customers, reactivate lapsed ones, and measurably increase advertising spend to acquire new customers.

We expect to deliver sequential revenue growth through the year while maintaining profitability discipline, and as the core experience stabilizes, we will also have more capacity to execute additional growth initiatives, which I am looking forward to highlighting in future quarters. As we execute that plan, we are staying anchored to the same four key pillars we have discussed throughout the year: balance sheet strength, sustainable profitability, revenue growth, and environmental and human health. These pillars continue to represent the framework that keeps us focused as we are still rebuilding parts of the customer experience. Starting with balance sheet strength and profitability, in the fourth quarter we delivered $1.6 million of positive adjusted EBITDA.

It reinforces our commitment to navigate this transformation responsibly, protecting liquidity, managing profitability, and scaling advertising spend only when the customer experience is stable and paybacks justify it. We also delivered breakeven operating cash flow in the quarter. This is the fifth quarter in the last eight where we have achieved at least breakeven or positive operating cash flow. That consistency matters. It underscores our focus on disciplined execution and building a more durable operating model. Contributing to these results, we continued to align expenses to the current scale of the business. We executed a reduction in force in November that we expect to generate approximately $5 million of annualized savings.

This action was necessary to match our cost structure to the business today, improve operating leverage, and create capacity to invest as performance improves. On the revenue and customer side, we advanced several important initiatives to strengthen the experience and rebuild engagement. First, we launched our loyalty program, Grove Green Rewards, in the fourth quarter. The program is designed to deepen engagement, reward repeat behavior, and reinforce the value customers get from shopping Grove Collaborative Holdings, Inc. It includes a sign-up bonus, differentiated earn rates for VIP customers, and enhanced earning on subscriptions.

It also gives us multiple levers to run points-based promotions and exclusive VIP deals, and importantly, it allows us to incorporate rewards into new customer offers and reintroduce referral capabilities. Second, in February, we launched our redesigned mobile app, which is a key step toward stabilizing the mobile experience. We moved away from our prior third-party approach and rebuilt our own custom app. Mobile is too important to the customer experience to tolerate instability. This release restores much of the functionality and experience customers had prior to the migration. There is still work ahead to improve performance over the coming quarters, but this release represents a meaningful step forward in delivering a better customer experience.

Third, we are focused on strengthening our subscription experience, which is a core driver of retention and lifetime value, and an experience that was negatively impacted in the platform migration. In 2025, subscription units drove 60% of our revenue, and orders with subscriptions were 79% of total orders. By the time we report second quarter earnings, expect to meaningfully improve the subscription experience to customers who want a box of home essentials delivered on a regular basis to their home. Taken together, Grove Green Rewards, the redesigned mobile app, and our planned subscription improvements are foundational to our strategy this year.

They are designed to restore elements of the experience customers know and love, deepen engagement through loyalty, improve discovery and convenience, and help us deliver a more personalized and reliable experience that reinforces Grove Collaborative Holdings, Inc. as the destination for clean and sustainable essentials. Our fourth pillar is environmental and human health. In 2026, we expanded Grove Collaborative Holdings, Inc.’s ingredient standards to cover more than 10,000 banned or restricted ingredients, including more than 3,000 outright banned across every category we carry. To our knowledge, these are the most stringent standards and curated assortment that exists in this space.

These standards are also informed by leading EU frameworks and often go beyond baseline U.S. requirements through tighter limits and stricter exclusions. For customers, the benefit is straightforward: more confidence in what comes into their home. Strategically, it further differentiates Grove Collaborative Holdings, Inc. versus competitors that have shorter, less comprehensive lists, reinforcing our role as the trusted curator, not just the marketplace. Alongside our focus on core execution, as we have stated previously, we continue to evaluate strategic options to maximize shareholder value. These may include additional acquisitions or partnerships, divestitures, and other strategic options consistent with our mission and long-term vision.

Any action we take will be guided by the same principles that shape how we operate the business every day: customer focus, capital efficiency, and sustainable shareholder value creation. In closing, I am energized about 2026 because the work in front of us is clear and gives us a credible path to stabilizing the business and then reaccelerating responsibly, without sacrificing profitability discipline. Grove Collaborative Holdings, Inc. remains uniquely positioned to lead in human health and wellness by combining trusted standards with the convenience and economics of a modern digital platform. I will now turn the call over to Tom Siragusa for the financial results and our 2026 outlook.

Tom Siragusa: Thank you, Jeff, and welcome everyone. I will walk through our fourth quarter and full year financial results and then review our outlook for 2026. Starting at the top line, revenue for the fourth quarter was $42.4 million, down 14.3% year over year. The decline was primarily driven by fewer orders, reflecting reduced advertising investment and the lagging effects of disruptions from our e-commerce platform migration earlier in the year. That decline was partially offset by $2.9 million of QVC revenue driven by an increase in the Today’s Special Value program. QVC was an existing Acreage sales channel that Grove Collaborative Holdings, Inc. acquired as part of the Acreage acquisition in the first quarter.

For the full year, revenue was $173.7 million, within our revised guidance range. While revenue declined 14.6% year over year, we made deliberate trade-offs to protect liquidity and profitability while prioritizing fixes to the customer experience, and we ended the year with positive adjusted EBITDA in the fourth quarter. Turning to our operating metrics, DTC total orders were 539,000, a decline of 25% year over year, while active customers ended the quarter at 599,000, down 13% versus the prior year. These declines were driven primarily by headwinds related to the e-commerce migration and lower advertising spend relative to prior years, which reduced new acquisition and, in turn, repeat orders given the recurring nature of our business.

DTC net revenue per order was $69.50, an increase of 4.1% year over year. The increase was primarily driven by more targeted promotional strategies and a larger mix of higher-priced items in customer orders as we continue to expand our selection. Our gross margin was 53%, an increase of 60 basis points compared to 52.4% in 2024. The increase was primarily driven by lower promotional activity, partially offset by a nonrecurring benefit in the prior-year period related to the sell-through of previously reserved inventory. Turning to advertising, we invested $1.0 million in the quarter, a 65.2% decrease year over year.

This reduction reflects a strategic decision to preserve liquidity and drive profitability while we focus on optimizing the core experience through ongoing improvements across our web and app platforms. Product development expense was $1.9 million, down 59.2% year over year. This decline reflects our decision to streamline our technology organization as well as lower amortization costs following the e-commerce platform migration. In the near term, we have also been more selective in owned brand innovation, prioritizing resources toward stabilizing and improving our core technology and customer experience. As the platform work progresses, we expect to rebalance our investment in product development to support both innovation and growth initiatives aligned with our financial discipline.

SG&A expense was $21.2 million, a 20.8% decrease versus the prior year. The reduction was driven by lower fulfillment costs from fewer orders, ongoing cost optimization initiatives including the reduction in force executed in the fourth quarter, as well as reduced depreciation and amortization and lower stock-based compensation. Net loss was $1.6 million, or a 3.7% net loss margin, compared to a net loss of $12.6 million, or a 25.5% net loss margin, in the prior year. The year-over-year improvement reflects lower operating expenses and lower interest expense, as well as the absence of the non-cash loss on debt extinguishment related to the payoff of our term loan in 2024.

Adjusted EBITDA was $1.6 million, or a 3.7% margin, compared to negative $1.6 million, or a negative 3.3% margin, in the prior year. The year-over-year increase reflects structural cost reductions, including our reduction in force from November, and disciplined advertising investment. As Jeff mentioned, this is a return to positive adjusted EBITDA for the first time in six quarters, reaffirming our commitment to navigating our transformation with discipline. For the full year, net loss was $11.7 million, and adjusted EBITDA was negative $2.2 million, which is in line with our revised full year adjusted EBITDA guidance and reflects the trade-offs we made throughout the year as we navigated the migration and reset our cost structure.

Turning to the balance sheet and liquidity, we ended the quarter with $11.8 million in cash, cash equivalents, and restricted cash, down from $12.3 million at the end of the third quarter, primarily reflecting cash used in investing and financing activities. Operating cash flow was breakeven for the quarter, as non-cash items more than offset the net loss, while working capital was a modest use of cash. This is compared to a $0.3 million operating cash inflow in the prior year. Now turning to our outlook, for the full year 2026 we expect net revenue to be approximately $140 million to $150 million and adjusted EBITDA to be approximately breakeven.

Looking across the year, we expect Q1 to represent the trough in revenue for the year, reflecting seasonality and continued disciplined advertising investment. From that point, we expect sequential improvement as customer experience enhancements support customer retention and enable a measured reacceleration of customer acquisition investment throughout the year. In closing, our priorities for 2026 are clear: maintain financial discipline as we continue to optimize the customer experience. These actions are laying the foundation for a healthier, more efficient business that can return to profitable growth going forward. With that, I will turn the call back over to Jeff for closing remarks.

Jeff Yurcisin: Thank you, Tom. As we close out the year, I want to bring us back to what is most important. Grove Collaborative Holdings, Inc. is rebuilding for the long term, but we also have to deliver in the short term. Over the past year, we have done the really hard work: migrating to a modern platform, reshaping our cost base, and refocusing the organization on fixing the core customer experience. We now believe we are past the most disruptive phase of this migration. Our priorities for the next phase are clear. First, keep improving the experience, especially on mobile and subscriptions, so customers can reliably shop, subscribe, and reorder with confidence.

Second, operate with tight financial discipline, protecting liquidity and ensuring that investments meet our standards for payback and lifetime value. Third, as these improvements take hold, return to measured growth built on stronger unit economics and a more efficient cost structure. The last year has not been good enough, but we know the path forward, and we are executing with urgency and discipline. That is how we will rebuild long-term shareholder value and reinforce Grove Collaborative Holdings, Inc. as the destination for clean and sustainable essentials. We will now open for questions. Operator, please open the line for questions. Thank you.

Operator: Thank you. Our first question is from Susan Anderson with Canaccord Genuity.

Susan Anderson: Hi, good evening. Thanks for taking my question. Maybe just to start off, if you could talk about the first quarter being the trough in sales and then the pickup after that, and the drivers that are going to drive the sequential pickup in sales as we go throughout the year. And then also, maybe if you could talk about your customer acquisition investment for this year. Are you expecting to invest more in customer acquisition versus what you did last year? Thank you.

Jeff Yurcisin: Thank you, Susan. Let me take that, and then I will let Tom share in terms of total acquisition spend. The core reason we are expecting the sequential growth goes back to building a better customer experience. Over the last twelve months since we jumped on the platform migration, it has been a rough customer experience. The mobile app alone was a really big change that we just launched in Q1, and we are seeing early positive signals. The loyalty program in Q4—each one of these will improve the core customer experience. We mentioned the subscription experience that we hope to be able to announce before our next call.

You put all of this together, and it is pretty energizing in terms of what we can accomplish. That is the primary driver. Then, in parallel, we do expect to be increasing marketing spend because we are seeing better repeat rates and a better LTV to CAC, and ultimately better paybacks. Tom, I will let you handle the specifics around marketing spend.

Tom Siragusa: Thanks, Jeff. Yes, Susan, if you look at our email in the fourth quarter, we took our advertising spend down from about $33 million in the third quarter to about $1 million in the fourth quarter. We expect to be in about the same range in the first quarter, and we are not going to give specifics as to what we think that ramp is going to look like over the course of the year. But given some of the technology improvements and the impact that those will have on the CX, those should be the enabler for us to grow advertising spend because there will be a better user experience.

That should be one of the key enablers for growth over the course of the year, along with stabilizing the existing customer base. That is how I would think about the cadence.

Susan Anderson: Okay, great. And then maybe if you could talk about the categories that you offer currently on your site, and is there any white space left? You have obviously been able to expand quite a bit into health and wellness, and then beauty and pet as well. So maybe talk about where you are at with those newer categories and then also any white space opportunity ahead? Thanks.

Jeff Yurcisin: Appreciate that. We think most of the opportunity is within our core category, and we see real growth paths within the type of assortment that we are currently selling. Are there opportunities adjacent? Of course there are. Some of those will be, when we think about wellness, thinking in a more broad perspective than just vitamins, minerals, and supplements, but everything going into air filters and even potentially mattresses, where the opportunity is to deliver and curate the best products for a healthy home. That goes beyond just our kind of standard categories. I would also say this year we will be enabling some drop-ship capabilities, which will allow us to get into some higher AOV categories.

The right type of economics, but again, all through the lens of these 3,000 banned ingredients and substances, the highest standards from an ingredient perspective, and also the most curated assortment out there. From a category perspective, we are seeing success in all these new categories. Whenever we launch more products, customers love it, and we are seeing growth. But the real opportunity is serving the core customer, with an adjacency toward drop-ship, which will expand our overall categories beyond just VMS into broader human health.

Susan Anderson: Okay, great. And then maybe last, if you could talk about the margins for this year and if there is any varying cadence by quarter, whether it is gross margin or operating expense, to get to your breakeven for the year? Thanks.

Jeff Yurcisin: Tom, I will let you take this.

Tom Siragusa: So, thinking in terms of margins, without giving specific guidance, from a gross margin perspective, we do not expect there to be a lot to move the needle one way or the other. We did launch our loyalty program, which will allow us to be more tactical with our promotions from a points-based perspective, so we will be leaning into that and using that to be as effective as we possibly can from a promotional perspective to engage customers. From an advertising perspective, we are going to spend similar to the fourth quarter in the first quarter, and then we will scale it from there.

Given the discretionary nature of advertising spend, we will lean in as we see the results from some of the technology improvements and from a new customer acquisition perspective. From an operating expense perspective, we executed the RIF in the fourth quarter that reset our cost base lower, and that is probably a good baseline to think about what our operating and structural expense looks like going forward.

Susan Anderson: Okay, great. Thanks so much for all of the color. Good luck this year.

Tom Siragusa: Thank you, Susan.

Operator: Thank you. There are no further questions at this time. I would like to hand the floor back over to Jeff Yurcisin for any closing comments.

Jeff Yurcisin: Thank you very much. I just want to thank everyone who joined the call and hope you have a great night. Thank you.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.

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