Purple Innovation, Inc.

Good afternoon, ladies and gentlemen. Welcome to the Purple Innovation first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Cody McAllister of ICR. Please go ahead.

Thank you for joining Purple Innovation's first quarter 2022 earnings call. A copy of our earnings press release is available on the investor relations section of Purple's website at www.purple.com. I would like to remind you that certain statements we will make in this presentation are forward-looking statements. These forward-looking statements reflect Purple Innovation's judgment and analysis only as of today. and actual results may differ materially from current expectations based on a number of factors affecting the company's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements included in our first quarter 2022 earnings release, which was furnished to the SEC today on Form 8K, as well as our filings with the SEC referenced in that disclaimer. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. Today's presentation will include reference to non-GAAP financial measures, such as EBITDA, adjusted EBITDA, adjusted net income, and adjusted earnings per share. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings release which can be found on our website. With that, I'll turn the call over to Rob Demartini, Purple Innovation's Chief Executive Officer.

Thank you, Cody, and thank you, and good afternoon, everyone. With me on the call today is Bennett Nussbaum, Purple's Chief Financial Officer. Our first quarter performance reflects the early progress of our initiatives to return the company to profitable growth. While the business environment continues to be challenging and there is still much work to be done, our overall results came in better than we guided. Bennett will review the numbers in detail shortly, but from a high level, sales exceeded guidance this quarter, driven primarily by higher wholesale volumes. With respect to our direct-to-consumer channel, showrooms continue to perform well and were mostly in line with the forecast. However, this was offset by softer post-pandemic e-commerce trends that deteriorated more than anticipated as the quarter progressed. Our e-commerce results are still above 2019 pre-pandemic levels. As I said on our last earnings call, one of the key areas of focus is elevating our brand through more effective marketing, which includes winging the company off its dependency on expensive and inefficient performance marketing. We did exactly that in the first quarter, pulling back on pay-per-click spending, This tactic negatively impacted purple site traffic. It contributed to adjusted EBITDA coming in close to $10 million better than we got it. We're encouraged by the elements of our first quarter performance and are still in the very early stages of rebuilding the framework for strong, consistent operational results. While we continue to expect positive progress quarter over quarter in 2022, we are adopting a more conservative view for the remainder of the year. We're adjusting our full year revenue guidance to 650 to $690 million and adjusted EBITDA to 21 to 27 million. Like much of the industry, we're facing new post-pandemic headwinds that have developed in recent months, including a shift in consumer behavior from online to in-store and an overall declining focus on home goods as consumers shift their spending back towards experiences and travel. We see these trends as a rationalization of a category that was strengthened by quarantine and work from home dynamics over the last two years. Outside of those industry headwinds, we have our own internal challenges and we're still working through. Now that I've been here an additional 60 days, I have a clear understanding of our company's capabilities, and where we need more strength. As such, rebuilding this company may take a few extra quarters than I'd originally anticipated, which is why we're bringing the revenue guidance down. In April, we completed a restructuring, further reducing our headcount. It was a difficult decision to make, but we made the cost cuts to match our current revenue outlook, and we will build up from here. I do believe the company has turned a corner and the way we are thinking about it internally is new team, new plan, new day. Despite these challenges we have to navigate, the foundation of the company and the brand are solid, and I'm more excited about the future of Purple than I ever have been. I want to emphasize we remain confident that our four strategic initiatives, operational excellence, brand elevation, developing our three channels, and accelerating innovation, that were outlined on our last call in March formed the foundation of the right plan to get the company back to consistent profitable growth. We've already seen some of the benefits of our plan manifest early in the year and expect these will compound as the year unfolds, albeit at a slightly more modest pace than we initially projected. With hard work and smart choices, we can build on our position as a leader in the premium mattress category and create tremendous value for our stakeholders. I'll now turn it over to Bennett, who will review the financials in more detail, after which I'll provide an update on our strategic initiatives ahead of a question and answer session.