Purple Innovation, Inc 10-Q for FY2026 Q3
Purple Innovation, Inc. (PRPL)
About this 10-Q
Purple Innovation, Inc filed this 10-Q on November 4, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Purple Innovation reported third-quarter revenue down 18.7% to $96.5 million and net loss narrowed to $1.4 million. Nasdaq also cited an MVPHS shortfall, requiring compliance by March 29, 2027. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $96.51M
- down 18.7% from $118.77M a year earlier
- Net loss
- $1.4M
- compared with a net loss of $11.72M a year earlier
- Diluted EPS
- -$0.33
- compared with -$2.71 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
FOR THE QUARTERLY PERIOD ENDED
OR
FOR THE TRANSITION PERIOD FROM _____________ TO _____________
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(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 2, 2026,
PURPLE INNOVATION, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
| Page | |||
| Part I. | Financial Information | 1 | |
| Item 1. | Financial Statements (Unaudited): | 1 | |
| Condensed Consolidated Balance Sheets | 1 | ||
| Condensed Consolidated Statements of Operations | 2 | ||
| Condensed Consolidated Statements of Stockholders’ Deficit | 3 | ||
| Condensed Consolidated Statements of Cash Flows | 4 | ||
| Notes to Condensed Consolidated Financial Statements | 5 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 42 | |
| Item 4. | Controls and Procedures | 42 | |
| Part II. | Other Information | 43 | |
| Item 1. | Legal Proceedings | 43 | |
| Item 1A. | Risk Factors | 43 | |
| Item 5. | Other Information | 43 | |
| Item 6. | Exhibits | 44 | |
| Signatures | 45 | ||
i
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PURPLE INNOVATION, INC.
Condensed Consolidated Balance Sheets
(unaudited – in thousands, except for par value)
| September 30, 2026 |
December 31, 2025 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Other long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued compensation | ||||||||
| Customer prepayments | ||||||||
| Accrued rebates and allowances | ||||||||
| Accrued warranty liabilities – current portion | ||||||||
| Operating lease obligations – current portion | ||||||||
| Related party debt – current portion | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Related party debt, net of current portion | ||||||||
| Accrued warranty liabilities, net of current portion | ||||||||
| Operating lease obligations, net of current portion | ||||||||
| Warrant liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Class A common stock; $ | ||||||||
| Class B common stock; $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit attributable to Purple Innovation, Inc. | ( | ) | ( | ) | ||||
| Noncontrolling interest | ( | ) | ||||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
PURPLE INNOVATION, INC.
Condensed Consolidated Statements of Operations
(unaudited – in thousands, except per share amounts)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of revenues - restructuring related charges | ||||||||||||||||
| Total cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Marketing and sales | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Restructuring, impairment and other related charges | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Change in fair value – warrant liabilities | ||||||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to Purple Innovation, Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
PURPLE INNOVATION, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(unaudited – in thousands)
| Class A | Class B | Additional | Total Stockholders’ Deficit attributable to Purple |
|||||||||||||||||||||||||||||||||
| Common Stock | Common Stock | Paid-in | Accumulated | Innovation, | Noncontrolling | Total | ||||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Capital | Deficit | Inc. | Interest | Deficit | ||||||||||||||||||||||||||||
| Balance – December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Issuance of stock under equity compensation plans | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance – March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of stock under equity compensation plans | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance – June 30, 2026 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Exchange of stock | ( | ) | ||||||||||||||||||||||||||||||||||
| Impact of transactions affecting NCI | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance – September 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Class A | Class B | Additional | Total Stockholders’ Equity (Deficit) attributable to Purple |
Total | ||||||||||||||||||||||||||||||||
| Common Stock | Common Stock | Paid-in | Accumulated | Innovation, | Noncontrolling | Equity | ||||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Capital | Deficit | Inc. | Interest | (Deficit) | ||||||||||||||||||||||||||||
| Balance – December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Issuance of stock under equity compensation plans | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Impact of transactions affecting NCI | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance – March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Issuance of stock under equity compensation plans | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Accrued Distribution True-up | — | — | ||||||||||||||||||||||||||||||||||
| Impact of transactions affecting NCI | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance – June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Exchange of stock | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance – September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
PURPLE INNOVATION, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited – in thousands)
| Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash interest | ||||||||
| Paid-in-kind interest | ||||||||
| Non-cash restructuring, impairment and other related charges | ||||||||
| Loss on disposal of property and equipment | ||||||||
| Change in fair value – warrant liabilities | ( | ) | ( | ) | ||||
| Stock-based compensation | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other assets | ||||||||
| Operating leases, net | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued compensation | ( | ) | ( | ) | ||||
| Customer prepayments | ( | ) | ( | ) | ||||
| Accrued rebates and allowances | ( | ) | ||||||
| Accrued warranty liabilities | ( | ) | ( | ) | ||||
| Other accrued liabilities | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Sale of property and equipment | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Investment in intangible assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from related party loan | ||||||||
| Payments for debt issuance costs | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of the period | ||||||||
| Cash and cash equivalents, end of the period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for interest, net of amounts capitalized | $ | $ | ||||||
| Cash paid during the period for income taxes | $ | $ | ||||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Property and equipment included in accounts payable | $ | $ | ||||||
| Warrants issued | $ | $ | ||||||
| Amendment fee added to principal of loan | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Organization
The mission of Purple Innovation, Inc. (the “Company” or “Purple Inc.”) is to deliver the greatest sleep ever invented.
The Company, collectively with its subsidiary Purple Innovation, LLC (“Purple LLC”) is an omni-channel business that began as a digitally-native vertical brand founded on comfort product innovation with premium offerings, and has since expanded into brick & mortar stores as a true omni-channel brand. The Company offers a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets and other products. The Company markets and sells its products through its direct-to-consumer e-commerce channels, retail brick-and-mortar wholesale partners, Purple showrooms, and third-party online retailers.
The Company was incorporated in Delaware on
As the sole managing member of Purple LLC, Purple Inc. through its officers and directors is responsible for all operational and administrative decision making and control of the day-to-day business affairs of Purple LLC without the approval of any other member.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of Purple Inc., its controlled subsidiary Purple LLC, and Purple LLC’s wholly owned subsidiary Advanced Comfort Technologies, Inc., dba Intellibed (“Intellibed”). All intercompany balances and transactions have been eliminated in consolidation. As of September 30, 2026, Purple Inc. held
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and reflect the financial position, results of operations and cash flows of the Company. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The unaudited condensed consolidated financial statements were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which were considered of a normal recurring nature) considered necessary to present fairly the Company’s financial results. The results of the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2026 or for any other interim period or other future year.
5
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Liquidity and Going Concern
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2026, the Company conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to its ability to continue as a going concern within one year after the date of the issuance of such financial statements.
The Company had cash and cash equivalents of approximately $
The Company has a history of recurring net losses and cash used in operations, an accumulated deficit, and requiring additional capital to fund its operations, invest in the business to expand sales and marketing efforts and invest in innovation. Debt service has consisted primarily of refinancing or extending the maturity date of the debt as well as paying-in-kind interest payments. As disclosed in Note 10 - Debt, the Company has elected to have interest paid-in-kind and added to the principal amount of the loans under the Amended and Restated Credit Agreement and on March 24, 2026, the Company executed the Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) with the Lenders to extend the maturity date of the Amended and Restated Credit Agreement from December 31, 2026 to April 30, 2027. In addition, certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements were waived (see Note 10 – Debt). Management has implemented plans to both increase its revenues from the sales of its products and to achieve cost savings within the next year, sufficient to generate positive operating cash flow levels. However, the Company cannot guarantee that it will have sufficient cash flow to meet the debt obligations when they become due within the next twelve months. The Company will need to raise additional capital or secure alternative financing arrangements, both of which are uncertain and not within the control of the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
The Company has taken a number of actions to increase cash flow and support its operations and strategies. In August 2024, the Company implemented the Restructuring Plan (as defined below) to consolidate manufacturing operations resulting in cost savings. The Company has realized and plans to continue to realize direct material cost savings by concentrating efforts on driving gross margin improvement through various methods such as pricing actions, continued mix shift towards the Restore and Rejuvenate collections, and by driving cost savings through supply chain initiatives and manufacturing efficiency. The Company has delivered direct material cost savings from its supplier diversification efforts, improved scrap and yield results from continuous improvements, and outbound freight costs reflect cost improvements along with improved delivery reliability. The Company has been successful in subleasing the two manufacturing facilities that were vacated as part of the Restructuring Plan. The Company has also taken additional cost-saving initiatives in 2025 and the beginning of 2026 to reduce headcount and streamline responsibilities and reporting structure. Further, management’s plans include additional actions intended to improve liquidity and reduce costs, including a planned optimization of advertising spending, pacing the number of new store openings, efforts to mitigate tariff impacts by managing the country of origin, and other cost-saving initiatives. In the latter part of the second quarter of 2026, the Company announced a pricing action to increase the sales price of our various products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins.
The Company is currently evaluating potential strategic alternatives and opportunities to achieve additional liquidity through one or more future debt refinancings.
The consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.
Revenue Recognition – Consideration Payable to Customers
There have been no material changes to the Company’s revenue recognition policies as described in the Company’s Annual Report on Form 10-K, except for the following application of accounting guidance to certain arrangements with third-party manufacturers.
6
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company enters into arrangements with third-party manufacturers, including manufacturers under common control with certain customers, to produce mattress products sold to those customers. The Company evaluates these arrangements to determine whether payments to such manufacturers represent consideration payable to a customer or payments for goods or services received, in accordance with ASC 606—Revenue from Contracts with Customers. For certain customer-specific or exclusive product arrangements, the Company has concluded that payments to a manufacturer under common control with a customer are economically linked to the underlying customer arrangement and represent consideration payable to that customer. Accordingly, revenue for these arrangements is presented net of payments made to the third-party manufacturers.
Reclassification of Merchant and Financing Fees
In the second quarter of 2026, the Company changed the presentation of costs associated with merchant credit card processing fees and third-party consumer financing fees. These costs were previously presented within cost of revenues and are now presented within marketing and sales. The Company believes this presentation will enhance the comparability of our financial statements with those of our industry peers.
The table below presents the effect of the reclassification on the Company’s previously issued financial statements. This change in presentation had no impact on previously reported revenues, operating loss, net loss, or earnings per share. Additionally, the reclassifications did not impact the historical balance sheets or statement of cash flows.
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| (In thousands, except per share amounts) | As Previously Presented | Reclassification | As Reclassified | As Previously Presented | Reclassification | As Reclassified | ||||||||||||||||||
| Cost of revenues | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Total cost of revenues | ( | ) | ( | ) | ||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||
| Marketing and sales | ||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||
The reclassifications have been reflected in all applicable financial information presented in these financial statements, including the related notes.
Refund of Tariffs
On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). On March 6, 2026, the Company filed a lawsuit in the U.S. Court of International Trade against the U.S. Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of all IEEPA tariffs that the Company has paid to the United States. In addition, the Company filed for qualifying refunds of tariffs with the CBP. During May and June 2026, the Company received $
Reverse Stock Split
On July 2, 2026, the Company’s stockholders approved a reverse stock split of its Class A common stock and Class B common stock (collectively, the “common stock”) at a ratio ranging from any whole number between
7
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Reverse Stock Split did not change the Company’s authorized number of shares of common stock. The Reverse Stock Split did not change the par value of the common stock and, therefore, the Company reclassified an amount equal to the reduction in the number of shares of common stock at par value to additional paid-in capital. No fractional shares of common stock were issued in connection with the Reverse Stock Split. Instead, any fractional share that would otherwise result from the Reverse Stock Split were rounded up to the next whole share of common stock. Proportionate adjustments were made to the number of shares authorized under the Company’s equity incentive plans, the number of shares subject to any award or purchase right under the Company’s equity incentive plans, and the exercise price or purchase price with respect to any stock award or warrant.
Variable Interest Entities
Purple LLC is a variable interest entity. The Company determined that it is the primary beneficiary of Purple LLC as it is the sole managing member and has the power to direct the activities most significant to Purple LLC’s economic performance as well as the obligation to absorb losses and receive benefits that are potentially significant. At September 30, 2026, Purple Inc. had a
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires the Company to establish accounting policies and to make estimates and judgments that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The Company regularly makes estimates and assumptions including, but not limited to, estimates that affect revenue recognition, accounts receivable and the allowance for credit losses, valuation of inventories, sales returns, warranty returns, impairment reviews of long-lived assets and definite-lived intangible assets, warrant liabilities, stock based compensation, the recognition and measurement of loss contingencies, the recognition and measurement of restructuring and related charges, estimates of current and deferred income taxes, deferred income tax valuation allowances, and amounts associated with the Company’s tax receivable agreement with InnoHold, LLC (“InnoHold”). Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. Actual results could differ materially from those estimates.
Segment Information
The Company operates in one operating segment.
Impairment Charges
The Company reviews its long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets and definite-lived intangible assets for potential impairment, the Company first determines if there are any indicators of impairment and if the carrying amount of the long-lived assets and definite-lived intangible assets might not be recoverable. If there are indicators of impairment, then the Company performs a recoverability test by comparing the carrying value of the assets to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the assets, the Company calculates an impairment loss. The impairment loss calculation compares the carrying value of its assets to the estimated fair value. When the Company recognizes an impairment loss, the carrying amount of the impaired assets are reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques.
In September 2026, the Company relocated the Corporate Headquarters to one of its other facilities in Draper, Utah and began efforts to sublease the vacated office building. The Company determined this was a triggering event for potential impairment of one of its long-lived assets and a recoverability test was required. The resultant assessment performed by the Company determined there was an impairment and the Company recorded an impairment loss of $
As of September 30, 2026, the Company determined there were indicators of impairment and performed recoverability tests on its long-lived and definite-lived intangible assets. The results of these tests indicated there was no impairment and no impairment loss was calculated.
8
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Recent Accounting Pronouncements
Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the consolidated financial statements. The prescribed cost and expense categories requiring disaggregated disclosures include purchases of inventory, employee compensation, depreciation and intangible asset amortization, along with certain other expense disclosures already required by GAAP that would need to be integrated within the new tabular disaggregated expense disclosures. Additionally, the amendments also require the disclosure of total selling expenses and an entity’s definition of those expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the potential impact this update will have on its expense disclosures in the notes to the consolidated financial statements.
Accounting for Internal-Use Software
In September 2025, the FASB issued ASU No. 2025-06, “Intangible - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The ASU removes all references to prescriptive and sequential software development stages. The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose. The amendments in this ASU are effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact this update will have on its consolidated financial statements and related disclosures.
Interim Reporting: Narrow-Scope Improvements
In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting (Topic 270): Narrow-scope Improvements.” The ASU indicates that SEC registrants must continue to follow SEC rules for condensed financial statements. The ASU also compiles a comprehensive list of required interim disclosures for condensed statements from across the Codification. In addition, the ASU reinforces a disclosure principle requiring entities to provide interim disclosures for significant events or transactions that have a material effect since the most recent year-end, such as changes in accounting principles, key estimates, financing arrangements, long-term contracts, or the reporting entity. The amendments in this ASU are effective for public business entities for interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-11 on its interim reporting once the ASU is adopted. As part of the ongoing evaluation, following the adoption of the ASU, the Company will ensure that the interim disclosure checklists are up-to-date and accurately reflect the required disclosures as outlined.
3. Restructuring, Impairment and Other Related Charges
In August 2024, the Company initiated a restructuring plan to strategically realign the Company’s focus on the achievement of operational efficiencies that are expected to improve profitability and provide for reinvesting in technology and marketing initiatives (the “Restructuring Plan”). The Company’s Restructuring Plan includes the permanent closure of its Grantsville and Salt Lake City, Utah manufacturing facilities to consolidate mattress production in its Georgia plant, and a headcount reduction at the Company’s Utah headquarters to drive additional operating efficiencies. The consolidation into the Georgia facility was finalized in December 2024 and the closure of the two Utah manufacturing facilities was completed in May 2025. The reduction in workforce at the Utah headquarters was completed in August 2024. All restructuring activities were completed in the third quarter of 2025.
9
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table summarizes the restructuring, impairment and other related charges the Company recognized during the three and nine months ended September 30, 2025 in the unaudited condensed consolidated statement of operations (in thousands):
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| Restructuring, | Restructuring, | |||||||||||||||||||||||
| Impairment | Impairment | |||||||||||||||||||||||
| and Other | and Other | |||||||||||||||||||||||
| Cost of | Related | Cost of | Related | |||||||||||||||||||||
| Revenues | Charges | Total | Revenues | Charges | Total | |||||||||||||||||||
| Cash charges: | ||||||||||||||||||||||||
| Employee-related costs | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Other costs | ||||||||||||||||||||||||
| Total cash charges | ||||||||||||||||||||||||
| Non-cash charges: | ||||||||||||||||||||||||
| Accelerated depreciation | ||||||||||||||||||||||||
| Write-down of long-lived assets | ||||||||||||||||||||||||
| Impairment of assets | ( | ) | ( | ) | ||||||||||||||||||||
| Total non-cash charges | ||||||||||||||||||||||||
| Total restructuring, impairment and other related charges | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Accelerated depreciation of $
The write down of long-lived assets of $
Impairment of assets included impairment charges of $
10
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
4. Fair Value Measurements
The Company uses the fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:
| Level 1 — | Quoted market prices in active markets for identical assets or liabilities; |
| Level 2 — | Significant other observable inputs (i.e., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves, and market-corroborated inputs); and |
| Level 3 — | Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions. |
The classification of fair value measurements within the established three-level hierarchy is based upon the lowest level of input that is significant to the measurements. Financial instruments, although not recorded at fair value on a recurring basis include cash, cash equivalents, accounts receivables, accounts payable, and the Company’s debt obligations. The carrying amounts of cash, cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these accounts.
The estimated fair value of the Company’s related party debt is based on Level 2 and Level 3 inputs. Level 2 inputs include observable inputs such as market-based expectations for interest rates, credit risk and volatility. The unobservable Level 3 inputs are associated with the required rate of return for the security implied by the various issuances of debt bundled with warrants, which were valued using a Monte Carlo model and the timing and probability of a warrant reprice event, like a strategic alternative transaction. The estimated fair value of the Company’s related party debt was $
The warrant liabilities (see Note 11 — Warrant Liabilities for more information) are Level 3 instruments and use internal models to estimate fair value using certain significant unobservable inputs which require determination of relevant inputs and assumptions. Accordingly, changes in these unobservable inputs may have a significant impact on fair value. Significant inputs, certain of which are unobservable, include risk free interest rate, expected average life, expected dividend yield, expected volatility and the timing and probability of a warrant reprice event. These Level 3 liabilities generally decrease (increase) in value based upon an increase (decrease) in risk free interest rate and expected dividend yield. Conversely, the fair value of these Level 3 liabilities generally increases (decreases) in value if the expected average life or expected volatility were to increase (decrease).
The following table summarizes the Company’s total Level 3 liability activity for the nine months ended September 30, 2026 (in thousands):
| Warrants | Total Level 3 Liabilities | |||||||
| Fair value as of December 31, 2025 | $ | $ | ||||||
| Change in valuation inputs(1) | ( | ) | ( | ) | ||||
| Fair value as of September 30, 2026 | $ | $ | ||||||
| (1) |
11
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
5. Revenue from Contracts with Customers
The Company markets and sells its products through direct-to-consumer e-commerce channels, Purple showrooms, retail brick-and-mortar wholesale partners, and third-party online retailers. Revenue is recognized when the Company satisfies its performance obligations under the contract which involves transferring the promised products to the customer, subject to shipping terms.
Disaggregated Revenue
The Company classifies revenue as either direct-to-consumer (“DTC”) or wholesale revenue. DTC revenues include the e-commerce channel which sells directly to consumers who purchase online, through the contact center, and through online marketplaces and the showrooms channel that sells directly to consumers who purchase at a Purple showroom location. The wholesale channel includes all product sales to the Company’s retail brick and mortar and online wholesale partners where consumers make purchases at their retail locations or through their online channels.
The following tables present the Company’s revenue disaggregated by sales channel (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| Sales Category | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| e-commerce | $ | $ | $ | $ | ||||||||||||
| Showrooms | ||||||||||||||||
| Wholesale | ||||||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
Contract Balances
Payments for the sale of products through the direct-to-consumer e-commerce channel, Purple showrooms and our contact center are collected at point of sale in advance of shipping the products. The amounts received for unshipped products are recorded as customer prepayments. Customer prepayments totaled $
6. Inventories
Inventories consisted of the following (in thousands):
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| Inventories | $ | $ | ||||||
12
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
7. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Equipment | $ | $ | ||||||
| Equipment in progress | ||||||||
| Leasehold improvements | ||||||||
| Furniture and fixtures | ||||||||
| Office equipment | ||||||||
| Total property and equipment | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Equipment in progress reflects equipment, primarily related to mattress manufacturing, which is being constructed and was not in service at September 30, 2026 or December 31, 2025. Interest capitalized on borrowings during the active construction period of major capital projects was de minimis during the three and nine months ended September 30, 2026, respectively, and totaled $
8. Leases
The Company leases its manufacturing and distribution facilities, corporate offices, Purple showrooms and certain equipment under non-cancelable operating leases with various expiration dates through 2036. The Company’s office and manufacturing leases provide for initial lease terms up to
The following table presents the Company’s lease costs (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease costs | $ | $ | $ | $ | ||||||||||||
| Variable lease costs | ||||||||||||||||
| Short term lease cost | ||||||||||||||||
| Sublease income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
13
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The table below reconciles the undiscounted cash flows for each of the first years and total remaining years to the operating lease liabilities recorded on the unaudited condensed consolidated balance sheet at September 30, 2026 (in thousands):
| 2026 (excluding the nine months ended September 30, 2026)(1) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total operating lease payments | ||||
| Less – lease payments representing interest | ( | ) | ||
| Present value of operating lease payments | $ |
| (1) |
As of September 30, 2026 and December 31, 2025, the weighted-average remaining term of operating leases was
The following table provides supplemental information related to the Company’s unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2026 and 2025 (in thousands):
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid for amounts included in present value of operating lease liabilities (1) | $ | $ | ||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
| (1) |
9. Other Current Liabilities
Other current liabilities consisted of the following (in thousands):
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued sales returns | $ | $ | ||||||
| Accrued sales, use and property tax | ||||||||
| Asset retirement obligation | ||||||||
| Insurance financing | ||||||||
| Other | ||||||||
| Total other current liabilities | $ | $ | ||||||
14
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
10. Debt
Debt consisted of the following (in thousands):
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Related party loan | $ | $ | ||||||
| Less: unamortized debt issuance costs | ( | ) | ( | ) | ||||
| Total related party debt | ||||||||
2024 Credit Agreement
On January 23, 2024, Purple LLC, Purple Inc. and Intellibed (collectively, the “Loan Parties”) entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”), which amended and restated the then existing term loan agreement (“Term Loan Agreement”), with Coliseum Capital Partners (“CCP”) and other lenders (collectively, the “Lenders”) and Delaware Trust Company, as administrative agent. The Lenders agreed to assume the Loan Parties’ obligations under the Term Loan Agreement and refinance their existing obligations. A term loan in the amount of $
In connection with the Amended and Restated Credit Agreement, the Company issued
The Amended and Restated Credit Agreement granted a security interest to the Lenders in substantially all of the assets (subject to certain limited exceptions) of the Loan Parties to secure the Loan Parties’ loans and other obligations under the Amended and Restated Credit Agreement, including a security interest in the intellectual property owned by the Loan Parties.
The Loan Parties (other than Purple LLC) provided an unconditional guaranty of the payment of all obligations and liabilities of Purple LLC under the Amended and Restated Credit Agreement.
The Amended and Restated Credit Agreement also provides for standard indemnification of the Lenders and contains representations, warranties and certain covenants of the Loan Parties. While any amounts are outstanding under the Amended and Restated Credit Agreement, the Loan Parties are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, investments, forming or acquiring subsidiaries, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The Loan Parties are also restricted from paying dividends or making other distributions or payments on their capital stock, subject to limited exceptions.
15
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
2025 Amendment
On March 12, 2025, the Loan Parties, entered into the First Amendment to the Amended and Restated Credit Agreement (the “2025 Amendment” and the Amended and Restated Credit Agreement as so amended, the “Amended A&R Credit Agreement”) with CCP and Blackwell Partners LLC – Series A (“Blackwell”) (collectively the “2025 Lenders”), which amends the Amended and Restated Credit Agreement. The 2025 Amendment, among other things, provides for an increase in the initial principal amount of the Related Party Loan by $
The 2025 Amendment also provides that (i) the First Incremental Loan shall be senior in right of repayment to the Related Party Loan and (ii) in any voluntary or mandatory prepayment in part or in full of the First Incremental Loan for any reason, the Company will be required to pay an amount equal to the greater of (i) the Make-Whole Premium (as defined below) and (ii)
The 2025 Amendment requires prepayment from certain amounts of proceeds received by the Company related to asset dispositions, equity issuances, incurrence of indebtedness, and extraordinary receipts. Additionally, upon an event of default, the 2025 Lenders may declare all or any portion of the term loan then outstanding to be accelerated and due and payable, immediately, including the prepayment premium. The Company determined that these features qualify as a derivative and must be bifurcated from the debt, but such value is de minimis. The Company will reassess whether the derivative has more than a de minimis value at each reporting period.
The 2025 Amendment also includes contingent interest upon an event of default at a rate of
In addition, the Company also paid (i) an amendment fee equal to
In connection with the 2025 Amendment, the Company issued to the 2025 Lenders, warrants (the “2025 Warrants”) to purchase
The 2025 Amendment was evaluated and determined to be a modification of debt as the effective borrowing rate was not reduced, therefore the 2025 Lenders did not grant a concession, and the 2025 Amendment terms were not substantially different from the Amended and Restated Credit Agreement.
16
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Second 2025 Amendment
On May 2, 2025, the Loan Parties entered into a Second Amendment to the Amended and Restated Credit Agreement (the “Second 2025 Amendment”) with the 2025 Lenders, which amends the Amended A&R Credit Agreement. The Second 2025 Amendment, among other things, provides for a commitment increase in the initial principal amount of the senior secured term loan facility by $
The Second 2025 Amendment also provides that (i) the Second Incremental Loan shall be senior in right of repayment to the initial $
In addition, the Company also paid (i) an amendment fee equal to
In connection with the Second 2025 Amendment, the Company issued to the 2025 Lenders, warrants (the “2025 Additional Warrants”) to purchase
The Second 2025 Amendment was evaluated and determined to be a modification of debt since the 2025 Lenders did not grant a concession, as the effective borrowing rate was not reduced, and the 2025 Amendment terms were not substantially different from the Amended and Restated Credit Agreement.
17
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Third Amendment to the Amended A&R Credit Agreement
On March 24, 2026, the Loan Parties entered into a Third Amendment to the Amended A&R Credit Agreement with the Lenders, which revised the maturity date under the Amended A&R Credit Agreement from December 31, 2026, to April 30, 2027 and waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. In connection with the Third Amendment, the Loan Parties agreed to pay to the Lenders an amendment fee in the aggregate amount of $
Pursuant to the Third Amendment to the Amended A&R Credit Agreement, the Lenders waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. Accordingly, the Company is in compliance as of September 30, 2026, with all covenants under the Amended A&R Credit Agreement.
The Company determined that it was experiencing financial difficulty and that the extension represented a concession granted by the Lenders as the effective borrowing rate was reduced. Accordingly, the Company accounted for the Third Amendment as a troubled debt restructuring. Since the undiscounted future cash payments were more than the carrying amount of the existing instrument, no gain was recognized. The impact of the revised terms, including the extension and associated amendment fee, has been reflected in the carrying amount of the debt and is being recognized through interest expense prospectively using a revised effective interest rate.
The Company has elected to have interest paid-in-kind and added to the principal amount of the loans. Interest expense under the Related Party Loan, the First Incremental Loan and the Second Incremental Loan for the three and nine months ended September 30, 2026, consisted of paid-in-kind interest of $
11. Warrant Liabilities
On January 23, 2024, in connection with the Amended and Restated Credit Agreement, the Company issued
18
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company used a Monte Carlo Simulation model to determine the fair value of the liability associated with the Warrants. The model used key assumptions and inputs, such as exercise price, fair market value of common stock, risk free interest rate, warrant life, expected volatility and the probability of a warrant re-price event.
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Trading price of common stock on measurement date | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Risk free interest rate | | % | | % | ||||
| Warrant life in years | | | ||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | ||||||||
| Probability of an event causing a warrant re-price | % | % | ||||||
| Estimated date of event causing a warrant re-price | April | May | ||||||
The Warrants had a fair value of $
12. Other Long-Term Liabilities
Other long-term liabilities consist of the following (in thousands):
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Asset retirement obligations | $ | $ | ||||||
| Other | ||||||||
| Total other long-term liabilities | $ | $ | ||||||
13. Commitments and Contingencies
Warranty Liabilities
The Company provides a limited warranty on most of the products it sells. The estimated warranty return costs associated with products sold through DTC channels are expensed at the time of sale and included in cost of revenues. The estimated warranty return costs associated with products sold through the wholesale channel are recorded at the time of sale and included as an offset to net revenues. Estimates for DTC warranty costs are based primarily on historical warranty claims, estimated warranty costs and the estimate warranty claim rate. Estimates for wholesale warranty costs are based primarily on the historical warranty claim amounts and the estimated claim rate and may be adjusted for any current or expected trends as appropriate. Actual warranty claim costs could differ from these estimates. The Company regularly assesses and adjusts the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. The Company classifies estimated warranty costs expected to be paid beyond a year as a long-term liability. The Company has accrued $
19
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Chief Executive Officer Cash Bonus Award
On January 26, 2024, the Company’s board of directors (the “Board”) approved an amendment to the Chief Executive Officer’s employment agreement. Under the amendment, the Company agreed that, among other things, the Chief Executive Officer will be eligible to earn a cash payment of up to $
On July 4, 2026, the Board and Robert T. DeMartini, the Company’s Chief Executive Officer entered into an amendment to the amended and restated employment agreement of Mr. DeMartini (the “Amendment”). Under the Amendment, the Company agreed that Mr. DeMartini will be eligible to earn an incremental aggregate cash bonus equal to $
In addition, under the Amendment, in the event of Mr. DeMartini’s retirement, subject to certain conditions, all of Mr. DeMartini’s time-based vesting restricted stock units (“RSUs”) then outstanding and unvested will vest in accordance with the remaining schedule as if Mr. DeMartini remained employed for an additional twelve (12) months and all of Mr. DeMartini’s outstanding performance-based vesting RSUs (“PSUs”) then outstanding will be eligible to vest on a pro-rata basis, subject to the performance achieved at the same time as active Company employees with the same type of PSUs.
Senior Leadership Team Special Recognition Bonus
On January 26, 2024, the Board unanimously approved a special recognition bonus payment to certain members of the Company’s senior leadership team. The bonus was awarded to incentivize retention and continued engagement with the Company during these challenging times in the bedding industry. Each participant is eligible to earn a special recognition bonus payment equal to 15 months of their regular salary. The special recognition bonus payment is paid as follows, subject to the employee’s continued employment with the Company:
Long-Term Incentive Cash Bonus Awards
On July 17, 2025, the Board unanimously approved a long-term incentive cash award to those employees eligible to participate in the Company’s 2017 Plan. The incentive award payment is based on a combination of time-based payments over a three-year period and performance-based payments paid in three years if certain financial performance targets are met.
On June 20, 2024, the Board unanimously approved a performance long-term incentive cash award to those employees eligible to participate in the Company’s 2017 Plan. The incentive award payment is based on a performance goal of the volume weighted average price per share of the Company’s Common Stock on NASDAQ on March 31, 2027. The Company determined the provisions surrounding the performance cash long-term incentive award require it to be accounted for as a liability at fair value at each reporting period, with changes in fair value recognized in earnings in the period of change.
The Company recorded a de minimis amount of compensation expense in the unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2026 and 2025 related to these future award payments.
20
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Rights of Securities Holders
On January 23, 2024, in connection with the issuance of the 2024 Warrants, the Company entered into an amended and restated registration rights agreement with holders of the Warrants (the “Holders”), providing for the registration under the Securities Act of 1933, as amended, of the 2024 Warrants, the shares issuable upon the exercise of the 2024 Warrants and Common Stock held by the Holders as of such date, subject to customary terms and conditions.
On March 12, 2025 in connection with the issuance of the 2025 Warrants, the Company entered into a Second Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) with the Holders, providing for the registration of the 2025 Warrants, the shares of Common Stock issuable upon the exercise of the Warrants, and the Common Stock held by the Holders as of such date (the “Registrable Securities”).
On May 2, 2025 in connection with the issuance of the 2025 Additional Warrants, the Company entered into a Third Amended and Restated Registration Rights Agreement (the “Third Amended Registration Rights Agreement”) with the Holders, providing for the registration under the Securities Act of the 2025 Additional Warrants, the shares issuable upon the exercise of the 2025 Additional Warrants, other warrants held by the Holders (and shares issuable upon exercise thereof) and the Common Stock held by the Holders as of such date (the “2025 Additional Registrable Securities”), subject to customary terms and conditions.
On May 2, 2025 in connection with the issuance of the SGI Warrants, the Company entered into a Registration Rights Agreement (the “SGI Registration Rights Agreement” and collectively with the 2025 Registration Rights Agreement and the Third Amended Registration Rights Agreement, the “Registration Rights Agreements”) with SGI, providing for the registration under the Securities Act of the SGI Warrants, the shares issuable upon the exercise of the SGI Warrants, and the Common Stock held by SGI as of such date (the “SGI Registrable Securities” and collectively with the 2025 Registrable Securities and 2025 Additional Registrable Securities, the “Registrable Securities”), subject to customary terms and conditions.
The Registration Rights Agreements entitle the investors party thereto to demand registration of the Registrable Securities and also to piggyback on the registration of Company securities by the Company and other Company securityholders. The Company will be responsible for the payment of the Holders’ expenses in connection with any offering or sale of Registrable Securities, including underwriting discounts or selling commissions, placement agent or broker fees or similar discounts, commissions or fees relating to the sale of certain Registrable Securities.
The registration statement filed on May 23, 2025, which registered the Registrable Securities, was declared effective by the SEC on May 30, 2025.
SGI Commercial Arrangements
On May 2, 2025, the Company entered into a Second Amendment to Master Retailer Agreement (the “MRA Amendment”) with Mattress Firm, Inc. (“Mattress Firm”), a business unit of SGI, which provides that SGI, through its Mattress Firm stores, will expand its inventory of the Company’s products across its national store network from approximately
Also on May 2, 2025, the Company entered into an Amended and Restated Master Vendor Supply and Services Agreement (the “Sherwood Agreement” and together with the MRA Amendment the “SGI Agreements”) with Tempur Sherwood, LLC, a subsidiary of Tempur Sealy. The Sherwood Agreement provides that Tempur Sherwood, LLC will have the exclusive right to assemble certain product lines, specifically Purple Royale, that the Company sells to Mattress Firm. The SGI Agreements expire on December 31, 2027. Revenue for certain product arrangements is presented differently depending on the nature of the underlying manufacturing relationships and the application of ASC 606—Revenue from Contracts with Customers. Under the guidance, payments to Tempur Sherwood, LLC are evaluated to determine whether they are economically linked to the underlying customer arrangement. The Company has concluded that certain payments to Tempur Sherwood, LLC are economically linked to the Mattress Firm MRA Amendment and therefore represent consideration payable to a customer. As a result of the Purple Royale launch in 2026, these payments are recorded as a reduction of revenue, and revenue is presented on a net basis. The Company recorded $
21
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
In connection with the SGI Agreements, the Company issued to SGI the SGI Warrants to purchase
Non-Income Related Taxes
The U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc., No.17-494, reversed a longstanding precedent that remote sellers are not required to collect state and local sales taxes. The Company cannot predict the effect of these and other attempts to impose sales, income or other taxes on e-commerce. The Company currently collects and reports on sales tax in all states in which it does business. However, the application of existing, new or revised taxes on the Company’s business, in particular, sales taxes, value-added tax and similar taxes would likely increase the cost of doing business online and decrease the attractiveness of selling products over the internet. The application of these taxes on the Company’s business could also create significant increases in internal costs necessary to capture data and collect and remit taxes. There have been, and will continue to be, substantial ongoing costs associated with complying with the various indirect tax requirements in the numerous markets in which the Company conducts or will conduct business.
Legal Proceedings
On December 16, 2022, Purple’s founders filed a complaint against Purple Inc. in the Fourth Judicial District Court in the State of Utah. In that suit, the plaintiffs alleged that they each entered into employment agreements with Purple LLC in February 2018. The plaintiffs contended that certain corporate transactions reduced their “ownership interest and voting power in Purple” and that, as a result, they should have continued to be paid a salary when they retired from Purple LLC. The plaintiffs calculated that they were each owed “no less than $
On April 3, 2023, Purple’s founders filed a complaint against Purple LLC in the Delaware Court of Chancery. The complaint alleges that Purple LLC breached the limited liability company agreement of Purple LLC by failing to pay the full amount of tax distributions owed under the agreement. The plaintiffs seek damages of approximately $
On April 16, 2024, Purple’s founders, in their capacity as a former landlord of Purple LLC, brought a lawsuit against Purple LLC, as lessee, for amounts allegedly owed under a real estate lease which the parties terminated effective September 30, 2023. In the suit, the plaintiffs allege approximately $
On July 24, 2024, a former part-time employee filed a class action lawsuit against Purple LLC in California Superior Court in the County of Alameda alleging failure to pay all wages, failure to pay overtime pay rate, failure to provide all meal periods, and other employment-related causes of action. The suit seeks damages, interest, attorneys’ fees, costs and other relief on behalf of all non-exempt California employees of Purple LLC during the applicable statutory periods. On September 30, 2024, the plaintiffs filed an amended complaint adding a claim for penalties under California’s Private Attorneys General Act. Purple LLC and the plaintiffs mediated the claims on May 8, 2025, which resulted in the parties agreeing to a settlement. The settlement agreement has been signed by the parties and the parties are currently waiting for the California Superior Court to approve the settlement.
22
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company is from time to time involved in various other claims, legal proceedings and complaints arising in the ordinary course of business. The Company does not believe that adverse decisions in any such pending or threatened proceedings, or any amount that the Company might be required to pay by reason thereof, would have a material adverse effect on the financial condition or future results of the Company.
14. Related Party Transactions
The Company has engaged in various transactions with entities or individuals which are considered related parties.
Coliseum Capital Management, LLC
Immediately following the Business Combination, Adam Gray was appointed to the Board. Mr. Gray is a manager of Coliseum Capital, LLC, which is the general partner of CCP and Coliseum Co-Invest Debt Fund, L.P. (“CDF”), and he is also a managing partner of Coliseum Capital Management, LLC (“CCM”), which is the investment manager of Blackwell and also manages investment funds and accounts. Mr. Gray has voting and dispositive control over securities held by CCP, CDF and Blackwell. In April 2023, Adam Gray was appointed Chairman of the Board of the Company as part of an agreement to resolve litigation that had been brought by Coliseum against the Company. Refer to Note 10— Debt for more information on the Related Party Loan and amendments.
15. Stockholders’ Equity
Class A Common Stock
The Company has
Class B Common Stock
The Company has
Preferred Stock
The Company has
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PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Warrants
The Company issued warrants in connection with various financing transactions and agreements. The Company had the following warrants outstanding at September 30, 2026 and December 31, 2025 (in thousands):
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| 2024 Warrants | ||||||||
| 2025 Warrants | ||||||||
| 2025 Additional Warrants | ||||||||
| SGI Warrants | ||||||||
| Total Warrants | ||||||||
The following table provides the exercise price and expiration date for each warrant tranche as of September 30, 2026:
| Warrant Share Equivalent (000’s) | Exercise Price(1) | Expiration Date | ||||||||
| 2024 Warrants | $ | |||||||||
| 2025 Warrants | $ | |||||||||
| 2025 Additional Warrants | $ | |||||||||
| SGI Warrants | $ | |||||||||
| (1) |
While the Warrants are exercisable, the Company may call the Warrants for redemption in whole and not in part at any time at a price of $
Noncontrolling Interest
Noncontrolling interest (“NCI”) is the membership interest in Purple LLC held by holders other than the Company. At September 30, 2026 and December 31, 2025, the combined NCI percentage in Purple LLC was
16. Income Taxes
The Company’s sole material asset is Purple LLC, which is treated as a partnership for U.S. federal income tax purposes and for purposes of certain state and local income taxes. Purple LLC’s net taxable income and any related tax credits are passed through to its members and are included in the members’ tax returns, even though such net taxable income or tax credits may not have actually been distributed. While the Company consolidates Purple LLC for financial reporting purposes, the Company will be taxed on its share of earnings of Purple LLC not attributed to the noncontrolling interest holders, who will continue to bear their share of income tax on its allocable earnings of Purple LLC. The income tax burden on the earnings taxed to the noncontrolling interest holders is not reported by the Company in its consolidated financial statements under GAAP.
The Company reported $
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PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
In connection with the Business Combination, the Company entered into a tax receivable agreement with InnoHold, which provides for the payment by the Company to InnoHold of
As noncontrolling interest holders exercise their right to exchange or cause Purple LLC to redeem all or a portion of their Class B Units, a tax receivable agreement liability may be recorded based on
The effects of uncertain tax positions are recognized in the consolidated financial statements if these positions meet a “more-likely-than-not” threshold. For those uncertain tax positions that are recognized in the consolidated financial statements, liabilities are established to reflect the portion of those positions it cannot conclude “more-likely-than-not” to be realized upon ultimate settlement. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties would be included on the related tax liability line in the consolidated balance sheet. As of September 30, 2026, the Company had unrecognized tax benefits of $
17. Net Loss Per Common Share
Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of Class A common stock outstanding during each period. Diluted net income (loss) per share reflects the weighted-average number of common shares outstanding during the period used in the basic net income (loss) computation plus the effect of common stock equivalents that are dilutive.
The following table sets forth the calculation of basic and diluted weighted average shares outstanding and net loss per share for the periods presented (in thousands, except per share amounts):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss attributable to Purple Innovation, Inc. – basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less – net loss attributed to noncontrolling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) attributable to Purple Innovation, Inc. – diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted average shares—basic | ||||||||||||||||
| Add – dilutive effect of Class B common stock | ||||||||||||||||
| Weighted average shares—diluted | ||||||||||||||||
| Net loss per common share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
25
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company excludes from the diluted net loss per common share computation potentially dilutive securities related to warrants, equity awards and convertible shares of Class B common stock when their exercise or performance vesting price is greater than the average market price of the Company’s common stock or they are otherwise anti-dilutive.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Warrants | ||||||||||||||||
| Restricted stock units | ||||||||||||||||
| Stock options | ||||||||||||||||
18. Equity Compensation Plans
2017 Equity Incentive Plan
The Purple Innovation, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) provides for grants of stock options, stock appreciation rights, restricted stock units and other stock-based awards. Directors, officers and other employees, as well as others performing consulting or advisory services for the Company and its subsidiaries, are eligible for grants under the 2017 Plan. As of September 30, 2026, an aggregate of
Employee Stock Options
The following table summarizes the Company’s total stock option activity for the nine months ended September 30, 2026:
| Options (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term in Years | Intrinsic Value (in thousands) | |||||||||||||
| Options outstanding as of January 1, 2026 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Exercised | — | |||||||||||||||
| Forfeited | — | |||||||||||||||
| Options outstanding as of September 30, 2026 | $ | $ | ||||||||||||||
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PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The estimated fair value of Company stock options is amortized over the options’ vesting period on a straight-line basis. All outstanding stock options were vested as of January 1, 2026 and there was remaining unrecognized stock compensation cost. There was stock option expense for the three and nine months ended September 30, 2026 and was de minimis for the three and nine months ended September 30, 2025.
Employee Restricted Stock Units
The following table summarizes the Company’s restricted stock unit activity for the nine months ended September 30, 2026:
| Number Outstanding (in thousands) | Weighted Average Grant Date Fair Value | |||||||
| Nonvested restricted stock units as of January 1, 2026 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Nonvested restricted stock units as of September 30, 2026 | $ | |||||||
The Company recorded a de minimis restricted stock unit expense during the three months ended September 30, 2026 and a restricted stock unit recapture benefit of $
For restricted stock units outstanding as of September 30, 2026, there were $
Aggregate Non-Cash Stock-Based Compensation
The Company has accounted for all stock-based compensation under the provisions of ASC 718 Compensation—Stock Compensation. This standard requires the Company to record a non-cash expense associated with the fair value of stock-based compensation over the requisite service period.
The following table summarizes the aggregate non-cash stock-based compensation recognized in the statement of operations for stock awards, employee stock options and employee restricted stock units (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Cost of revenues | $ | $ | $ | ( | ) | $ | ||||||||||
| Marketing and sales | ( | ) | ||||||||||||||
| General and administrative | ( | ) | ||||||||||||||
| Research and development | ||||||||||||||||
| Total non-cash stock-based compensation | $ | $ | $ | ( | ) | $ | ||||||||||
19. Employee Retirement Plan
In July 2018, the Company established a 401(k) plan that qualifies as a deferred compensation arrangement under Section 401 of the IRS Code. All eligible employees over the age of 18 and with 4 months’ service are eligible to participate in the plan. The plan provides for the Company to match employee contributions up to
27
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
20. Segment Information and Concentrations
The Company designs and manufactures a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets, and other products. The Company has
The accounting policies for the Company’s
The CODM uses consolidated net loss to evaluate earnings generated from segment assets (return on assets) in deciding whether to reinvest profits into its single reportable segment or into other parts of the entity, such as for acquisitions. Consolidated net loss is also used to monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing the segment’s performance and in establishing management’s compensation.
The following table summarizes segment revenue, significant segment expenses, other segment items and segment profit or loss (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Reductions (additions): | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of revenues – restructuring related charges | ||||||||||||||||
| Advertising expense | ||||||||||||||||
| Marketing and sales expense | ||||||||||||||||
| Wholesale marketing and sales expense | ||||||||||||||||
| Showrooms marketing and sales expense | ||||||||||||||||
| General and administrative expense | ||||||||||||||||
| Research and development expense | ||||||||||||||||
| Restructuring, impairment and other related charges | ||||||||||||||||
| Other segment items, net (1) | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ||||||||||||||||
| Net loss attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net reductions | ||||||||||||||||
| Segment net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (1) | Other segment items, net include interest expense, other (income) expense, net, and change in fair value of warrant liabilities. |
The Company classifies products into two major categories: sleep products and other. Sleep products include mattresses, platforms, adjustable bases, mattress protectors, pillows and sheets. Other products include cushions and various other products. In the three and nine months ended September 30, 2026 and 2025 sales of other products accounted for less than
28
PURPLE INNOVATION, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company defines international revenues as sales to customers located outside of the United States. In the three and nine months ended September 30, 2026 and 2025 international customers accounted for less than
The Company had one individual customer that accounted for approximately
The Company currently obtains materials and components used in production from outside sources. As a result, the Company is dependent upon suppliers that in some instances, are the sole source of supply. The Company is continuing efforts to dual-source key components. The failure of one or more of the Company’s suppliers to provide materials or components on a timely basis could significantly impact the results of operations. The Company believes that it can obtain these raw materials and components from other sources of supply in the ordinary course of business, although an unexpected loss of supply over a short period of time may not allow for the replacement of these sources in the ordinary course of business.
The Company maintains its cash balances in financial institutions based in the United States that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 for each financial institution per entity. At times, the Company’s cash balance deposited at financial institutions exceeds the federally insured deposit limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to these deposits.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to provide a review of the operating results and financial condition of Purple Innovation, Inc. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in “Part I. Item 1. Financial Statements.” Capitalized terms used in this “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and not otherwise defined shall have the meanings set forth in “Part I. Item. 1 Financial Statements.”
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that represent our current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” “project,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words.
All forward-looking statements included in this Quarterly Report are made only as of the date hereof. It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses (including the discussion under the heading “Outlook for Growth”), and other characterizations of future events or circumstances are forward-looking statements.
We caution and advise readers that these statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict, including those included in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2026. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements and investors are cautioned not to place undue reliance on any such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
We own or have rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect the content of our products and the formulations for such products. Solely for convenience, some of the trademarks, trade names and copyrights referred to in this Form 10-Q are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trademarks and trade names.
Overview of Our Business
Our mission is to deliver the greatest sleep ever invented.
We began as a digitally native vertical brand founded on comfort product innovation with premium offerings, and have since expanded into brick & mortar stores as a true omni-channel brand. We offer a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets and more. Our products are the result of decades of innovation and investment in proprietary and patented comfort technologies and the development of our own manufacturing processes. Our proprietary Hyper-Elastic Polymer gel technology underpins many of our comfort products and provides a range of benefits that differentiate our products from our competitors. Specially engineered to relieve pressure, maintain an ideal body temperature, and provide instantly adaptive support, Purple’s patented technology has been tested rigorously within medical and consumer applications for over 30 years. Originally designed for use in hospital beds and wheelchairs, we adapted this unique pressure-relieving material for our mattresses, pillows and other cushion products.
We market and sell our products via our direct-to-consumer channel, which includes Purple.com (our direct-to-consumer e-commerce), Purple showrooms, our customer contact center and online marketplaces (collectively “DTC”), and our wholesale channel through retail brick-and-mortar and online wholesale partners.
Organization
Our business consists of Purple Inc. and its consolidated subsidiary, Purple LLC. As the sole managing member of Purple LLC, Purple Inc., through its officers and directors, is responsible for all operational and administrative decision making and control of the day-to-day business affairs of Purple LLC without the approval of any other member. At September 30, 2026, Purple Inc. had a 99.94% economic ownership interest in Purple LLC while Class B unit holders had the remaining 0.06%.
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Recent Developments in Our Business
Operational Developments
We continue building on the progress we made in the past year and remain focused on where we believe we can make the most impact. The demand environment remained challenging in the third quarter of 2026 as overall revenue was down 18.7% across all channels. E-commerce revenues were down 6.3%, showroom revenues were down 15.7% and wholesale revenues were down 31.0% compared to the third quarter of 2025. Industry trends remain under pressure as higher interest rates and financing costs, along with increasing costs continue to weigh on housing and mattress demand. DTC performance early in the quarter was weak as the price increases we implemented in June had a greater impact on demand than anticipated. However, business improved in the second half of the quarter with better performance during the holiday promotional period. Wholesale revenues were down mainly due to the performance of our regional and independent partners, and an increase in reductions of revenue due to certain payments to customers and a manufacturer under common control with a customer. Operationally, we continue to see the benefits of previous actions taken in areas we can control and we believe that we are operating from a stronger foundation than a year ago. We continue to invest in innovation with new mattresses expecting to roll out over the next two quarters across our Essentials and Hybrid collections.
Impact of Revenue Presentation for Certain Product Arrangements
Revenue for certain product arrangements is presented differently depending on the nature of the underlying manufacturing relationships and the application of ASC 606—Revenue from Contracts with Customers. Under the guidance, payments to third-party manufacturers, including manufacturers under common control with certain customers, are evaluated to determine whether they are economically linked to an underlying customer arrangement. For certain customer-specific or exclusive product programs where the manufacturer is under common control with the customer, we have concluded that payments to the manufacturer are economically linked to the customer relationship and therefore represent consideration payable to a customer. As a result, these payments are recorded as a reduction of revenue, and revenue is presented on a net basis. We recorded $1.7 million and $7.2 million in consideration paid as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three months and nine months ended September 30, 2026, respectively. This presentation results in reported revenue being lower than the gross amount billed to the customer. While the net presentation affects reported revenue, it does not impact gross profit dollars for these arrangements. The distinction reflects the application of GAAP to different fact patterns rather than a difference in the underlying economics of the transactions.
Debt Financings
On March 24, 2026, the Loan Parties entered into the Third Amendment with the Lenders, which revised the maturity date under the Amended A&R Credit Agreement from December 31, 2026, to April 30, 2027 and waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. In connection with the Third Amendment, the Loan Parties agreed to pay to the Lenders an amendment fee in the aggregate amount of $1.6 million, equal to 1.25% pro rata based on each Lender’s outstanding principal amount (the “Amendment Fee”). Of the Amendment Fee, approximately $1.3 million was paid-in-kind by adding such amount to the 2025 Lenders’ outstanding principal amount. The remaining $0.3 million of the Amendment Fee was paid in cash to the other lenders. In connection with the Third Amendment, the Loan Parties also agreed to reimburse the 2025 Lenders for certain expenses in the amount of $0.3 million.
Reclassification of Merchant and Financing Fees
In the second quarter of 2026, we changed the presentation of costs associated with merchant credit card processing fees and third-party consumer financing fees. These costs were previously presented within cost of revenues and are now presented within marketing and sales. We believe this presentation will enhance the comparability of our financial statements with those of our industry peers.
The tables below present the effect of the reclassification on our previously issued financial statements. This change in presentation had no impact on previously reported revenues, operating loss, net loss, or earnings per share. Additionally, the reclassifications did not impact the historical balance sheets or statement of cash flows.
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| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| (In thousands, except per share amounts) | As Previously Presented | Reclassification | As Reclassified | As Previously Presented | Reclassification | As Reclassified | ||||||||||||||||||
| Cost of revenues | $ | 60,535 | $ | (5,026 | ) | $ | 55,509 | $ | 62,207 | $ | (4,615 | ) | $ | 57,592 | ||||||||||
| Total cost of revenues | 60,535 | (5,026 | ) | 55,509 | 63,125 | (4,615 | ) | 58,510 | ||||||||||||||||
| Gross profit | 35,195 | 5,026 | 40,221 | 41,046 | 4,615 | 45,661 | ||||||||||||||||||
| Marketing and sales | 31,557 | 5,026 | 36,583 | 36,626 | 4,615 | 41,241 | ||||||||||||||||||
| Total operating expenses | 52,038 | 5,026 | 57,064 | 55,525 | 4,615 | 60,140 | ||||||||||||||||||
| Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |||||||||||||||||||||||
| (In thousands, except per share amounts) | As Previously Presented | Reclassification | As Reclassified | As Previously Presented | Reclassification | As Reclassified | ||||||||||||||||||
| Cost of revenues | $ | 67,340 | $ | (4,831 | ) | $ | 62,509 | $ | 129,547 | $ | (9,446 | ) | $ | 120,101 | ||||||||||
| Total cost of revenues | 67,417 | (4,831 | ) | 62,586 | 130,542 | (9,446 | ) | 121,096 | ||||||||||||||||
| Gross profit | 37,683 | 4,831 | 42,514 | 78,729 | 9,446 | 88,175 | ||||||||||||||||||
| Marketing and sales | 30,616 | 4,831 | 35,447 | 67,242 | 9,446 | 76,688 | ||||||||||||||||||
| Total operating expenses | 51,922 | 4,831 | 56,753 | 107,447 | 9,446 | 116,893 | ||||||||||||||||||
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| (In thousands, except per share amounts) | As Previously Presented | Reclassification | As Reclassified | As Previously Presented | Reclassification | As Reclassified | ||||||||||||||||||
| Cost of revenues | $ | 67,915 | $ | (5,642 | ) | $ | 62,273 | $ | 197,462 | $ | (15,088 | ) | $ | 182,374 | ||||||||||
| Total cost of revenues | 67,915 | (5,642 | ) | 62,273 | 198,457 | (15,088 | ) | 183,369 | ||||||||||||||||
| Gross profit | 50,851 | 5,642 | 56,493 | 129,580 | 15,088 | 144,668 | ||||||||||||||||||
| Marketing and sales | 40,120 | 5,642 | 45,762 | 107,362 | 15,088 | 122,450 | ||||||||||||||||||
| Total operating expenses | 62,977 | 5,642 | 68,619 | 170,424 | 15,088 | 185,512 | ||||||||||||||||||
| Year Ended December 31, 2025 | ||||||||||||
| (In thousands, except per share amounts) | As Previously Presented | Reclassification | As Reclassified | |||||||||
| Cost of revenues | $ | 279,171 | $ | (21,618 | ) | $ | 257,553 | |||||
| Total cost of revenues | 280,166 | (21,618 | ) | 258,548 | ||||||||
| Gross profit | 188,559 | 21,618 | 210,177 | |||||||||
| Marketing and sales | 147,040 | 21,618 | 168,658 | |||||||||
| Total operating expenses | 231,588 | 21,618 | 253,206 | |||||||||
Review of Strategic Alternatives
We have engaged with multiple parties about a broad range of opportunities to maximize shareholder value, including, but not limited to, a merger, sale or other strategic or financial transaction. The Board has formed a special committee of independent directors and we have engaged a financial advisor to support them in evaluating a range of options and exploring other potential strategic alternatives. If we are unsuccessful in engaging in a favorable strategic alternative, then our ability to grow our business and compete with larger, including combined, competitors may be adversely affected.
Impact of United States Tariff Policy
We continue to actively manage the impact of recent United States tariff policies. Importantly, all of our mattresses are manufactured in the United States, and about 15% of our cost of goods is tied to products sourced from overseas. This limited exposure is primarily concentrated in the textile side of the business, which includes sheets and mattress covers, but also includes the import of bases and foundations. Tariffs impacted us by approximately $0.1 million and $1.9 million during the three and nine months ended September 30, 2026, respectively, due to our mitigation efforts which have reduced the overall impact to our initial expectations. The tariff landscape remains fluid, and we are actively evaluating sourcing alternatives and pricing strategies on a case-by-case basis. We believe that our vertically integrated model and strong vendor relationships give us the flexibility to remain agile and responsive to changes in tariff policies, and we believe that we will be able to partially mitigate these impacts through a combination of supply chain repositioning, vendor collaborations, and selective pricing actions. On March 6, 2026, we filed a lawsuit in the U.S. Court of International Trade against the U.S. Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of the tariffs imposed under the International Emergency Economic Powers Act that the Company has paid to the United States. During the second quarter of 2026, we received $5.5 million in tariff refunds plus interest (See Note 2 – Summary of Significant Accounting Policies, Refund of Tariffs).
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Pricing Actions
In the latter part of the second quarter of 2026, we announced a pricing action to increase the sales price of our products across all mattress and pillow products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. All price increases were in effect with all customers by the end of the third quarter of 2026.
Reverse Stock Split
On July 2, 2026, our stockholders approved a reverse stock split of our Class A common stock and Class B common stock (collectively, the “common stock”) at a ratio ranging from any whole number between 1-for-10 to 1-for-30, with the exact ratio determined by the Board of Directors. On July 6, 2026, the Board of Directors approved a 1-for-25 reverse stock split (“Reverse Stock Split”) of our common stock that became effective on July 19, 2026. Following the effect of the Reverse Stock Split, every 25 shares of our common stock that were issued and outstanding automatically converted into one outstanding share of common stock. All stock awards and warrants outstanding immediately prior to the Reverse Stock Split were proportionally adjusted.
The Reverse Stock Split did not change our authorized number of shares of common stock. The Reverse Stock Split did not change the par value of the common stock and, therefore we reclassified an amount equal to the reduction in the number of shares of common stock at par value to additional paid-in capital. No fractional shares of common stock were issued in connection with the Reverse Stock Split. Instead, any fractional share that would otherwise result from the Reverse Stock Split will be rounded up to the next whole share of common stock. Proportionate adjustments were made to the number of shares authorized under our equity incentive plans, the number of shares subject to any award or purchase right under our equity incentive plans, and the exercise price or purchase price with respect to any stock award or warrant.
Impairment Charges
In September 2026, we relocated our corporate headquarters to one of our other facilities in Draper, Utah and began efforts to sublease the vacated office building. We determined this was a triggering event for potential impairment of one of our long-lived assets and a recoverability test was required. We performed the recoverability test by comparing the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges). When the estimated undiscounted cash flows are less than the carrying value of the assets, we calculate an impairment loss. The impairment loss calculation compared the carrying value of its assets to the estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. The resultant assessment we performed determined there was an impairment and we recorded an impairment loss of $1.1 million for the three and nine months ended September 30, 2026. When we recognize an impairment loss, the carrying amount of the impaired asset is reduced to estimated fair value.
Nasdaq Matters
On August 7, 2026, we were formally notified by The Nasdaq Stock Market LLC that we had demonstrated compliance with the $1.00 bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) and all other applicable criteria for continued listing on The Nasdaq Global Select Market. Accordingly, the previously disclosed listing matter before the Nasdaq Hearings Panel (the “Panel”) has been closed. The Panel has imposed a Mandatory Panel Monitor for a period of one year, through August 7, 2027. If during the monitoring period, our closing bid price falls below $1.00 per share for 30 consecutive business days, we will not be eligible for a 180-day compliance period otherwise available under the Nasdaq Listing Rules. Rather, Nasdaq would issue a delist determination, which we could then appeal by requesting a hearing before the Panel. Our securities may be at that time delisted from Nasdaq.
On September 30, 2026, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that for the last 30 consecutive business days, our Market Value of Publicly Held Shares (“MVPHS”) was below the minimum of $15 million required for continued listing on the Nasdaq Global Select Market pursuant to Nasdaq Listing Rules 5450(b)(2)(C) and 5450(b)(3)(C) (the “MVPHS Requirement”). The notification of noncompliance has no immediate effect on the listing or trading of our Class A common stock on The Nasdaq Global Select Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(D), we are given 180 calendar days from the date of the notification (the “Compliance Period”), or until March 29, 2027 (the “Compliance Date”), to regain compliance with respect to the MVPHS Requirement. To regain compliance with the MVPHS Requirement, our MVPHS must close at $15 million or more for a minimum of ten consecutive business days during the Compliance Period. If we do not regain compliance by the Compliance Date, Nasdaq will notify us that our securities are subject to delisting. At that time, we may appeal any such delisting determination to a hearings panel. However, there can be no assurance that, if the Staff issues a delisting determination and we appeal the delisting determination, such appeal would be successful. Alternatively, we may consider applying for transfer to the Nasdaq Capital Market, provided we meet all the continued listing requirements of the Nasdaq Capital Market.
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Executive Summary – Results of Operations
Net revenues decreased $22.3 million, or 18.7%, to $96.5 million for the three months ended September 30, 2026 compared to $118.8 million for the three months ended September 30, 2025. The decrease in revenue was driven by a $16.0 million or 31.0% decrease in our wholesale revenue, a $3.4 million or 15.7% decrease in showroom net revenues and a $2.9 million or 6.3% decrease in E-commerce net revenues. Wholesale revenues were down mainly due to lower industry demand and the performance of our regional and independent partners, and an increase in reductions of revenue due to certain payments to customers and a manufacturer under common control with a customer. The other decreases were due mainly to weak DTC performance early in the quarter as the price increases we implemented in June had a greater impact on demand than anticipated. However, business improved in the second half of the quarter with better performance during the holiday promotional period.
Gross profit decreased $14.6 million, or 25.8%, to $41.9 million for the three months ended September 30, 2026 compared to $56.5 million for the three months ended September 30, 2025. Our gross profit decreased $10.6 million due to lower sales and $4.0 million due to lower gross profit percentage. Our gross profit percentage decreased to 43.4% of net revenues in the third quarter of 2026 from 47.6% in the third quarter of 2025 primarily due to reduced production volumes and increases in material costs, partially offset by reduced tariff costs.
Operating expenses decreased $16.9 million, or 24.7%, to $51.7 million for the three months ended September 30, 2026 compared to $68.6 million for the three months ended September 30, 2025. This decrease was driven by a $5.4 million decrease in employee and wholesale marketing related expenses, a $5.3 million decrease in restructuring related costs from last year, a $3.7 million decrease in advertising spending and $3.6 million decrease in all other operating expenses, partially offset by a $1.1 million increase in impairment on our leases.
Total other income (expense), net was $8.4 million net other income for the three months ended September 30, 2026, compared to $0.4 million net other income for the three months ended September 30, 2025. The other income, net for the three months ended September 30, 2026 consists of a $14.3 million gain from the change in the fair value of warrants, $2.2 million in other income, partially offset by $8.1 million in interest expense. The other income, net in the three months ended September 30, 2025 consists of a $6.9 million gain from the change in the fair value of warrants, $1.7 million in other income, partially offset by $8.2 million in interest expense.
Net loss attributable to Purple Inc. was $1.4 million for the three months ended September 30, 2026 compared to a net loss of $11.7 million for the three months ended September 30, 2025. The $10.3 million decrease in net loss was primarily due to reduced operating expenses and the increase in gain from change in fair value of the warrants partially offset by lower margins.
Outlook for Growth
The way we think about the business today is fundamentally different than a year ago. Last year was about reshaping the business for a tougher market – right sizing our cost structure, strengthening the foundation and restoring profitability. Now, we are focused on growth with our strategic focus areas that build on what is already working and how we are running our business. We believe we are well positioned to grow our business given our new grid innovation, evolved messaging strategy, our new cost structure and other cost saving initiatives. Our Path to Premium Sleep strategy remains focused on the following three priorities to drive growth:
| ● | Knowing Our Consumer. Knowing our consumer continues to shape how we show up across all channels. We remain focused on helping people understand why the GelFlex Grid is different, why it matters to sleep quality and which Purple product is right for them. As part of that effort, we are becoming more disciplined about where we invest our marketing dollars and the returns we expect from them. Our Marketing approach continues to evolve in several important ways. We have shifted toward a more consistent, always-on approach to brand awareness advertising, rather than concentration around holiday promotional periods. We are also doing more to let our customers tell the Purple story through testimonial marketing. Another important priority is strengthening how we communicate the Purple brand. When Purple was founded 10 years ago, our story was centered on innovation and what made our products different. Today, we’re building on that foundation by placing greater emphasis on the broader benefits of our products and the role better sleep can play in consumers’ health and wellness. Our goal is to position Purple as more than a mattress brand, helping consumers understand how better sleep can contribute to a better life. we’re excited to have recently welcomed Kristin Harrer as our new Chief Marketing Officer. She brings extensive experience building and leading consumer brands, including senior marketing roles at Nike, Samsung, Dollar Shave Club and Vans. Her experience will help sharpen our brand positioning, strengthen how we connect with consumers and improve overall marketing effectiveness. |
| ● | Delivering Better Sleep. We believe our product remains our biggest differentiator. During the third quarter, we unveiled the first major redesign of our proprietary GelFlex Grid technology, featuring a new circular geometry designed to improve support and pressure relief, reduce motion transfer and use less material. We continue to invest in innovation with new mattresses expected to roll out over the next two quarters across our new Essentials and Hybrid collections. We have created clearer differentiation between models and a much more compelling look for a multi-brand environment. The Essentials collection represents a significant portion of our mattress business and offers consumers an accessible entry point to the Purple brand. The new Hybrid collection will replace Restore, with improved construction and performance, and improved aesthetics for a multi-brand environment. Our innovation also extends beyond mattresses as we recently introduced a new airline travel pillow and the new Renew Grid pillow at Costco. We also have plans to release a super-premium down pillow. |
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| ● | Executing with Financial Discipline. Over the past two years, we have taken meaningful steps to improve the efficiency of our business and change the way we operate. Those efforts have contributed to lower costs and increased efficiency. However, the lower wholesale volumes have put temporary pressure on our margins and profitability as we absorb fixed manufacturing costs over a lower production base. We are responding by managing the things we can control. We continue to manage plant costs, adjusting labor to match production volume and manage inventory and working capital. Our sourcing work also continues to create additional opportunities. Supplier diversification initiatives are beginning to show benefits and additional sourcing initiatives are expected to take effect in the first half of 2027. At the end of the third quarter, we also took another step to reduce costs by initiating the process to sublet our corporate headquarters building and bringing our teams together into our Innovation Center. We believe this not only reduces costs, but importantly improves collaboration and brings our people closer to the product we are developing. |
There is no guarantee that we will be able to effectively execute on these initiatives, which are subject to risks, uncertainties, and assumptions that are difficult to predict, including the risks described in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026 and our Quarterly Reports on Form 10-Q filed with the SEC on April 28, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on August 11, 2026. Therefore, actual results may differ materially and adversely from those described above. In addition, we may, in the future, adapt these focuses in response to changes in the market or our business.
Operating Results for the Three Months Ended September 30, 2026 and 2025
The following table sets forth for the periods indicated, our results of operations and the percentage of total revenue represented in our unaudited condensed consolidated statements of operations (dollars in thousands):
| Three Months Ended September 30, | ||||||||||||||||
| 2026 | % of Net Revenues | 2025 | % of Net Revenues | |||||||||||||
| Revenues, net | $ | 96,506 | 100.0 | % | $ | 118,766 | 100.0 | % | ||||||||
| Cost of revenues: | ||||||||||||||||
| Cost of revenues | 54,582 | 56.6 | 62,273 | 52.4 | ||||||||||||
| Cost of revenues - restructuring related charges | — | — | — | — | ||||||||||||
| Total cost of revenues | 54,582 | 56.6 | 62,273 | 52.4 | ||||||||||||
| Gross profit | 41,924 | 43.4 | 56,493 | 47.6 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Marketing and sales | 36,273 | 37.6 | 45,762 | 38.5 | ||||||||||||
| General and administrative | 11,963 | 12.4 | 15,200 | 12.8 | ||||||||||||
| Research and development | 2,358 | 2.4 | 2,367 | 2.0 | ||||||||||||
| Restructuring, impairment and other related charges | 1,101 | 1.1 | 5,290 | 4.5 | ||||||||||||
| Total operating expenses | 51,695 | 53.6 | 68,619 | 57.8 | ||||||||||||
| Operating loss | (9,771 | ) | (10.1 | ) | (12,126 | ) | (10.2 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (8,090 | ) | (8.4 | ) | (8,203 | ) | (6.9 | ) | ||||||||
| Other income, net | 2,202 | 2.3 | 1,742 | 1.5 | ||||||||||||
| Change in fair value – warrant liabilities | 14,315 | 14.8 | 6,892 | 5.8 | ||||||||||||
| Total other income (expense), net | 8,427 | 8.7 | 431 | 0.4 | ||||||||||||
| Net loss before income taxes | (1,344 | ) | (1.4 | ) | (11,695 | ) | (9.8 | ) | ||||||||
| Income tax expense | (76 | ) | — | (53 | ) | — | ||||||||||
| Net loss | (1,420 | ) | (1.5 | ) | (11,748 | ) | (9.9 | ) | ||||||||
| Net loss attributable to noncontrolling interest | (22 | ) | — | (28 | ) | — | ||||||||||
| Net loss attributable to Purple Innovation, Inc. | $ | (1,398 | ) | (1.4 | ) | $ | (11,720 | ) | (9.9 | ) | ||||||
Revenues, Net
Net revenues decreased $22.3 million, or 18.7%, to $96.5 million for the three months ended September 30, 2026 compared to $118.8 million for the three months ended September 30, 2025. The decrease in revenue was driven by a $16.0 million or 31.0% decrease in our wholesale revenue, a $3.4 million or 15.7% decrease in showroom net revenues and a $2.9 million or 6.3% decrease in E-commerce net revenues. Wholesale revenues were down $12.0 million related to lower industry demand mainly in our regional and independent partners and an increase of $4.0 million in reductions of revenue due to certain payments to customers and a manufacturer under common control with a customer. The DTC decreases were due mainly to weak DTC performance early in the quarter as the price increases we implemented in June had a greater impact on demand than anticipated. However, business improved in the second half of the quarter with better performance during the holiday promotional period. In addition, there was a shift in timing in the prior year as Rejuvenate orders in the second quarter were delivered in the third quarter.
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Total Cost of Revenues
Total cost of revenues decreased $7.7 million, or 12.4%, to $54.6 million for the three months ended September 30, 2026, compared to $62.3 million for the three months ended September 30, 2025. This decrease was due primarily to lower revenue volumes and $2.0 million in lower tariff payments. Our gross profit percentage decreased to 43.4% of net revenues in the third quarter of 2026 from 47.6% in the third quarter of 2025, due mainly to reduced production volumes and inventory adjustments, partially offset by reduced tariff costs and favorable channel mix.
Marketing and Sales
Marketing and sales expense decreased $9.5 million, or 20.7%, to $36.3 million for the three months ended September 30, 2026 compared to $45.8 million for the three months ended September 30, 2025. This decrease primarily consisted of a $3.7 million decrease in advertising spending, a $3.2 million decrease in various marketing activities and professional services, a $1.7 million decrease in employee-related expenses due to headcount reductions and $0.9 million decrease in all other marketing and sales expenses.
General and Administrative
General and administrative expense decreased $3.2 million, or 21.3%, to $12.0 million for the three months ended September 30, 2026 compared to $15.2 million for the three months ended September 30, 2025. This decrease was due to a $1.7 million decrease in employee related costs due to headcount reductions, a $0.7 million reduction in professional and legal fees and a $0.8 million decrease in all other general and administrative costs.
Research and Development
Research and development expense remained flat at $2.4 million for the three months ended September 30, 2026 and 2025.
Restructuring, Impairment and Other Related Charges
Impairment charges were $1.1 million for the three months ended September 30, 2026 due to the impairment of one of our leases as we moved our headquarters to an existing facility. We incurred $5.3 million of restructuring, impairment and other related charges during the three months ended September 30, 2025.
Operating Loss
Operating loss decreased $2.3 million, or 19.4%, to $9.8 million, for the three months ended September 30, 2026, compared to $12.1 million for the three months ended September 30, 2025. This decrease in our operating loss is the result of lower operating expenses partially offset by lower gross profits.
Interest Expense
Interest expense totaled $8.1 million for the three months ended September 30, 2026 compared to $8.2 million for the three months ended September 30, 2025. This decrease was primarily due to lower amortization of debt issuance costs, partially offset by additional interest incurred on a higher principal balance on the outstanding debt.
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Other Income, Net
Other income was $2.2 million for the three months ended September 30, 2026 compared to $1.7 million for the three months ended September 30, 2025. This increase was mainly due to a $0.7 million patent infringement settlement partially offset by a $0.2 million decrease in other income items.
Change in Fair Value – Warrant Liabilities
Our warrants contain certain provisions that did not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date. We incurred a $14.3 million gain on the change in fair value of our warrant liabilities for the three months ended September 30, 2026 related to the decrease in fair value from the previous reporting date, due mainly to the reduction in stock price. For the three months ended September 30, 2025, we recognized a $6.9 million gain related to the decrease in fair value of the warrant liability during that period.
Income Tax (Expense) Benefit
We had a $0.1 million income tax expense for the three months ended September 30, 2026 and de minimis tax expense for 2025. The income tax expense amounts in both the third quarter of 2026 and 2025 were related to various state taxes.
Noncontrolling Interest
We calculate net loss attributable to noncontrolling interests on a quarterly basis using their weighted average ownership percentage. Net loss attributed to noncontrolling interests was negligible for the three months ended September 30, 2026 and 2025.
Operating Results for the Nine Months Ended September 30, 2026, and 2025
The following table sets forth for the periods indicated, our results of operations and the percentage of total revenue represented in our unaudited condensed consolidated statements of operations (dollars in thousands):
| Nine Months Ended September 30, | ||||||||||||||||
| 2026 | % of Net Revenues | 2025 | % of Net Revenues | |||||||||||||
| Revenues, net | $ | 290,506 | 100.0 | % | $ | 328,037 | 100.0 | % | ||||||||
| Cost of revenues: | ||||||||||||||||
| Cost of revenues | 163,948 | 56.4 | 182,374 | 55.6 | ||||||||||||
| Cost of revenues - restructuring related charges | — | — | 995 | 0.3 | ||||||||||||
| Total cost of revenues | 163,948 | 56.4 | 183,369 | 55.9 | ||||||||||||
| Gross profit | 126,558 | 43.6 | 144,668 | 44.1 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Marketing and sales | 106,589 | 36.7 | 122,450 | 37.3 | ||||||||||||
| General and administrative | 42,441 | 14.6 | 44,678 | 13.6 | ||||||||||||
| Research and development | 7,291 | 2.5 | 6,997 | 2.1 | ||||||||||||
| Restructuring, impairment and other related charges | 1,101 | 0.4 | 11,387 | 3.5 | ||||||||||||
| Total operating expenses | 157,422 | 54.2 | 185,512 | 56.6 | ||||||||||||
| Operating loss | (30,864 | ) | (10.6 | ) | (40,844 | ) | (12.5 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (24,121 | ) | (8.3 | ) | (20,424 | ) | (6.2 | ) | ||||||||
| Other income, net | 5,148 | 1.8 | 1,812 | 0.6 | ||||||||||||
| Change in fair value – warrant liabilities | 14,750 | 5.1 | 11,319 | 3.5 | ||||||||||||
| Total other income (expense), net | (4,223 | ) | (1.5 | ) | (7,293 | ) | (2.2 | ) | ||||||||
| Net loss before income taxes | (35,087 | ) | (12.1 | ) | (48,137 | ) | (14.7 | ) | ||||||||
| Income tax expense | (155 | ) | — | (148 | ) | — | ||||||||||
| Net loss | (35,242 | ) | (12.1 | ) | (48,285 | ) | (14.7 | ) | ||||||||
| Net loss attributable to noncontrolling interest | (73 | ) | — | (83 | ) | — | ||||||||||
| Net loss attributable to Purple Innovation, Inc. | $ | (35,169 | ) | (12.1 | ) | $ | (48,202 | ) | (14.7 | ) | ||||||
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Revenues, Net
Net revenues decreased $37.5 million, or 11.4%, to $290.5 million for the nine months ended September 30, 2026, compared to $328.0 million for the nine months ended September 30, 2025. This decrease was primarily driven by a $29.3 million or 21.1% decrease in our wholesale revenue due to a $14.2 million decrease in wholesale sales volume related to lower industry demand mainly in our regional and independent partners and an increase of $15.1 million in reductions of revenue due to certain payments to customers and a manufacturer under common control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, E-commerce net revenues decreased $8.3 million, or 6.2% due to overall market demand and showroom net revenues remained flat.
Total Cost of Revenues
Total cost of revenues decreased $19.4 million, or 10.6%, to $163.9 million for the nine months ended September 30, 2026, compared to $183.4 million for the nine months ended September 30, 2025. This decrease was due primarily due to lower sales volumes, increases in material and freight costs, a $5.3 million credit for tariff refunds we received in the second quarter and costs of $7.2 million to a manufacturer under common control that were booked against revenues. Our gross profit percentage decreased to 43.6% for the first nine months in 2026 from 44.1% in the first nine months of 2025.
Marketing and Sales
Marketing and sales expense decreased $15.9 million, or 13.0%, to $106.6 million for the nine months ended September 30, 2026, compared to $122.4 million for the nine months ended September 30, 2025. This decrease is due to a decrease of $6.8 million in professional fees and other marketing costs, a decrease of $4.9 million in advertising spending, and a decrease of $4.2 million for payroll related costs.
General and Administrative
General and administrative expense decreased $2.2 million, or 5.0%, to $42.4 million for the nine months ended September 30, 2026, compared to $44.7 million for the nine months ended September 30, 2025. This decrease was primarily due to a $5.8 million decrease in employee-related expenses due to headcount reductions and a $0.1 million decrease in other expenses, partially offset by a $3.6 million increase in strategic alternative costs.
Research and Development
Research and development expense increased $0.3 million, or 4.2%, to $7.3 million for the nine months ended September 30, 2026, compared to $7.0 million for the nine months ended September 30, 2025. This increase is due to an increase in professional services during the period.
Restructuring, Impairment and Other Related Charges
Impairment charges were $1.1 million for the nine months ended September 30, 2026 due to the impairment of one of our leases as we moved our headquarters to an existing facility. We incurred $11.4 million of restructuring, impairment and other related charges during the nine months ended September 30, 2025.
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Operating Loss
Operating loss decreased $10.0 million, or 24.4%, to $30.8 million, for the nine months ended September 30, 2026, compared to $40.8 million for the nine months ended September 30, 2025. This decrease in our operating loss is the result of the reduced marketing and sales expenses and restructuring and impairment charges in 2026, partially offset by reduced gross profit due to lower revenues and lower gross profit margins.
Interest Expense
Interest expense totaled $24.1 million for the nine months ended September 30, 2026, compared to $20.4 million for the nine months ended September 30, 2025. This increase was primarily due to additional interest incurred on a higher principal balance on the Related Party Loan as the Company elected the paid-in-kind option on monthly interest over the past 12 months.
Change in Fair Value – Warrant Liabilities
Our warrants contain certain provisions that did not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date. We incurred a $14.8 million gain on the decrease in the fair value of our warrant liabilities for the nine months ended September 30, 2026. For the nine months ended September 30, 2025, we recognized an $11.3 million gain related to the decrease in fair value of the warrant liability during that period.
Income Tax (Expense) Benefit
We had a $0.2 million income tax expense for the nine months ended September 30, 2026, compared to $0.1 million income tax expense for the nine months ended September 30, 2025. The income tax expense amounts in the nine months ended September 30, 2026 and 2025 were related to various state taxes.
Noncontrolling Interest
We calculate net income or loss attributable to noncontrolling interests on a quarterly basis using the weighted average ownership percentage. Net loss attributed to noncontrolling interests was de minimis for the nine months ended September 30, 2026 and 2025.
Liquidity and Capital Resources
Our historical principal sources of funds are cash flows from operations and cash and cash equivalents on hand, supplemented with borrowings made pursuant to various loan agreements. Principal uses of funds consist of capital expenditures, working capital needs, operating lease payment obligations and investing in innovation. In accordance with the terms of our various loan agreements, we have elected to pay interest in kind on our loans to reduce cash obligations. Our working capital needs depend largely upon the timing of cash receipts from product sales, payments to vendors and others, changes in inventories, and operating lease payment obligations. Our cash and cash equivalents and working capital positions were $28.3 million and $(117.6) million, respectively, as of September 30, 2026 compared to $24.3 million and $35.2 million, respectively, as of December 31, 2025. The change in working capital position at September 30, 2026 is due to our debt maturity date now being within the next 12 months. We had an accumulated deficit of $660.4 million at September 30, 2026. We incurred a net loss of $35.2 million for the nine months ended September 30, 2026, with net cash provided by operating activities of $10.6 million. Cash used for capital expenditures was $5.2 million for the nine months ended September 30, 2026. Our capital expenditures in 2026 have primarily consisted of additional investments made in our manufacturing operations and showroom facilities. Additional details regarding our current debt are described above in Note 10 - Debt.
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We have a history of recurring net losses and cash used in operations, an accumulated deficit, and requiring additional capital to fund our operations, invest in the business to expand sales and marketing efforts and invest in innovation. Our financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the condensed consolidated financial statements for the three and nine months ended September 30, 2026, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to our ability to continue as a going concern within one year after the date of the issuance of such financial statements.
Debt service has consisted primarily of refinancing or extending the maturity date of the debt as well as paying-in-kind interest payments. As disclosed in Note 10 - Debt, the Company has elected to have interest paid-in-kind and added to the principal amount of the loans under the Amended and Restated Credit Agreement and on March 24, 2026, the Company executed the Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) with the Lenders to extend the maturity date of the Amended and Restated Credit Agreement from December 31, 2026 to April 30, 2027. In addition, certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements were waived (see Note 10 – Debt). Management has implemented plans to both increase its revenues from the sales of its products and to achieve cost savings within the next year, sufficient to generate positive operating cash flow levels. However, the Company cannot guarantee that it will have sufficient cash flow to meet the debt obligations when they become due within the next twelve months. The Company will need to raise additional capital or secure alternative financing arrangements, both of which are uncertain and not within the control of the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
The Company has taken a number of actions to increase cash flow and support its operations and strategies. In August 2024, the Company implemented the Restructuring Plan to consolidate manufacturing operations resulting in cost savings. The Company has realized and plans to continue to realize direct material cost savings by concentrating efforts on driving gross margin improvement through various methods such as pricing actions, continued mix shift towards the Restore and Rejuvenate collections, and by driving cost savings through supply chain initiatives and manufacturing efficiency. The Company has delivered direct material cost savings from its supplier diversification efforts, improved scrap and yield results from continuous improvements, and outbound freight costs reflect cost improvements along with improved delivery reliability. The Company has been successful in subleasing the two manufacturing facilities that were vacated as part of the Restructuring Plan. The Company has also taken additional cost-saving initiatives in 2025 and the beginning of 2026 to reduce headcount and streamline responsibilities and reporting structure. Further, management’s plans include additional actions intended to improve liquidity and reduce costs, including a planned optimization of advertising spending, pacing the number of new store openings, efforts to mitigate tariff impacts by managing the country of origin, and other cost-saving initiatives. In the latter part of the second quarter of 2026, the Company announced a pricing action to increase the sales price of our various products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. The Company is currently evaluating potential strategic alternatives and opportunities to achieve additional liquidity through one or more future debt refinancings.
Other Contractual Obligations
Other material contractual obligations primarily include operating lease payment obligations. See Note 8 - Leases of the unaudited condensed consolidated financial statements for additional information on leases.
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Cash Flows for the Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
The following summarizes our cash flows for the nine months ended September 30, 2026 and 2025 as reported in our unaudited condensed consolidated statements of cash flows (in thousands):
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by (used in) operating activities | $ | 10,638 | $ | (28,030 | ) | |||
| Net cash used in investing activities | (6,293 | ) | (6,066 | ) | ||||
| Net cash (used in) provided by financing activities | (346 | ) | 37,443 | |||||
| Net increase in cash | 3,999 | 3,347 | ||||||
| Cash, beginning of the period | 24,345 | 29,011 | ||||||
| Cash, end of the period | $ | 28,344 | $ | 32,358 | ||||
Cash provided by operating activities was $10.6 million for the nine months ended September 30, 2026 compared to cash used in operating activities of $28.0 million for the nine months ended September 30, 2025. The $38.6 million increase in year-over-year cash provided by operating activities included a $36.3 million increase in cash provided from the changes in operating assets and liabilities, a $13.0 million decrease in net loss partially offset by a $10.7 million decrease in non-cash adjustments.
Cash used in investing activities reflected net capital expenditures of $5.2 million and $6.1 million and investment in intangibles of $1.1 million and $0.5 million for the nine months ended September 30, 2026 and 2025, respectively. The nine months ended September 30, 2025 was partially offset by $0.5 million for the sale of certain property and equipment. Capital expenditures in 2026 consisted primarily of additional investments made in our manufacturing operations and showroom facilities.
Cash used in financing activities was $0.3 million for the nine months ended September 30, 2026 compared to cash provided by financing activities of $37.4 million during the nine months ended September 30, 2025. Cash used in financing activities for 2026 consisted of amendment fees paid in cash to certain lenders for the Third Amendment. Financing activities for 2025 included $39.0 million of proceeds from the additional financing in 2025 offset in part by $1.6 million in payments for debt issuance costs.
Critical Accounting Estimates
We discuss our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K filed with the SEC on March 31, 2026. There have been no significant changes in our critical accounting policies since the end of fiscal 2025.
Available Information
Our website address is www.purple.com. We make available free of charge on the Investor Relations portion of our website, investors.purple.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The inclusion of our website address in this report does not include or incorporate by reference into this report any information on our website.
We also use the Investor Relations portion of our website, investors.purple.com, as a channel of distribution of additional Company information that may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts. The contents of our website shall not be deemed to be incorporated herein by reference.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our operating results are subject to risk from interest rate fluctuations on the outstanding borrowings. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. The proceeds we received from the Related Party Loan entered into in January 2024 bear interest at a variable rate which exposes us to market risks relating to changes in interest rates. As of September 30, 2026, we had $142.2 million of variable rate debt associated with the Related Party Loan. Based on this debt level, an increase of 100 basis points in the effective interest rate on the outstanding debt amount would result in an increase in interest expense of approximately $1.4 million over the next 12 months.
We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO” and together with the CEO, the “Certifying Officers”), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Based upon this evaluation, and the above criteria, our Certifying Officers concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2026 at the reasonable assurance level.
(b) Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time involved in various claims, legal proceedings and complaints arising in the ordinary course of business. Please refer to Note 13 — Commitments and Contingencies to the unaudited condensed consolidated financial statements contained in this report for certain information regarding our legal proceedings.
ITEM 1A. RISK FACTORS
The Company’s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected by a number of factors, whether currently known or unknown, including those described below and in Part I, Item 1A of the 2025 Annual Report on Form 10-K filed with the SEC on March 31, 2026 under the heading “Risk Factors.” There have been no material changes from the risk factors previously disclosed in our 2025 Annual Report on Form 10-K filed with the SEC on March 31, 2026, except as set forth below.
Risks Relating to our Common Stock
Nasdaq may delist our securities from its exchange, which could harm our business and limit our stockholders’ liquidity.
Our common stock is currently listed on Nasdaq, which has listing criteria. We cannot assure that our common stock will continue to be listed on Nasdaq in the future. To continue listing our common stock on Nasdaq, we must maintain certain governance, financial, distribution and stock price levels. Generally, we must maintain a minimum market value of publicly held shares, a minimum amount in stockholders’ equity or other financial measures, a minimum number of holders of our common stock, and a $1.00 minimum per share bid price for our common stock. We have in the past experienced, and may experience in the future, noncompliance with Nasdaq’s continued listing requirements.
On September 30, 2026, we received a letter from the Listing Qualifications Department of Nasdaq. The letter notified us that, for the prior 30 consecutive business days, the market value of our publicly held shares (“MVPHS”) was below the $15 million minimum required for continued listing on The Nasdaq Global Select Market under Nasdaq Listing Rules 5450(b)(2)(C) and 5450(b)(3)(C). The letter has no immediate effect on the listing or trading of our common stock. In accordance with Nasdaq Listing Rule 5810(c)(3)(D), we have until March 29, 2027 to regain compliance. To regain compliance, our MVPHS must close at or above $15 million for at least ten consecutive business days. If we do not regain compliance by March 29, 2027, Nasdaq will notify us that our common stock is subject to delisting. At that point we may appeal the determination to a Nasdaq Hearings Panel, but there can be no assurance that any appeal would be successful. Alternatively, we may apply to transfer our common stock to The Nasdaq Capital Market. There can be no assurance that we would meet that market’s continued listing requirements or that any transfer application would be approved. We intend to monitor our MVPHS and evaluate available options to regain compliance. However, there can be no assurance that we will regain compliance with the MVPHS requirement or maintain compliance with Nasdaq’s other continued listing requirements.
If we are unable to comply with Nasdaq’s continued listing requirements, our common stock may be subject to delisting. If Nasdaq delists our common stock from trading on its exchange or if we decide to voluntarily delist from Nasdaq and/or deregister our common stock under the federal securities laws, we could face significant material adverse consequences, including but not limited to (i) a limited availability of market quotations for our common stock; (ii) reduced liquidity for our common stock; (iii) a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; (iv) a limited amount of news and analyst coverage, and in the event of deregistration of our common stock, less public disclosure about us; and (v) a decreased ability to issue additional securities or obtain additional financing in the future.
ITEM 5. OTHER INFORMATION
10b5-1 Trading Plans
During the third quarter of 2026, none of our directors or executive officers
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ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Indicates management contract or compensatory plan. |
44
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PURPLE INNOVATION, INC. | ||
| Date: November 4, 2026 | By: | /s/ Robert T. DeMartini |
| Robert T. DeMartini | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 4, 2026 | By: | /s/ Robert G. Lucian |
| Robert G. Lucian | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
| Date: November 4, 2026 | By: | /s/ George T. Ulrich |
| George T. Ulrich | ||
| VP Accounting and Financial Reporting | ||
| (Principal Accounting Officer) |
45
Exhibit 31.1
CERTIFICATIONS
I, Robert T. DeMartini, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Purple Innovation, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: November 4, 2026 | /s/ Robert T. DeMartini |
| Robert T. DeMartini, Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Robert G. Lucian, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Purple Innovation, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: November 4, 2026 | /s/ Robert G. Lucian |
|
Robert G. Lucian, Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION
In connection with the Quarterly Report on Form 10-Q of Purple Innovation, Inc. (the “Corporation”) for the quarter ended September 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Robert T. DeMartini, Chief Executive Officer of the Corporation, hereby certifies, pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
| Dated: November 4, 2026 | /s/ Robert T. DeMartini |
|
Robert T. DeMartini, Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION
In connection with the Quarterly Report on Form 10-Q of Purple Innovation, Inc. (the “Corporation”) for the quarter ended September 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Robert G. Lucian, Chief Financial Officer of the Corporation, hereby certifies, pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
| Dated: November 4, 2026 | /s/ Robert G. Lucian |
|
Robert G. Lucian, Chief Financial Officer (Principal Financial Officer) |