Purple Innovation, Inc. · NASDAQ:PRPL
Purple Innovation — Investor Day (June 2021)
42 slides from Purple Innovation's investor day presentation, Jun 29, 2021
Slide 1: Investor & Analyst Session June 29, 2021
Investor & Analyst Session June 29, 2021
Slide 2: Forward Looking Statements
2 Forward Looking Statements Certain statements made in this release that are not historical facts are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward - looking statements include
Slide 3: We are Purple. We are reinventing comfort.
3 We are Purple. We are reinventing comfort.
Slide 4: The mattress industry is strong and growing, with favorable future tailwinds
4 4 2018 2015 20.7 2016 2017 16.2 2019 17.2 17.5 19.7 +6% p.a. Source: UBS Mattress Sector Outlook, ISPA, Furniture Today, US Census Retail, Haver The mattress industry is strong and growing, with favorable future tailwinds Favorable Tailwinds Increased investment in home Focus on we
Slide 5: Volume is shifting to mass premium and premium products
5 5 Volume is shifting to the biggest addressable opportunity: mass premium and premium products 36% 38% 37% 41% 34% 41% 35% 36% 32% 36% 17% 19% 20% 19% 22% 6% 7% 7% 8% 8% Mass Premium ($1k - $2k) 2016 Mass Market ($500 - $1k) 2015 2017 2018 Entry - level (<$500) 2019 Premium
Slide 6: We are the fastest growing major US mattress brand
6 6 17% 17% 15% 15% 17% 17% 17% 19% 17% 15% 22% 19% 20% 18% 14% 14% 13% 11% 11% 13% 6% 6% 7% 7% 8% 4% 3% 2019 26% 2016 26% 24% 2015 2017 27% 26% 1% < 1% 2018 2% 1% 2% 2% Others We are the fastest growing major US mattress brand Source: Bank of America Global Research Hardlines Re
Slide 7: Our revenues have grown nearly 80% each year
7 Our revenues have grown nearly 80% each year 2016 2017 2019 2018 2020 $65M $197M $286M $428M $648M +78% CAGR
Slide 8: Why we're winning and will continue to win
8 • Differentiated product with unique benefits and high customer satisfaction • Disruptive innovation in a sleepy category lacking differentiation • Proprietary materials and manufacturing behind our differentiated product • Digital - first model that enables rapid scale • Profit focused with favor
Slide 9: Quality sleep is a significant and recurring problem...
9 Quality sleep is a significant and recurring problem... 1. National Center for Chronic Disease Prevention and Health Promotion, Division of Population Health (2017) 2. CDC, as of 2016 3. https://pubmed.ncbi.nlm.nih.gov/28348990/, published 2016 4. Purple research 70 million Americans of all ages
Slide 10: ... and investors are betting big on future consumer spend in the category
10 … and investors are betting big on future consumer spend in the category 1. National Institute of Health 2. Crunchbase 3. Euromonitor Research ~$450M invested in sleep research in 2020, +90% increase from 2014 1 Consumer Spending +$40B spent on sleep aids and therapies in 2016 in US alone, growin
Slide 11: The mattress industry has moved slowly on innovation
11 The mattress industry has moved slowly on innovation, and the innovations launched all bring trade - offs A brief history of mattress category technology innovation Note: dates indicate when different technologies achieved market traction Improvements to date come with significant trade - offs Po
Slide 12: Soft vs. firm disguises the trade-off between comfort and support
12 Industry standards of “soft” vs. “firm” disguise the inherent trade - off between comfort and support Optimal sleep requires both comfort and support Comfort Soft surface to fall asleep quickly and soundly Support Firmness to maintain alignment and wake free from pain
Slide 13: Our gel grid technology reframed the firm vs. soft debate
13 Our gel grid technology reframed the longstanding debate around “firm vs. soft” – offering the benefits of both Continuous grid of columns provides exceptional support across large surface areas like the firmest traditional mattress Proprietary “buckling column” design accommodates specific press
Slide 14: The Purple Difference
14 The Purple Difference As proven innovators, we used technology to tackle the problem head - on and “change the game” Proprietary gel grid technology provides both pressure point relief and joint support Open grid structure minimizes points of contact and facilitates airflow and cooling Grid respo
Slide 15: Gel grid is disrupting the sector as memory foam did
15 100% 95% 70% 40% 37% 25% 35% 32% 5% 20% 21% 5% 2010 1990 5% 2000 10% + 2025 Forecast Coil Hybrid (coil + foam) 2020 Gel grid Foam We believe our gel grid is disrupting the sector as memory foam did – but more quickly with ecommerce & DTC Premium mattress mix by category SOURCE: Internat
Slide 16: Approximately 90% of revenue from proprietary materials and machines
16 Approximately 90% of our revenue is from products comprised of materials we developed, made on machines we invented (1) As of March 31, 2020 8 Proprietary Mattress Max TM Machines Designed and built by Purple, the Mattress Max TM machine is a critical enabler Revolutionary technology makes large
Slide 17: Product expansions fueled by polymer and grid combinations
17 Our product expansions are fueled by dozens of unique polymer and purple grid combinations (1) As of March 31, 2020 Exclusive rights, 220+ granted or pending patents 1 Patents span products and manufacturing processes and equipment Dozens of polymer and grid combinations designed explicitly to ap
Slide 18: By going digital first, we have grown bigger and faster
18 By going digital first, we have grown bigger, faster, and with better economics than any player to date Broad reach Favorable economics Owned distribution Smart social and digital campaigns generated consumer awareness and excitement across target audiences at favorable price point Premium price
Slide 19: Customers are our most influential product advocates
19 Customers are our most influential product advocates +30% Of customers learn about Purple through word of mouth In Customer S atisfaction 2 - Years in a Row with mattresses online by J.D. Power #1 SOURCE: J.D. Power website. 1. Report measures customer satisfaction with mattress purchases
Slide 20: Bold goals for the next 3-5 years
20 Our success has given us the confidence to set bold goals for the next 3 - 5 years in annual net revenue Adj. EBITDA margin $2 - 2.5B 14 - 15%
Slide 21: Strategic plan prioritizing three big moves
21 We’ve developed a detailed strategic plan prioritizing three “big moves” to drive profitable growth 1. Represents average price paid by the consumer across all channels 2 . Average of 2019 and 2020 Adjusted EBITDA Margins which were 7.8% and 13.6%, respectively. COVID - related benefits contribut
Slide 22: Assortment elevation and distribution expansion drive revenue growth
22 Assortment elevation and distribution expansion combine to drive significant revenue growth $600+ New Mattress $400+ 2020 $75+ $400+ Current Mattress Non Mattress Canada 3 - 5 years from now ~$650M $2 - 2.5B 1a 1b 2 Higher unit volume and taking price on existing assortment Introduction of 2+ new
Slide 23: Expanding mattress assortment at higher price points
23 1a. We will expand our mattress assortment to address opportunities at higher price points… SOURCE: DTC listings, brand websites, retailer listings Product and pricing architecture of select competitors 1 $0 $4,000 $1,000 $5,000 $2,000 $6,000 $3,000 $1,500 $610 $1,975 $2,600 $500 $5,099 $1,000 $1
Slide 24: Complement core mattresses with differentiated comfort solutions
24 1b. …and complement our core mattress offerings with differentiated comfort solutions Newly - launched $ 9 99 Ascent Adjustable Base Bases and Foundations that complement our growing mattress assortment Compelling Standalone Products that leverage proprietary Purple technologies Differentiated, p
Slide 25: Anchor physical retail on 200+ owned showrooms
25 63 605 60 125 81 271 191 202 2. We will anchor our physical retail ecosystem on 200+ owned showrooms across the US 2020 US retail footprint across peer set, # Mattress Peers DTC Peers Furniture Peers Purple showroom economics 1. Company estimates for target showroom locations, based on
Slide 26: Expanded network of wholesale partners
26 Proposed Wholesale Footprint Expansion # of Doors 2. An expanded network of wholesale partners will allow us to meet customers wherever they shop 2,300 3,500 Today 3 - 5 years +1,200 Achieve balance of speciality mattress, furniture, and department store retail Prioritize wholesale partner qu
Slide 27: Selective wholesale expansion protects premium brand positioning
27 2. Selective expansion of our wholesale channel will protect Purple’s premium brand positioning Moderate store count that will optimize ROI for identifying, onboarding and supporting partners Reach target consumer demographic willing to spend in the premium segment Consultative sales proces
Slide 28: Margin expansion from mix shift, promotions and efficiencies
28 3. Mix shift, promotion optimization and operational efficiencies will drive margin expansion; some gains reinvested for growth Adj. EBITDA today 1 Adj. EBITDA 3 - 5 years from today 10.7% 14 - 15% Mix shift Smart promotions Manufacturing efficiency gains Fixed cost spread Scaled distribution Inp
Slide 29: Our innovation in mattresses is just getting started
29 Our innovation in mattresses is just getting started Fall asleep faster Stay asleep longer Wake up feeling better than ever At Purple, we are committed to helping you:
Slide 30: Innovate like a startup, scale like an industry leader
30 We’re uniquely positioned to innovate like a startup, and scale like an industry leader Agility Scale ~6 years in mattress business +65% of revenue from DTC online +220 patents +1.5M sq. ft. of manufacturing ~2300 wholesale doors +10 new products brought to market
Slide 31: Three core aspects of sleep
31 We continue to focus on the three core aspects of sleep Where others simply see a mattress, we see a platform for revolutionizing the future of better sleep… 3 to 5 years Today Balance of comfort and support Products that naturally balance your body for your most comfortable sleep yet Propr
Slide 32: Purple mattress as the central platform for sleep innovation
32 …with the Purple mattress as the central platform unifying the latest in sleep innovation Adjustability AI / Automation Monitoring
Slide 33: Further revenue opportunities: new markets and product categories
33 33 In addition, we see further revenue opportunities on the horizon: new markets and new product categories 2020 2018 2019 $ 286 M 5+ years from now 3 - 5 years from now $ 428 M $ 648 M $2 - 2.5B Strategy: Drive global expansion in premium markets Why we can win: Successful Canada expansion offer
Slide 34: Experienced leadership team
34 We have built an experienced leadership team to help Purple realize its full potential Joe Megibow Craig Phillips John Legg Casey McGarvey Tres White Patrice Varni Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Legal Officer Chief Retail Officer Chief Marketing Offi
Slide 35: Financial Results
Financial Results
Slide 36: Purple Has Achieved High Growth and Expanded Into Wholesale
36 Purple Has Achieved High Growth and Expanded Into Wholesale Source: Company filings Note: Dollars in millions Mattress Average Selling Price Net Revenue Growth 45.1% 49.9% 51.4% 52.3% 46.3% Wholesale DTC 67.0% 33.0% $285.8 $428.4 $648.5 $122.4 $186.4 2018 2019 2020 1Q ’20 1Q ’21 92.2% Other 7.8%
Slide 37: Margin Enhancing Profile
37 Margin Enhancing Profile Source: Company filings Note: Dollars in millions (1) See Appendix for Non - GAAP Reconciliation 1Q 21 1Q 20 44.1% 2020 2019 47.0% 46.9% 43.5% Adj. EBITDA (1) Gross Profit Margin 7.8% 13.6% 12.2% 8.7% $33.4 $88.1 $10.6 $22.8 2019 2020 1Q 20 1Q 21 Gross Margin levers inclu
Slide 38: Consistent Execution and Cost Management
38 Consistent Execution and Cost Management Source: Company filings Note: Percentages calculated based on net revenue General & Administrative Marketing & Sales 33.1% 1Q 21 2018 2019 2020 1Q 20 29.0% 36.3% 30.0% 29.2% 6.3% 1Q 20 2018 2019 6.2% 8.3% 2020 1Q 21 6.2% 7.8%
Slide 39: Non-GAAP Reconciliation
39 Non - GAAP Reconciliation Management believes that the use of Adjusted EBITDA, which is a non - GAAP financial measure, provides investors with additional u seful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. Other c
Slide 40: Historical Balance Sheet
40 Historical Balance Sheet NOTE: Restatements are a result of reclassifying certain warrants as expenses instead of equity due to the SEC's recent state men t regarding how warrants issued in or after a SPAC company IPOs should be viewed for purposes of classification.
Slide 41: Historical Income Statement
41 Historical Income Statement NOTE: Restatements are a result of reclassifying certain warrants as expenses instead of equity due to the SEC's recent state men t regarding how warrants issued in or after a SPAC company IPOs should be viewed for purposes of classification.
Slide 42: Historical Cash Flow Statement
42 Historical Cash Flow Statement NOTE: Restatements are a result of reclassifying certain warrants as expenses instead of equity due to the SEC's recent state men t regarding how warrants issued in or after a SPAC company IPOs should be viewed for purposes of classification.