Purple Innovation, Inc. · NASDAQ:PRPL
Purple Innovation — Global Partner Acquisition — SPAC Merger (January 2018)
41 slides from Purple Innovation's SPAC merger presentation, Jan 8, 2018
Slide 1: Purple Investor Presentation
UI x oe 6 G Bz PARNER ae Ac purple Purple Investor Presentation January 2018
Slide 2: Company overview
Company overview Company overview Net revenue ($m) and growth (%) = Who: Purple is a leading comfort technology company that leverages its operational and innovation expertise to design and sell a portfolio of patented comfort products backed by a unique brand = What: Purple designs, manufactures an
Slide 3: GPAC investment thesis
GPAC investment thesis ‘Attractive financial profile characterized by a rare combination of hyper-growth and scale. The Company achieved net revenue of $133.8m in the first 9 months of 2017, reflecting 227% year-over-year growth. GPAC belleves that Purple is well posioned to continue its dynamic gro
Slide 4: Company overview
Company overview
Slide 5: Investment highlights
Investment highlights Purple is recognized as a leading comfort technology brand that designs and manufactures products to improve how people sleep, sit & stand ) Market opportunity Unique technology Innovative product portfolio Vertical integration Large and growing market, witha Backed by propriet
Slide 6: Purple changes lives
Purple changes lives “Lam disabled and suffer from Spastic Cerebral Palsy. My disability causes me to suffer with constant back and leg pain. After the first night of sleeping on our Purple, | had no pain at all, and have had no pain since. This product has saved my life.” Jo = Vinny “Serious, go ge
Slide 7: Purple has a large and growing market opportunity
@ Purple has a large and growing market opportunity Purple addresses a large sleep market with sit and stand providing additional upside Segmentation of U.S. bedding industry (2016) ($bn) Consistently growing market disrupted by direct- to-consumer entrants!) a Mattresses 78 Sheets & mattress 32 pro
Slide 8: Purple is poised for greater DTC market penetration and disruption
@ Purple is poised for greater DTC market penetration and disruption The industry is still in relatively early stages in terms of U.S. mattress industry is large, stable and growing'"2) Sbn) online penetration Market share of top 500 e-Commerce retailers by category - 20160) Books, Musi, & Video Off
Slide 9: Purple's massive market share gains
@ Purple’s massive market share gains Purple’s brand recognition is growing at a rapid clip..." purple ‘Google interest overtime TUTE T+0 TH13 +26 T+39 1452 Months after launch (7) Purple was offically launched one year after Helix, two years after Leesa and Casper, four years after Tuft & Needle an
Slide 10: One of a kind solution
@ One of a kind solution ther products in market Purple’s game-changing comfort technology mattress ions Purple's comfort technol -urple's comfort technology, “STEMPUR PEDIC performance and unique fee! a purple atertal (loan) 1) wee ‘ pn eee Henry em con Pert polyurethane foam éicomfort TUFT& NEEDLE
Slide 11: Purple's innovative proprietary and patented technologies
@ Purple’s innovative proprietary and patented technologies History of innovation led to the rise of comfort technologies across sleep, sit and stand“) Purple’s column design allows air to flow freely, [sa] thereby preventing moisture trapping, extending the life ‘of the mattress and seat cushions w
Slide 12: Competitive moat with multiple barriers to entry
@ Competitive moat with multiple barriers to entry *roprietary proc ‘= Proprietary and patent-protected comfort technologies and Mattrass Max" machinery ‘= Competitors in general use the same ‘ld, basic materials - a mix of memory and polyurethane foam, steel coils and latex foam = 78 granted and pe
Slide 13: Expanding product portfolio creates compelling long-term value proposition
@® Expanding product portfolio creates compelling long-term value proposition + Potentes Sstvanced comfort technology + Hyper elastc omer sete ang cuabie Grid pattern designed to progresshety ol and yield under pressure Seat Cushions (since 2010) purple 222%... Cen, ise eck support for ‘atonal comfo
Slide 14: Innovation + manufacturing + marketing = vertical integration
@ Innovation + manufacturing + marketing = vertical integration ‘= Dedicated team focused on improving = 2 facilties totalling 646,000 sq.ft located ‘= Highly experienced digital marketing team existing products and prototyping new in Alpine and Grantsville, UT that drives strong brand awareness des
Slide 15: Innovative marketing drives unparalleled awareness
@ innovative marketing drives unparalleled awareness Consistent voice promoting a true lifestyle brand... _Purple's video campaigns have extensive social reach Video views pf ay — (al 3] 3) 146m 144m, Sleep Stand() () 27m 46m Y Loyal audience that frequently engages with Purple's viral content throu
Slide 16: Multi-channel distribution strategy
® Multi-channel distribution strategy © direct-to-consumer © arick-and-mortar relationships © speciaty = Purple continues to increase sales and «= _Established relationships given long = Catalogue and TV home shopping provide penetration through existing channels history of products additional lever
Slide 17: Purple growth opportunities
@ Purple growth opportunities International expansion Category & vertical expansion New product sleep, sit & stand s launches across Existing product innovation Multi-channel 9. distribution / retail ‘% htop | —— Directto- consumer growth & penetration Purple has multiple vectors to drive growth pur
Slide 18: Visionary leaders...
@ Visionary leaders... = Samed numerous teams at Walmart that were responsible for a $2 billion program to optimize its global supply chain, a $7 billion program for strategic supplier management and an $60 billion growth strategy for Walmart U.S., which resulted in the launch of Walmart, Express an
Slide 19: ...Complemented by an exceptional executive team
@ ...Complemented by an exceptional executive team + Alex leads the world class marketing and branding teams at Purple fale MeArtiie = Has experience in both agency and in-house settings, including startups and large ; pubte copes Chie Marketing « Erporiones leading bigh growth ruption evrging progr
Slide 20: Complemented by an exceptional executive team (continued)
@ Complemented by an exceptional executive team (continued) ia Charlie Smith Gs Chief Operating Officer Mitch Edwards Chief Business Development Officer Jodi Deputy Head of Purple People Casey McGarvey Chief Legal Officer purple 222%... M MORINDA overstock © Stallcandy (G inContact. EdIZONE Held exe
Slide 21: Investment highlights
Investment highlights Purple is recognized as a leading comfort technology brand that designs and manufactures products to improve how people sleep, sit & stand ) Market opportunity Unique technology Innovative product portfolio Vertical integration Large and growing market, witha Backed by propriet
Slide 22: Recent initiatives update
Recent initiatives update
Slide 23: Retail developments
Retail developments Launch details of Mattress Firm pilot test Start date 11220117 = Washington, D.C. metro area (open) Roll-out = Sacramento, CA (open) = Austin, TX (open) Projected store presence 51 pilot test stores = Mattresses (4 new and 1 existing models) = PowerBases = Pillows pro duers: = Pl
Slide 24: Product launches
Product launches Product developments( Components of mattresses Twin xL Queen King The Purple Bed = $799 $999 $1,299 Z Purple.2H 5/4 $799 $999 $1,209 Purple.4 =~ $1,999 $2,499 $3,299 nk The Purple Bed (existing) Purple.x (new) Cover Hyper-Elastic Polymer™ Smart Comfort Grid™ (2°, 3° or 4", depending
Slide 25: Financial highlights
Financial highlights
Slide 26: Historical financials
Historical financials Commentary Net revenue ($m) and growth (%) Revenue s1900-s1940 + Hyper-growth at scale, achieving 227% year-over-year growth in the first 9 months of 2017 sia + Continued strong growth into Q4 2017, even with reduced marketing KA spend beginning in December 2017 Pri expanding p
Slide 27: Q3 2017 results
Q3 2017 results Commentary Revenue ? + Continued to experience tremendous growth, achieving year-over- (Si) (unaultec) 3 2016 ae year growth of 178% in G3 2017 + Growth driven by DTC sales across entire product portfolio TCT SS aH =a Ws + 32017 continued to be impacted by capacity constrains”) - Mat
Slide 28: Projected financials
Projected financials Commentary Forecasting & budgeting overview + Based on top-down and bottoms-up methodologies for financial forecasting and analysis + 2017E updated results and new forecast driven by 2017YTD results and review of assumptions by Purple's new CFO and Controller who joined in mid-N
Slide 29: Revenue detail
Revenue detail SS SSS SS ‘+ Based on curent ends of Purple market share gains and growth = _Expectaon of continued ap growth of TC for several yeas, ore '$395m- $365 ‘IN DTC market overall ‘and then growing th overall e-commece growth ence OTC = Assumes mo capac constrains n 2018!) reaches 203+ shar
Slide 30: Purple DTC market share sensitivity
Purple DTC market share sensitivity 2018E Purple DTC net revenue ($m) (Sm) (unaudited) zoe | 2o17e | 20196 Market size Direct-to-consumer $790 $1,245 $1,962 % YoY growth 16H% con Toon} 2.8% | 9.9% | 10.0% | 10.1% | 10.2% % total 1% 7% 1 10% 1 Traditional $16,734 $16,902 ‘$17,662 pecacresetal | areal
Slide 31: Key margin detail
Key margin detail Key takeaways Adjusted OPEX and COGS as a% of net revenuelt#212) COGS as a % of net revenue improvement driven by multiple efficiency gains associated with scale and manufacturing improvernents Deployment of addtional Mattress Max"™ lines and increased automation in 2017 - 2018 Mar
Slide 32: Purple's mattress production machinery cycle and manufacturing capacity
Purple’s mattress production machinery cycle and manufacturing capacity Production timeline for each Mattress Max machine 0 Launch Optimized Production ramp Continued optimization + Ofna to 9-12 months rewen redton trough hase as + Contos improvement in partons and afency su in Company tests and apb
Slide 33: Medium-term business outlook (3 - 5 years)
Medium-term business outlook (3 — 5 years) es a = Further DTC growth = Expand retall penetration = Cross-sall existing customers % ~ 509 Revenue growth 35% - 50%+ = New product introductions + Category expansion + International expansion + Higher margin products due to ASP uplift : 5 + Manufacturing
Slide 34: Summary transaction terms
Summary transaction terms Key transaction terms Sources & uses + Proforma enteriise value of $485.8 millon Sources (in $ millions) 43x Purple’s 2018 netrevenue midpoint of $425 millon GEA ext $1218 Purple rolLover equity 401s + 850.0 milion of eashto fund growth intatives ane for general corprate pu
Slide 35: Appendix
Appendix
Slide 36: Comparable company benchmarking
Comparable company benchmarking Revenue metrics 2016 - 2018E revenue CAGR con 10 Be Median: 17% 120% Medan: 40% Mean: 7% Baa Zz sn 51% ‘purple LSM OO sem Oom Phy saw 2018E EV / revenue 83x 76x Median: 2.8% Median: 2.7« Median: 4.8% spurple: @'® elf WA | seas * ) HEE High growth consumer I High-grout
Slide 37: Comparable company benchmarking
Comparable company benchmarking Margin metrics 2018E gross margin Median: 50% ef © OO Bus 40% 40% 50% Low rp Heh Median: 51% Median: 36% 62% 65% 51% 5196 AT 449 ae ME 20% i 2386 sy eae 08 es a Onuaz-z purple 2016 — 2018E gross margin expansion (bps) Median: 170 Median: (72) Median: 37 cag 900 759 80
Slide 38: Historical and projected non-GAAP income statement
Historical and projected non-GAAP income statement (5m nuaton I EC A LE ET Total net revenue $65.5 $190.0 -$194.0 $370.0 - $480.0 $40.9 $133.8 % YoY growth NM 190.2% - 196.3% 94.7% - 147.4% NM 227% Cost of goods sold, 39.9 4039-1055 192.4-240.0 256 739 ‘Agjusted gross profit $256 $86.1-$88.5 $477.6
Slide 39: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation (Sm) (unausited) 2016 zoe | zoe ff omzoe | omzor7 | Net income. ($1.9) ($5.0) -($2.0) _($16.6) -$6.5 ($1.7) ($3.4) Depreciation & amortization on 08 18 0.0 05 Net interest expense 00 on 03 00 00 Other expense, net (0.0) (0.0) - (00) (0.0) Income tax expense : : 34 : @
Slide 40: Adjusted COGS and G&A reconciliation
Adjusted COGS and G&A reconciliation (Sm) (unaudited) 2oi7e | 201ee om 2016 9M 2017 GAAP COGS $44.0 $103.9 - $105.5 $192.4 - $240.0 $29.2 $73.9 Related party royalties (4.1) bal # (3.6) ad Adjusted COGS $39.9 $103.9 -$105.5 $192.4 - $240.0 $25.6 $73.9 ‘% net revenue 60.9% 54.7% - 54.4% (52.0% - 50.0
Slide 41: Disclaimer
Disclaimer ‘SSEASTAS ea She apeae las yar nog maae 40 purple
Global Partner Acquisition — SPAC Merger (January 2018) on 6ix