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Grove Collaborative Holdings Inc (NYSE:GROV) presented its Q1 2025 financial results on May 14, 2025, revealing a revenue decline but highlighting expectations for sequential improvement throughout the year as the company continues its strategic transformation toward sustainable growth and expanded product offerings.
Quarterly Performance Highlights
Grove reported Q1 2025 revenue of $43.5 million, an 18.7% decrease year-over-year. The company attributed this decline to lower repeat order volume and temporary disruptions from its ecommerce platform transition, which it estimated reduced revenue by $2-3 million during the quarter.
Gross margin stood at 53.0%, down 250 basis points compared to the same period last year, primarily due to the elimination of customer fees and lower benefits from the sell-through of previously reserved inventory.
As shown in the following financial results table, adjusted EBITDA was negative $1.6 million (-3.6%), compared to positive $1.9 million (3.5%) in Q1 2024:
Operating cash flow improved to negative $6.9 million versus negative $12.1 million in the prior-year period. The company explained this was driven by an increase in net working capital related to assets acquired in recent acquisitions, as well as negative net income, net of non-cash expenses.
Despite the quarterly setback, Grove expects sequential revenue growth throughout the remainder of 2025, with Q1 representing the lowest point:
Strategic Initiatives
Grove Collaborative is executing a multi-year transformation strategy, having shifted from prioritizing revenue growth in 2020-2021 to driving profitability in 2022-2023. The company is now in its transformation phase (2024-2025), focusing on an open shopping experience, expanded product categories, and stabilizing revenue before targeting profitable growth in 2026 and beyond.
A key element of Grove’s strategy is expanding beyond home cleaning products into human health and wellness categories. This expansion aims to reach a larger portion of the estimated 57 million conscientious consumers who prioritize healthier, planet-friendly products.
The company’s data shows promising results from this strategy, with higher order values when vitamins, minerals, and supplements (VMS) products are included:
"We are prioritizing environmental and human health, making Grove the destination for conscientious consumers," the company stated in its presentation, noting that 89% of surveyed customers trust Grove for health and wellness needs.
Financial Outlook
For 2025, Grove provided revised guidance indicating that Q1 would be the lowest revenue quarter, with expected improvement through Q2 and Q3, leading to slight year-over-year growth by Q4. Full-year 2025 revenue is projected to decline approximately mid-single-digit to low double-digit percentage points compared to 2024.
The company expects full-year 2025 adjusted EBITDA to range from negative low single-digit millions to positive low single-digit millions, reflecting ongoing investments in its transformation strategy.
Grove’s multi-year profitability trend shows significant improvement from 2022 through 2024, despite the recent quarterly setback:
Balance Sheet and Cash Position
A significant achievement highlighted in the presentation was the repayment of $72 million in term debt during 2024, which strengthened the company’s balance sheet and reduced interest expenses entering 2025. As of March 31, 2025, Grove reported:
The company ended Q1 with $13.5 million in cash, cash equivalents, and restricted cash, with outstanding debt reduced to $7.5 million. Grove also mentioned that its asset-based loan maturity has been extended to April 2028, providing additional financial flexibility.
Grove has also made progress in optimizing its inventory levels, reducing inventory by $9.4 million year-over-year to better align with the current scale of its business.
Operational Efficiency
The presentation highlighted Grove’s focus on operational efficiency, with significant reductions in SG&A expenses and improved inventory management:
These efficiency improvements have helped maintain gross margins at 53.0% despite the revenue challenges, positioning the company to leverage its leaner cost structure as revenue growth resumes.
Looking ahead, Grove Collaborative faces the challenge of balancing its strategic transformation with short-term financial performance as it navigates its platform transition and expands into new product categories. The company’s stock closed at $1.19 on May 14, 2025, near the lower end of its 52-week range of $1.02 to $1.95.
Full presentation:
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