v3.25.2
Segment Information and Concentrations
 6 Months Ended
Jun. 30, 2025
Segment Information and Concentrations [Abstract]  
Segment Information and Concentrations

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 one reportable segment that operates an omni-channel distribution strategy which allows the Company to offer a seamless shopping experience to its customers across multiple sales channels. The Company’s one segment markets and sells products through its direct-to-consumer e-commerce channels, retail brick-and-mortar wholesale partners, Purple showrooms, and third-party online retailers.

 

The accounting policies for the Company’s one segment are the same as those described in Note 2 – Summary of Significant Accounting Policies. The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net income or loss as reported in the consolidated statement of operations. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The Company does not have intra-entity sales or transfers.

 

The CODM uses consolidated net income (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 income (loss) is also used to monitor budget versus actual results. The monitoring of budgeted versus actual results are 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
June 30,		   Six Months Ended
June 30,		 
   2025   2024   2025   2024 
Revenues, net  $105,100   $120,271   $209,271   $240,304 
Reductions (additions):                    
Cost of revenues   67,340    71,331    129,547    149,644 
Cost of revenues – restructuring related charges   77    
—
    995    
—
 
Advertising expense   7,672    15,823    22,274    28,729 
Marketing sales expense   6,481    8,001    13,666    17,994 
Wholesale marketing and sales expense   4,980    4,716    9,304    10,879 
Showrooms marketing and sales expense   11,483    12,837    21,998    25,237 
General and administrative expense   14,991    18,117    29,478    37,845 
Research and development expense   2,178    3,986    4,630    7,652 
Restructuring, impairment and other related charges   4,137    
—
    6,097    
—
 
Other segment items, net (d)   3,078    (14,585)   7,724    12,488 
Income tax expense   54    54    95    113 
Net loss attributable to noncontrolling interest   (26)   (36)   (55)   (87)
Net reductions   122,445    120,244    245,753    290,494 
Segment net loss  $(17,345)  $27   $(36,482)  $(50,190)

 

(d) Other segment items, net include interest expense, other (income) expense, net, loss on extinguishment of debt, 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 six months ended June 30, 2025, and 2024 sales of other products accounted for approximately 3.0% of net revenues.

 

The Company defines international revenues as sales to customers located outside of the United States. In the three and six months ended June 30, 2025, and 2024 international customers accounted for less than 1.0% of net revenues.

 

The Company had one individual customer that accounted for approximately 19.3% and 29.4% of accounts receivable at June 30, 2025 and December 31, 2024, respectively, and approximately 14.8% and 13.4% of net revenue during the three and six months ended June 30, 2025, respectively, and approximately 14.9% and 14.3% of net revenue during the three and six months ended June 30, 2024, respectively.

 

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 exceed 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.