Welcome back, everyone. Next, we have Grove Collaborative Holdings Inc., trades on the New York Stock Exchange under the ticker GROV. Grove is the one-stop shop online destination for everyday essentials that create a healthier home and planet, with thousands of thoughtfully vetted and curated products for every room in your home. Happy to welcome CEO Jeff Yurcisin and CFO Tom Siragusa, who will be joining us later. Jeff, so happy to have you on our conference today. Welcome.
Thank you, Ana. Appreciate being here. Thank you all. Let me first introduce myself. My name is Jeff Yurcisin, CEO of Grove. I was mentored, hired by Andy Jassy. I grew up at Amazon, spent 14 years learning D2C, kind of building different businesses. I've now replaced three different founders. I've taken one company from $100 million- $1 billion. Another scenario is a more cautionary tale where you have to learn, if you're going to be in D2C, how to compete with Amazon. With that, I just want to launch into this presentation, tell you why I am more bullish about Grove than any of these other opportunities, including the one that I took from $100 million- $1 billion. Let's jump in. Next, obviously, safe harbor statement. Feel free to go to our website to look at the details, and non-GAAP measures will be discussed.
Next, let's talk a little bit about how you do this. How do you build a true durable business that can compete in the D2C space? The first thing that I think you have to do is you have to think about moats. You have to serve a specific customer better than anyone else in the world. That's what we think we can do. The way we position ourselves to those customers is your home healthier, your family healthier, your planet healthier. First, we need to understand the context. We are in a turnaround. We have been in a turnaround for a few years. In the early years, it's important to know that we were going to the moon. We were trying to raise $600 million. We're trying to get to $1 billion as fast as possible and trying to disrupt CPG.
However, when you look at this, kind of these phases, there were real assets. When I joined in 2023, you will see that we had already kind of gone years with explosive growth, kind of trying to reach $1 billion as fast as possible. Look at the years from 2018- 2021, losses of almost $100 million a year. We invested in marketing. I said that I joined in 2023. A few notes. I joined because I thought this had Series B upside. All of us can do different things with our time. I saw a world where there is going to be some business out there that will serve consumers in a way better than anyone else. What I loved about the early years, and even in those years where we were losing money, is that there were real assets to the Grove business.
In the next few slides, I'll go through what those assets are and why I'm so bullish. First, let's talk about how you build that moat and how you serve a customer better than anyone else. First, our value proposition is tied to curation, vetting the essentials for a home, for a healthier home and body. Second, we have a really high bar, a high standard on all ingredients, but not just ingredients, this is on health, sustainability, and performance. Lastly, we need to talk about plastic. I don't know how many of you know, but we have 0.5% of our weight of our brains is plastic. Plastic is everywhere. We were the first plastic-neutral retailer. We are the only retailer that I know that actually measures every ounce of plastic in everything we sell. We try to avoid plastic. We inform customers.
We empower them to make the right type of choices and when we do sell plastic, we literally take it out of the ocean. These are how we differentiate to customers. High level of curation, high standards, and leading the way beyond plastic. First, what we had to do was really transform this business and that started with us rethinking who our customer was. In the early years, we had acquired 5 million customers over the years with all of that marketing spend that I showed earlier, and we did it with a CEF basket. Customers could only purchase if they had subscriptions. It wasn't the right customer-centric business. What I am most proud of building are customer-centric businesses. I know how to do this. What we did was literally expanded the TAM by saying, no, no, anyone can shop here, you don't have to subscribe.
We'll give you incentives to subscribe, and we'll talk about why subscriptions are key to our business. We'll give you incentives, but anyone can purchase from Grove. This changed from being a home cleaning essential company to then being a destination for all customers who care about sustainable and healthy products, has been critical for our mission. Next, we need to talk about secular tailwinds. We have real secular tailwinds behind us. Sustainability matters, customers care, wellness, human health matters. We see tailwinds there. When it comes to plastics, we have been lied to for a generation, you can go back and see the very papers in DuPont's library in the 1970s that knew that when we put those plastic items into that bin, they were not going to get recycled. That truth is coming out more and more often.
More customers know that only about 9% of plastic really gets recycled, only about 1% of plastic is recycled more than once. When you think about all of this, there are alternatives that customers are looking for because of the impact of plastic in their lives around microplastics, which are everywhere in our air, in our bodies, in breast milk, in blood, truly everywhere, and of course in our brains. With that, let's talk about how we went about building this business. First, we've got a 57 million person TAM. Someone's going to build this business that is not Amazon, that wins on trust, wins on curation, wins on helping customers find the right type of products. To scale, we have to first make sure that we have a platform that can win. This means two different FCs that are not outsourced to 3PLs.
This means the right type of tech staff to be able to scale and the right type of overall infrastructure. Secondly, we needed to grow our product mix. What's amazing is customers would come into us saying, "Hey, I want more items. I want you to sell more baby product. Can you help me figure out which beauty product makes sense? Can you help me with supplement I should take?" We've been growing product, expanding our assortment while keeping a high bar, which gives customers more reasons to shop. Lastly, this really is about trust. Whoever wins in the long term in this space, and I don't think it's going to be the big marketplaces, including Amazon, has to win on trust with education, with storytelling, and explaining the why behind the business. Now let's talk a little bit about this platform.
I've hinted that you need to have a scalable marketing framework. You can't just hand big checks over to Meta and Google. I've talked a little bit about some of the efficient cost structure. When you saw the EBITDA improvements that we've made, we've tackled every single item in our P&L. There are two things I want to emphasize here that are unique to Grove that very few other businesses have. This is tied to the streamlined operations in the box economics. In terms of box economics, nobody's going to beat Amazon when you compete with them head- to- head. No one, at least in 2025. What we do is the key to our business is that we're not selling one or two items at a time. Subscriptions don't show up in multiple boxes at one store.
We literally are building a box for our customers who care about carbon, but who really just want someone to help curate the best type of products that should go into their home. Those 8+ units per order are also complemented by a recurring order business, a heavy subscription business where customers and our fulfillment centers know that a box is going out the door next week. When we do that, we can plan our labor in a way that's super efficient. We aren't fighting every single day to hit a particular type of outbound shipment to customers arriving that day. We get to plan our labor, put multiple items in a box, and drive down the second largest part of our P&L, which is shipping.
When you look at shipping as a percentage of revenue, whether it's a $40, $60, $80, $150 box, it's often roughly the same shipping cost. Shipping as a percentage of revenue decreases as we drive more units up. I mentioned earlier that we have streamlined operations, two FCs that have a phenomenal team that work incredibly hard to be able to put those items into a box in a differentiated type of experience. You add all of this up. We think we have the economics that can compete with the big guys and the economics that can allow us to deliver on our promise to customers, which is let us be the place where your values meet value. With that, let's jump into human health and wellness.
One board member recently told me, "Jeff, we all care about the environment, but the reality is people care about their health more." What is magical, I said that when Grove was scaling, that we had some valuable assets. The name Grove matters to customers. We have phenomenal net promoter scores, customers trust us. What we have done is taken that trust that we earned on sustainability and the anti-plastic type of movement, and we moved into human health and wellness. On this slide, a few notes. On the left side, you'll see that we're entering all of these new categories where customers are asking us to assort these brands and products. In the middle, you'll see our own internal metrics that when we add SKUs into our assortment, we see overall revenue increasing.
Lastly, the most important metric I believe on this page is the first bullet point in the green, customers trust us. 89% of customers surveyed told us that they trust Grove for health and wellness more than any other retailer. This was before we even had a large health and wellness business. The reality is, as we were building this business, we were earning trust along the way. Now, when you think about economics and how to deliver and what is a durable long-term competitive advantage, I believe you need owned brands. Owned brands is not private label for us. This is not just some low-price alternative to brand name products. No, this is real innovation, real leadership on sustainability. If any of you guys are still, or your families or your friends, buying large water-based orange bottles to clean your laundry, please. It's 2025.
Like, especially if you're shipping it from someone, please. Let's move on to laundry detergent sheets. Those work incredibly well, better for the environment, comparable type of efficacy in terms of cleaning. What we're doing is we're building trust when whether we do the laundry detergent sheets or the sustainable cleaning with little concentrates that you add with water. We then moved into actually great durables in terms of bamboo paper, tree-free paper alternatives, then using traditional toilet paper and paper towels. Now, this is why we're here. What we have seen this year is there's a really efficient use of capital with really strong paybacks when you can find some subscale brands that are good founders that built good brands and good products and have a real following, but are just subscaling and can't make the economics work. I'm not talking about acquiring entire businesses.
I'm talking about acquiring the brands and the assets within them. What we've been able to do is expand to a wider family of products that enable us to deliver even higher gross margins going forward. I mentioned trust, if this were a longer kind of conversation, I would emphasize this even more. We have to win with content, we have to win with trust. In 2025, we've kind of leaned into this in a really significant way, everything from blogs to organic social, we are telling the story on every single touchpoint with customers. Now, let's talk a little bit about our financials. Revenue down 15%, 16% year- over- year, up quarter- over- quarter, 1%. Gross margin strong year- over- year. EBITDA operating cash flow over the last eight quarters, we have been relatively breakeven on EBITDA. Why am I here? I am here.
Why do I believe that there's a series B type of opportunity and upside? It's because of our story and because of the assets and because of where we're going. Let's walk through this. Adjusted EBITDA, in those early years with massive spend where we thought we could raise enough money to get to a $1 billion dollars and weren't focused on profitability, we were burning $30 million, $40 million a quarter. You look at the eight quarters since I joined in August of 2023, we've lost accumulated less than $2 million, less than a singular week in Q1 2022. We focus on profitability, we said we'd focus on profitability, and we did it. I care even more about cash flow and operating cash flow discipline.
You'll see a similar type of story, the two unusual blocks where our cash flow went negative since I've been in place and since our team has been in place. I've been tied to a great renegotiation of a headquarters lease that involved a one-time payment to get out of five years of ongoing payments. Additionally, the working capital associated with the acquisition that we made. Now let's talk about the inputs to this business. We're fixing the core of this business. This was a turnaround. Look at what we've done with gross margin. We have expanded gross margin over 800 basis points. We've looked at every single line in this P&L to drive that EBITDA to effectively break even and n ow we've got to talk about the balance sheet. This slide can be read a few different ways. One is about resilience.
One is knowing that Grove was once in a dire spot. What was that dire spot? We took on $72 million in term debt, supplemented with $7.5 million in the ABL. In that $72 million in term debt that we had, we had a $55 million minimum cash covenant. That meant that we were able to use effectively $17 million by paying interest on the $72 million, which led to over $4 million per quarter type of interest expense. $16 million a year for access to $17 million in capital. Why did we do this? Because we had once been in a dire situation where we needed cash. We're a SPAC, most SPACs wouldn't make it. I'm not sure most SPACs would have reduced SG&A headcount by 70%, would have gotten and prioritized profitability and prioritized cleaning up the balance sheet.
That's what we did in the back half of last year. We paid down the term debt. Now we've got a standard ABL, a clean balance sheet that I think takes away existential risk. A lot of these SPACs and microcap companies, some of them won't make it. Most of them haven't made it in the SPAC perspective because they have not focused on profitability and balance sheet. We've done that. We've fixed this core business, we've built this great customer experience, what this comes down to is, when are you going to grow? I think this is the most important slide on this presentation. Let's talk about it. We said that we had to fix the core business. To win in the long- term, you need a durable competitive advantage. You can't fight head-on with Amazon. That's what we've been doing for two years.
We've gone from a closed marketplace to an open marketplace. We've gone from a model that forced kind of subscriptions to one that is really open and gives customers incentives to subscribe and save. We said all along that Q1 would be our trough, i t was. Q2, we grow sequentially, Q3, we'll grow sequentially, Q4, we'll grow sequentially and i n Q4, we will have year-over-year growth. This has been a journey. It has been a multi-year journey. When you look at this chart, you may say, "Hey, Jeff, yeah, sure, you may grow $6 million in a year, but it's not a seasonal business." A lot of families, at least in my home, don't give bamboo toilet paper underneath the Christmas tree or laundry detergent sheets to their partners. What we've done is fix the business so that we can grow on an ongoing basis.
If you look at 2024, you'll see the natural seasonal arc that we have and that still leads to the question, "Jeff, why are you so confident? How are you doing this?" We're building a better customer experience, but there's one critical part that is the arc of our company, and it's tied to cohorts. For those of you who are experts in D2C investing and understand retail in depth, you'll know that all of us worry about, what's your payback ? When you acquire a customer. How many months? What's your LTV to CAC ratio? The reason we focus on these things is whenever you spend a lot of money in marketing, you get the and acquire a bunch of customers in that period. You get the benefit in future periods.
When all of our internal modelings say that after 8- 10 quarters, that benefit kind of flattens out quarter- over- quarter . You have almost an asymptote, like an annuity of revenue from those customers that you had acquired 8- 10 quarters ago. That's where we are. In Q1 of 2022, we lost almost $40 million, driven by heavy marketing spend. As we've been fixing this core business, we've been fighting uphill against the overhang of those cohorts. The reality is we see revenue growth, the reality is Tom and I haven't been on these roadshows you haven't seen me because we didn't. We had to fix our core business before we really had a story to tell. We think we're at an inflection point. We're going to be more focused on engaging with retail investors, w e're going to be more focused on real durable growth and t his is kind of a quick highlight from what we did in 2024- 2025.
This transformation, this year-over-year growth is just the beginning the trough was in Q1. In our last earnings call, I said, "Hey, I want you to envision a world where we're a $300 million business that's growing double digits that is profitable. At what point in time does a different type of multiple exist?" What we're guiding towards right now is real year-over-year growth, slight growth in Q4, and then f rom an EBITDA perspective on an ongoing future perspective we think that we will be in this break-even type of space. This year, you'll see that full- year adjusted EBITDA is expected to be low single-digit millions to break even. What does this mean? I believe that this is the time. This is why I'm here, we had to fix the business.
I believe, I know how to build customer-first businesses. The thing that I'm one of the things I'm most proud of is our team, I know how to build great teams and cultures. This is a marvelous place, a group of people fighting together for a mission beyond themselves. We've been in it. We've been in a turnaround for quarters, years, and we've hit the inflection point. Look at our entry-year growth, look at our execution and I would just say maybe I'd end with, you should look even at who's on our board. You should look at my experience, look at my insider trading. Look at open windows, what I have done. Purchased about $100,000 in Q2, an open window. I'm not here to run a microcap company, my board is not here to run a microcap company, our leadership team, our team is not.
Where we are going is towards building a customer experience that's durable, having a platform that can scale from a technical fulfillment center and box economics perspective, always on the front of our seat, looking at potential acquisitions to add to that platform that could accelerate that journey, but at the core, we believe there's asymmetric upside i t's why I'm here. It's why I joined two years ago. We've been doing the hard work, and now this is where we're going. With that, Ana, let me open it up for questions.
Awesome, Jeff. Thank you so much. Really interesting story you have and you have with Grove. Thank you. Let's jump in. I want to ask a little bit about, what's the origin story. You know, Grove got started as a digitally native company, tell me a little bit about your competitive advantage versus your peers.
Okay, love it. We started off, believe it or not, as ePantry. Our founder, Stuart Landesberg, had this vision of a cleaner, better CPG product and destination. Like both on the product side we innovated, w e were the first ones to really come out with concentrates that you would mix with water and put into soap dispensers or multi-surface cleaners. We were the first retailer to truly say we would be plastic neutral. These are extraordinarily hard things, and that was the core of our origin story. I think today what we see is a slightly different customer, leveraging those assets, leveraging the brand, leveraging the customers, but a business where we are the destination for clean, sustainable, non-toxic products. Given all of that, the question is, is there a market for this? We believe there is. Is there secular tailwind? We believe there is.
It goes back to finding and serving a specific customer better than anyone else in the world. Who are our competitors? You could go to Amazon, Target, Walmart, you could go to all the marketplaces. We have buyers picking, curating, reading ingredient labels, not an open market of sellers. We do the work for our customers and then w e hold the highest bar when it comes to ingredient standards and sustainability and the environment. We believe we're serving that 57 million person TAM better than anyone in the world. Our durable advantage is tied to delivering that experience for them.
Wonderful. I care about all of these things. Obviously, health, wellness, beauty, huge market. Talk a little bit about what's been the response from consumers with these new categories. Do you think you continue to roll out new categories going forward? Is there still white space? What's it like?
I love it. There is white space. We started in cleaning and essentials. Candidly, a lot of customers still know us from that because we spent so much marketing building that brand. There's still that asset. Here, you start off in cleaning essentials, and 89% of Grove customers trust us on human health and wellness. We are following their lead. We see the biggest opportunity in VMS, vitamins, minerals, and supplements. Super excited about personal care, beauty, baby. We are adding all of the top, high standards, high-performing brands to our assortment. Customers love it. When you look at our net promoter scores, when it comes to selection and value, we are that place where value meets values and a s we expand into more categories and add more selection, we're giving customers more reasons to shop, more reasons to fill up that box.
That also creates a virtuous flywheel for us in that it actually helps our box economics as we drive up that average order value.
Let's talk about growth in sales, specifically Q4. What will be the drivers of that growth in Q4?
Several key things. One is this overhang that we've had for 8- 10 quarters from the excessive advertising spend that we had in an unsustainable period. All of our models say that cohorts flatten. We are now at that stage, so we're not running uphill. Now the business is on its own performing. What are the real drivers of it? It's the same drivers of fixing a core customer experience and then finding a way to tell your story to customers in a more efficient way than just giving an open checkbook to the large digital players like Meta and Google.
What is your path to profitability?
If we look at profitability, I mentioned this earlier on an EBITDA perspective, I'm kind of proud of the discipline that we've had. We've literally looked at every single part of the P&L. We've had to. We did not have a sustainable business y ou can't keep losing $40 million per quarter indefinitely. We looked up and down the P&L, we are finding scale in every single area of our business w e are renegotiating leases, renegotiating vendor contracts. We are driving up gross margin right here, we are changing the core economics of this business as we are turning this into a new Grove, a new business with new economics that will deliver consistent kind of profitability in the long- term.
Perfect. Thank you for that. W e just have a little bit of time left there are so many questions. Let's talk about the macro for a second. The recent partnership with HumanCo, how's that progressing?
Great question. HumanCo was actually involved in Grove even before I arrived. I think we had a relationship with them dating back to 2022. We've been talking to them for years about potential M&A acquisitions t hey bring us targets. I think M&A is a really interesting opportunity for us. We acquired two companies this year. We saw it as a great use of capital but a bout two months ago, HumanCo wrote a letter to shareholders and to our board that was actually consistent with a lot of things that I believe. We are aligned on where we're going in terms of our vision, leading destination for clean, sustainable, non-toxic products. We are aligned that we are undervalued, w e recognize that we're in microcap jail. What we believe is we are trying to welcome them into the fold.
We're creating a working group where we will work together to assess different opportunities. We'll always be open to different opportunities that maximize and accelerate returns for shareholders. I'm energized by where we are right now. Where we are right now is seeing one to four M&A targets every month reaching out to us and w e see a world of accelerating growth by assessing and considering all of these different M&A opportunities. In the earnings call, I said, "Look, I just want you to envision a $300+ million company. I don't know if we'll ever be $5 billion. I really don't. I know there's going to be a $500 million or $1 billion dollar player in this space soon." The question is, what does that look like? We fix the core customer experience, w e fix the platform. We're ready to scale.
When M&A opportunities come about, we're going to quickly assess them and see if we can bring them in the fold. I look forward to working with HumanCo to talk about all the different options that could be on the table.
Q uickly talk a little bit about your recent acquisitions? Was it 8Greens and Grab Green? What drove you to acquire those?
It's just like a natural complement to who we are. As you're fixing this platform, as you're delivering this great customer experience, let's add more brands that matter in a creative manner that have good paybacks. Grab Green was the first natural dishwasher pod ever offered into the market. Fits with our core customer. They were an existing seller. 8Greens, this is interesting. The founder, Dawn Russell, was on the Today Show yesterday. She kind of was impacted by cancer when she was 25 years old. She got through it without chemo and radiation. She went all in on greens. It's become her life passion to give Americans more greens and supplements.
This morning, I took my 8Greens tablet, seltzer kind of tablet, and you're able to get the greens that you need in a formula, in either a tablet or in a gummy that works for your family and your kids. Each of these acquisitions just strengthen our broader portfolio, show that we're using capital in a wise way. We're able to fund mostly with the resources that exist. I think that you're going to see more and more of this. There are just some great brands out there that are a little subscale. Maybe their SG&A costs are a little too high. Maybe they're having a hard time finding the right type of scene from a marketing perspective, and they're looking for some sort of exit. What we see is some value in some of those. We'll keep assessing. I promise you this.
We'll keep assessing those and see if there are ways to continue to accelerate our growth.
Perfect. I want to give you a few moments to close for our viewers today. Jeff, thank you so much. Closing remarks, please.
Thank you. When I think about this business, I joined, my board has joined not because of a small cap microcap business. There's real upside here. We see it. We talk about it. We're building the platform, the team, the culture to be able to do it. We thought we took existential risk off the table with this chart, paying off the long-term debt. We really are just focused on organic growth that we can deliver quarter- over- quarter, year- over- year. Maybe I would just close with this is the first time you see me for most of you. The reason is we haven't had the story to tell. We now believe our internal metrics give us confidence in where we're going and I'm excited to tell this story to you, to introduce you to Grove.
I will end with I bought shares in the open market because there's asymmetric upside. What's the downside? What would we be valued at for growing and break even without debt? Are we really going to go under? Some of the markets are treating us right now. For me, I believe if we deliver on this path, there is substantial upside. It's why we're here, i t's what we're doing. We hope, we believe that we can do that while making the world a little bit better day by day.
Wonderful. Great presentation. We really appreciate you being on the conference. We certainly want to follow along with your updates. Please come back. All right?
All right. Thank you.