Microphone on. All live? Thanks, everybody. All right, before we get started, I have the obligatory safe harbor statement I need to read to everybody. I'd like to remind you that some of the information discussed will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections, and our plans and prospects. Actual results may differ materially from those set forth in such statements. For discussion of these risks and uncertainties, you should review our filings with the SEC. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make today are based on assumptions and beliefs as of today, and we undertake no obligation to update them except as required by applicable law. Our discussion today will include non-GAAP financial measures, including EBITDA and adjusted EBITDA.
These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from, our GAAP results. A reconciliation of the most directly comparable GAAP financial measures to such non-GAAP financial measures has been provided as supplemental financial information in our earnings release and in the appendix to this presentation. This presentation will be posted as soon as practical after we conclude today so, Lovesac, we are growing in a down category. We're profitable. We're cash flow positive. We have net cash on the balance sheet. We have a product pipeline that's going to outlast my career, most of our careers. In short, we're unique. We're a unique brand. We're a unique business model. We're a unique secular growth story.
And that's what we're going to talk to you about today, with optionality to participate in real time and, in fact, in faster time than most of our peers when the macro bounces. That's the story you'll hear today. You're going to hear from Shawn, our founder and CEO, Mary, our President and Chief Operating Officer, Sam, our SVP of strategy, and then I'll come back to tie this all together for you and condense what they've said into more concrete financial measures. And without any further ado, it's my pleasure to turn it over to Shawn D. Nelson.
Thanks, Keith. Thank you, everyone, for coming out today, those of you here live, and those of you on the live stream. We really appreciate all of the support. Lovesac, six years, six and a half now, as a public company. Super proud of that. Having started way back in the 1990s, you know, the 1990s, the other century before, if you can believe it, Lovesac began. It's one of these companies started in my parents' basement. And we've lived through, as we observe our history and the various stages along the way, we break it into four chapters. And you are experiencing with us chapter four of our continued history. And we'll break this down as we go. But that's kind of where we are. And we really are at kind of a pivot point.
We'll try to make that clear, what that means and what that infers on our financials and everything else. But just in the most succinct way I can encapsulate, 26 years now, this was my college side hustle, right? That's what this company was. I had made a giant not-bean bag full of chopped foam, which made it squishy and amazing, and it would fill the bed of a Chevy truck. And everywhere I took it, everyone's like, "Holy cow. Where do I get one of those?" Little did I know, at 18 years old, when I made the first one, I was doing market research, and it came back positive, and people wanted it. And three years into it, finally made the first one in 1998, started the business, and my friends helped out.
We just kind of sold these things, never made any money, just got through college, waited tables to pay my way through school because this just sucked me dry, as most product companies do in the beginning. But it was fun, and it was exciting. We opened our first store in 2002 because none of the real furniture retailers wanted us. We tried, like, too big, too expensive. No one's going to pay $1,000 for it at that time, $500, inflation, for a giant bean bag. And your name, come on. And so we opened our own and didn't know how it would pan out. But four years into it, we had 30 or 40 of them. And all the way back to that first location, people would, you know, they'd come in, they'd flop down. We had movies playing on the big screen TV.
We had the music going, doors wide open. It was just a vibe, and that's what people wanted to take home with them, is that Lovesac vibe that I think somehow we still hung on to today. It's amazing. We're proud of that, but they would also ask about the couch in the corner, you know, this leather couch that was in the corner, and it was just there to look pretty, you know, kind of set the stage for the giant not-bean bags, and that gave rise to the Sactionals, right? If only we could sell a couch like we sell these Sacs. I mean, if I have one Sac in the back room, shrunken down from eight feet in diameter to one-eighth its original size in a duffel bag, that was our technology. It was patented. We're very proud of that. It allowed us to ship.
It allowed us to be rentable right out of the gate. We had that from the beginning. One Sac in the back room, maybe 50 covers on the shelves, we had 50 Sacs in stock for you right now, right, to choose from out the door or shipped. That was an amazing inventory model. And that has actually stayed with us through to today. And it's an important key feature that we'll talk about as we go through the modern Lovesac. But that was the birth of Sactionals. If only we could do that with a couch. We cut them up, took them apart, you know, fixed every problem people have with couches, washable, changeable, stackable, stockable, shippable, all these cool things that Sactionals bring to you.
And then we buried Sactionals underneath a sea of bowls and lamps and rugs and baskets, hiring the best people from the West Elm and the Pottery Barn of the world to come to Lovesac and help us take over furniture. It took about a decade floundering around trying to figure out how to sell high-end because they had to be high-end because we refused to make crap. To make Sactionals, as flexible as they are, require a lot of material. You know, all four sides of the seats that you're sitting on are finished so that those seats can become an ottoman, so that those seats can be rotated from long to deep, et cetera. So Sactionals were necessarily not inexpensive. It was difficult to sell them in the traditional merchandising model, right, shrouded in all this stuff.
It was around 2016, actually 2014, 2015, when we observed what was going on in the direct-to-consumer land, right? We had Warby Parker. We had Casper. We had all these brands that were raising money like crazy, attracting all the attention. Meanwhile, we had the best product for that business model, shrouded in all that stuff. So we purged. We got rid of 90% of our SKUs. And by doing so, built the entire box specialized to sell that product and Sacs. And the Sac business continued to grow. But that product, Sactionals, became a rocket ship that we rode because we got good at not just selling in the stores, that we converted to showrooms. You know, couldn't carry it out. We'll ship it to you.
It's really a showroom for the internet, but good at digital marketing, good at brand marketing, good at TV, good at all of it across these years. And that is the rocket ship we rode to NASDAQ, grew the company at an incredible pace through those years, right? 31% compounded average growth rate for seven years since we've come public. $100 million came public on NASDAQ six and a half years ago. Super proud of that. An amazing day, of course. And now we have this incredible growth curve to live up to. And you know, I know you look at a chart like this, and it's super exciting and kind of amazing, right?
You're saying, "Okay, well, you know, Shawn is kind of flattening out here." Listen, this feels a lot like it did at the beginning of chapter three, the chapter that we've exited, when we had made that transition from being a merchant-led retailer to being what we became as a DTC brand around couches at the time. It worked for us. Even though we all understand where the DTC movement ended, Lovesac might be one of the only survivors that's really become profitable, reliably, cash generative, and with a path to double and triple again. I'm going to put it really bluntly. That's our ambition, okay? So we recognize what's going on in the home category that we operate in, but we're super proud of what we've built. Now we're especially excited about this pivot that you're experiencing with us right now.
And we have lived it before, and by the way, lived it before that, and by the way, lived it before that. This is resilience embodied. All right, so with a little more detail so you understand, in case you're not super close to this brand yet, Sactionals is the world's most adaptable couch, bar none. It's a really incredible product. It's driven most of this growth, and we're really proud of it. You know, in case you're, again, don't know how they work, let me make it real for you this way.
If these were your Sactionals, if this was your Sactionals couch at home, right, you could rearrange it, add to it, take these same pieces, in fact, turn them different ways, change the covers, change the fabrics in just a few minutes, and achieve a completely new look and feel, a completely new space, split it into multiple units, you know, deploy it to another room. Whatever you need to suit your style, the size of the space. Come back, by the way, in three or four years and add to that same thing. We never drop our core fabrics, ever. We might move them from off the rack to custom, but they're still only three, four weeks out. You can add on forever, grow it, adapt it to your growing family, your changing life. Whatever you dream up or think of, you can do with just two SKUs.
You buy a bunch of seats. You buy a bunch of sides. You can build anything you want. And I'm talking 10,000 different couch permutations from these two SKUs back to that original Sac model, right? If you have those base SKUs in stock, you can have a myriad of covers and accessories and all kinds of options to make it not only unique to you, but of course, the inventory implications are just incredible for this product. And it's patented. And that's why you see nothing like it in the world. You can turn them long if you're tall and sit deeper in just minutes, no tools. You can turn them wide if you want a bigger couch to fit necessarily between the windows or what have you. Deploy them to another room. Send them off with your kids to college.
Once the pieces are separated, the covers fit like a glove, so it doesn't look like a floppy flip cover. These are all washable, changeable, removable cover couches in front of you that you're sitting in, that you see around you, and then the whole thing packs up inside of itself, of course, to make it FedEx-able, UPS-able, shippable, delivered to your door in days, entirely destroying the furniture model that we compete with, and you can see, obviously, why we grew like we did once we figured out how to communicate such a complex product. It's weird, so simple. Buy a bunch of seats, buy a bunch of sides, build anything you want, super complex because it looks like a sectional, but it's not. It can be so many things to different people, different ways of life, and then, of course, you know, all the other benefits.
I mean, to be honest with you, we get people's attention with this changeability. People love seeing that. And it's video-worthy, which in this day and age is really important for a product. What do you do if you're competing with this product in the day and age of video? Do you show how beautiful your couches are? Do you pan across the lovely fabrics? No one has anything like what we have built for this day and age of communication. And then on top of that, you know, the real benefits. Most people buy their Sactionals and love their Sactionals because of this, because of this, because in just seconds, you know, some kind of accident in life, some kind of, you know, daily occurrence doesn't become anger and strife or upsetness in a home. You're free to live.
You're free to have the dog on the couch with you, finally. You're free to kick your feet up. You're free to eat pizza. It doesn't matter. And all of that gray fabric underneath those covers made from 100% recycled plastic bottles. We don't even talk about this hardly. Why? There are brands that lead with this as their whole value prop. We recycle more bottles than all of them, I think, because we're talking millions and millions of yards of fabric, right, covering these massive products. And the reason we don't lead with it is because we have so many other stories that are more important to the consumer to tell. And so I think it is, in many ways, the most sustainable brand out there, not just because of this kind of sustainability that most people think of, but because it's actually a product that sustains.
I've got Sactionals in my home that are older than my children. They go back to 2007. It's amazing. It's totally unique. And of course, Lovesac Comfy. I mean, that's how we started, right? Eight-foot giant Sacs of foam. I mean, we are synonymous with comfort. You can turn them into a bed. We sell you this whole guest dress kit. Over the years, we've added onto the platform in ways that a lot of you may not even be familiar with. Of course, you can move them through any hallway, doorway, staircase. They'll fit anywhere, arrange and rearrange to customize to the space. And then, of course, all of our cool accessories. Super proud of even these little guys. I've seen, you know, I spend a lot of time. Sorry, I'm kind of OCD.
I spent a lot of time in the showrooms, and I've seen, you know, just this cup holder sell at $10,000. You know, it's like people are in different. Maybe the wife is really excited about the Sactionals. The husband's tuned out. And then, you know, he gets a glimpse of this, pulls his phone out, puts it in the slot, and it's like, "I'm sold." And this is the new version, by the way, that holds your phone in this cool little slot. It's just a really cool solution that's unique to Lovesac and really tailored to our platform because unless you're selling at our scale, things like this don't really make sense because they're not standardized. So Sactionals are super customizable and, on the other hand, super standardized, which makes it possible to do all these things. Storage we've added over the years.
And all this has driven our AOV up. All this has driven our attachment rate and the ability to remarket to you. And then, of course, you can shape-shift, go from a square arm to a roll arm if you w
ant something a little more traditional, to now the angled side that just launched last year and has taken. It's like 50% of our sales at this point. A new profile that we knew through research. So it's not just mad science-y. It's research, right, that we tease out now. We have a rigorous team that we identify the consumer need and then go hit it, and we nail it. And now you can shape-shift your Sactionals, achieve totally different looks. Of course, covers go on forever, all with basically the same two SKUs underneath. And then StealthTech. StealthTech is 100% unique to Lovesac, and we're super proud of it, right?
This is Dolby 5.1 surround sound reverberating through your sofa invisibly, right? You're looking at a StealthTech Sactional. That's what it looks like. It looks just like all the other Sactionals, but it is incredible. And it can go beyond even just 5.1. You can expand it to 7, even 9.1, 9.2, add more subwoofers, and daisy-chain them. But why some say the moon? Why choose this as our goal? Why 35 years ago? Why the Atlantic? Because that challenge is one that we're willing to accept. And it doesn't even do it justice. If only NASDAQ speakers were as good as the speakers inside of our Sactionals. What's cool is that StealthTech is zero sound quality loss audio. It is perfect. It's not just like a, you know, the only couch with sound in it. It's not just a good system. It's the best system.
If you don't believe me, you know, we're not here to—we've got other things to talk about today, so we don't have StealthTech set up here in this room. Of course, most people are remote anyway. Find your way to a Lovesac showroom and go experience this if you have not. It will melt your face off, okay? This is Dolby 5.1, 7.1, 9.1 surrounding you. It's 12 in from your skull, and it doesn't have to be blaring. It can be precise. And you say, "How is that possible?" Through the foam, through the fabric, through he decorative cover. We invented that. Lovesac holds the patents on that. Why is that? Because we believed it was possible. We were told it was impossible, even by some of the, you know, initial audio engineers who weren't having it. But with the right tuning, it's possible, and it's amazing.
And it will charge your phone. I set my phone on the arm. It charges. It's invisible. People love this kind of thing, and it's unique from Lovesac, and you can only find it here. And you still maintain all of the flexibility. That's the key. If you couldn't have all the flexibility in Sactionals, why would you invest so much in a couch? Because it's a good $3,000-plus upgrade to add StealthTech to the system. But isn't it neat that I can add StealthTech to my system at home with Sactionals dating back to 2008? What other brand of any kind in any product realm does that? Period. Think about that. And that is at the core of who we are at Lovesac. You have to have this kind of flexibility in order to achieve the kind of value from these new inventions and add-ons.
Without it, you're stuck maybe with a Samsung couch or something. And what does that look like two, three, four years from now that you invested in? At Lovesac, you maintain all of that flexibility. It's totally unique. Sacs, of course, still a growing business for us. Really proud that it would be so after all these years. But, you know, this is a category we established. We are the, you know, Kleenex of giant beanbags. And it's everyone compares to Lovesac, and that's great. It's a legacy namesake, and it has a purpose that I'll get to in just a minute, even beyond just, you know, selling more. It's really exciting. But it really is where the brand began. With the new PillowSac Accent Chair Frame, it's brought new life to the Sac brand and exploded on social media. We'll talk more about that as we go.
Okay, so where are we today? We are an amazing team. This is the best place for me to encapsulate where Lovesac has arrived. I'm so proud of the talent that we're able to attract. You know, Lovesac's big enough finally to matter. You know, we're growing toward $1 billion in sales. We can attract talent from the best companies in the world, and we have. This team that you're looking at, my top team, right, wasn't here for chapter three, and it's not because Lovesac doesn't retain. We have tenure at Lovesac like you wouldn't believe. You know, one decade, two decade kind of people that stick with this company and help us grow.
But if you understand our culture, and Mary will talk about this, our and this might surprise you for, you know, a company that looks like a bunch of, like, I don't know, laid-back college kids, you know, probably smoke weed and beanbags. Listen, that's not who we are. Our number one core value, Mary, is what? Top ambition. I was not a laid-back, you know, I'm from Salt Lake City, Utah. The truth is I was a straight-A student who had a very intense drive, and I pretended to be, you know, this laid-back Lovesac guy. But the truth is we are a team of killers. Top ambition. And we will take this company to the moon, and you'll understand more as we unfold our future for you. And I'm super proud of and not just this team. The team goes on and on and on.
And very proud of the talent that we continue to attract and that we've retained. You know, Sue, you know, did see chapter three, head of our e-comm and digital in the room today, and good example of this blend of new talent, tenured talent to help us navigate chapter four, all right? And look, after all the growth that we've experienced in a seven-year, 31% CAGR, maybe 15% growth sounds amazing at our size. Maybe it doesn't. The truth is I want to make this clear. You know, this is a CFO kind of placeholder. This is a general counsel kind of. We are going to double and triple this company. That's what we're here to do. Anything less for me is disappointing. You know, I've been at this a very long time. It has sucked my whole life in.
I'm not here to collect a paycheck and, you know, do pretty well and see our stock tick up or something. I mean, we'd all love to see the stock tick up, and that'll be great. But we will double and triple this company. We'll do it profitably. We'll do it cash flow positively. And I'm going to show you exactly how we're going to do that in chapter four today. So look, Lovesac admittedly can be tough to define, right? All of these strange attributes, what bucket do you put us in? We have become more than a furniture company. We're certainly more than the specialty retailer, the specialty retail chain we started back in 2002. We have transcended that, I believe, and I'll try to tease that out and explain it. We're more than a merchant-led assortment, as I've already touched on.
And we are certainly more than a DTC company at this point. What are we? We're a data-driven, we're a data-driven innovator, okay? We began with a little bit of mad science-y, chopping up foam in my parents' basement, making a beanbag no one had ever seen before. We continue to be inventive and be creative and be aggressive in that way. At the same time, however, thankfully, some of this amazing talent that I've described to you, even through chapter three, brought to us, you know, the Pepsi, P&G, CPG kind of formula for marketing that we didn't have growing up as a specialty retailer. And it has infiltrated how we operate.
(Mary will go deeper into this) but we spend a great amount of effort and money and time on consumer research, research around our product, research around even shaping our instruction manuals for things like the recliner that, of course, require no tools. But we know how it's going to perform even before we launch it because of the amount of research we do. We are customer-obsessed. We're an inventor of product platforms, okay? Not products, not a product catalog with all kinds of add-ons and, you know, chase and basket size. It's a platform. And as I showed you with Sactionals, all the ways that you can grow it and change it, hopefully you start to understand what we mean by that, right? It generates unique intellectual property. We have patents on patents. It's amazing. We have a deep catalog.
I think we're up to. I don't even know at this point. Many, many dozens of patents internationally that we defend aggressively with technology solutions as well in this Designed for Life way. We'll unpack this as we go. We're an architect of customer acquisition engines. What's that? Okay, we're really good at selling stuff. It's cool that we can invent cool stuff. It's useless if we can't bring it to market and dominate that category like we've dominated sectional couches, okay? And that comes not by running stores and operating a website. That comes by a symphony built to do only that and do it well. And now other things as well as we expanded to new platforms.
It's a tailored customer acquisition engine for the platform. And it's multifaceted from digital to physical, and we'll talk more about that a lot today. Finally, it's a more efficient inventory model.
As I've tried to explain using Sactionals as the example, I mean, dating all the way back to our earliest days in Sacs, I got one of those and 50 covers for it. I have 50 in stock ready for you as a customer. But my inventory carry is de minimis. It's amazing the power of that and how that flows all the way back up the supply chain, even to the manufacturing, which is why, by the way, we never ran out of stock through COVID. We did not run out of stock through COVID once because as long as we're deep on seats and sides and as long as those are flowing through multiple ports, why is that relevant today? It helped us then. It will help us in the future, right?
Because while all of my competitors do manufacture in many of the same places, we'll get into the details in Mary's presentation, right? Across Asia, Malaysia, you know, China, Vietnam, we could go all over. It's not just that we manufacture there and they do too. It's that we have redundant manufacturing for those same exact SKUs in all of those same places. So it's not like, "Oh, this port's closed down. I'm out of bunk beds." No, no, no. We have redundant manufacturing for our core SKUs across many geographies. And we'll touch more on it. And finally, a brand. A brand, right? Of course, everyone has a brand. Every company has a brand. But through the years, we have become more brand-obsessed, and we believe that is very much the future of what we're trying to build. All the patents, all the inventiveness is fun and exciting.
A brand is where we're focused. Why is that? So much so, by the way, it's become our stated mission, okay? We'll talk about our purpose in a minute, which is really what energizes us. But just from a down-to-business brass tacks, what are we trying to achieve here? We're trying to build the most beloved brand in America. Not couch brand, not furniture brand. This is the prize. And by the way, it may take another decade or two. That's okay. I'll go that long if you let me. We are trying to build the most beloved brand in America. And you'll say, "Come on, it was a beanbag company.
Who cares about furniture?" I think once you understand our DNA and how customers perceive us and how we are shaping customers to perceive the brand we're trying to build, the brand that isn't trying to sell you the new thing next year that you already bought the year before, the brand that applauds that you bought your Sactionals perhaps on Craigslist if it was because they're still valid. They're not left on the curb with a "Take Me" sign. This is the brand with a DNA that can do that. And the way we became, you know, let me back up.
So in those days, the way the reason that we've evolved our thinking to this place, one of the reasons, you know, if I rewind to the days when we were putting on the clothes of a DTC brand around couches, and it was a story that worked at the time and helped us come public and all that because it was a story that was being heard. I was out raising money, as one does, building the company, trying to, you know, keep it going toward an eventual IPO. And I was meeting with a private equity guy. And he asked me, as they do, "What's your moat?" You know, you sell these beanbags. You have these cool cat. But what's your moat at Lovesac? And we were still pretty small.
I said, you know, I gave him the chapter and verse on the product and our patents and our great team and our marketing and our sales and our growth and all these things. It was all great. At the end of this meeting, you know, and he was a little bit dismissive, admittedly, and, you know, not one that ended up writing a check, but he gave me. He said, "Look." He said, "I want to make." This is a world-class investor. He said, "Look, I want to make something clear. We invest in brands. A company with a true brand that can achieve that unlocks the true margin potential that's available. Everything else is just commoditized. Everything else is just product. Everything else is just a, you know, buying and selling machine.
And it really took me to school and made me think deeply about this. And now we've shaped really our whole strategy around this. And the way that we're going to kind of analogize this throughout the presentation now ties back to a photo that's been hanging on the wall of my office for more than a decade that I've never had the chance to explain until today. Because it's very easy to look at Lovesac, and if I gave you this tree as an analogy for the company, you know, you'd see the trunk as Sactionals and all these branches as this. No. That is not what we're doing here. And I've had to be very, very patient to wait until today to explain what this tree really means, okay?
This is an oak tree with deep roots into the ground, and it will go for another 100 or 200 years. That's the kind of brand I want to build. I want to spend the rest of my life doing it if it's necessary, right? What does that look like? How does, you know, what does that mean? It's very simple. Think of the best brands that you can think of. Think of the best consumer product brands that you can think of. You know, we think of Apple, of course. We think of Nike, Tesla, Disney, Patagonia. That's the brand we're going to build. Now, you're probably like, "Come on, beanbags and couches." I'm telling you, we are here to build a Nike, and it will take a long time. But we're not effing about. The team that we continue to build is here to do that.
They are attracted to this company for that reason, otherwise, they've got better careers somewhere else, right, and we're going to use this tree to kind of analogize the brand and make the case for what that looks like and how it's going to play out, okay, so it's got a lot of branches, right, and you've only actually experienced one or two of these in real life so far, Sactionals and Sacs, but there will be many, and they will be thick, and they will be strong, and they will be meaningful, and each branch represents a business, a big, thick, meaty business like Sactionals, okay, so let's break this down using Sactionals as the example.
As we look at a cross-section of what Sactionals is, right, a couch that's built to last a lifetime and designed to evolve, how cool is it that over the many years, like the rings of a tree, right? Let's all go back to second grade. We know what they mean. Over these many years, we've added on the platform. And by the way, this is just a smattering. There's 20 more where that came from that we've already launched into the world, and the business has gotten bigger and broader. In fact, it's the best-selling sectional platform in the United States, in the world probably, by the numbers, right? By our own numbers, right? As we observe our competitors, they make amazing products, but they've got 26 different couches.
By the way, Sactionals as a business is bigger than most of their entire upholstery businesses right now in real time, even though it's only a single-digit % of the market. Why? Because it's such a fragmented market. But as people experience, as consumers experience a platform like this that continues to extend out, and by the way, we've got years and years more of growth with Sactionals. You don't believe me? Just a week ago, two weeks ago, three, whatever, three weeks ago, we launched the recliner. We've, you know, we're selling, we're selling them as fast as we can possibly bring them in. It's doubling our expectations. There's this new SKU, and we knew that it would do well because of our research.
But as people experience this and they're spending $5,000 or $10,000 or $15,000 on a product, they experience three different kinds of lock-in on our platform approach to doing business. Number one, right? They have the sunk cost fallacy. They spent a lot of money on this thing. They've done a lot of research. They've studied the competition. They're not spending that kind of money flippantly. And, you know, just like who you vote for, you kind of got to support, you know, your belief once you've made that decision. And it's real with Sactionals, and it's meaningful. And we have them then on our platform for a long time because we continue to make it even better for them than the day they bought it. How cool is it that you could have made that decision, that expensive decision to buy Sactionals back in 2015?
Pick a year, and we just made it way more capable last week. The Sactionals, and it works with what you already have. Instead of degrading on your living room floor like everything else you buy, it actually gets better with time, more capable. You know, it's really pretty remarkable in my opinion. Secondly, they experience what we call the IKEA effect. By the way, this is a term used in psychology at this point. What's the IKEA effect? It is such a pain in the ass sometimes to put together. Listen, it's a whole Saturday morning. It's 36 boxes delivered to your door, and you've got to, and we love it, right? Our customers experience the product viscerally, and yes, we will provide white glove services, and if you really don't want to, we'll set it up for you. All that's coming.
At the same time, we really want people to touch, feel, and experience it because by the time, and look, there's no tools involved, unlike IKEA, not to pick on IKEA. I mean, they're amazing. They're huge and amazing. Listen, no tools, no screwdrivers, none of that stuff, right? They snap together like Legos. The hardest part really is just the covers. But they have to experience that. So they know how to change their covers and wash their covers and all those things. And by the time they're done, had a fun family activity on a Saturday morning, you know, they know this thing. They've bled for this thing. They love this thing just like you love your kids after changing their diapers for two, three years. It endears you to it. It's the IKEA effect, and it's a lock-in mechanism on the platform.
And number three, they experience probably what I would call platform lock-in, which is what I alluded to where I'm on this platform. It does things that nothing else does, and it just keeps getting better. And it's the only thing in its class that operates this way because everyone else is just selling sofas that begin to die the day you bring them home until they're left on a curb. And nothing makes me more happy than seeing Sactionals for sale in the secondhand market even. And we'll get to that in a minute because that's another opportunity. But so Lovesac, I think to some degree, has become famous for this, if you follow it closely, for this platform approach to product development. We call it Designed for Life. Sactionals is a Designed for Life platform.
But the part that Lovesac is less known for, and we're going to promote to you today and explain to you today as really the hidden superpower that I think most investors don't understand is that we have become masters at the customer acquisition engine, right? And it has four or five components to it: brand performance, marketing, digital configuration, showroom experience, partner demonstrations, and customer relationships. So we're going to break that down. These two superpowers are the reason that Lovesac can dominate a category, in this case, Sactionals so far. And the result is a high-growth, capital-light, profitable business model, and of course, brand. Okay? So number one, Designed for Life. What's this? It's very simple. We make things that are built to last a lifetime but can evolve with you as your life changes. Okay? What other product do you own in your life that does that?
Just think about that. It's very unique. We were not born with this design philosophy. We were just trying to survive, right? Making Sacs, you know, opening stores, finding our way. But once Sactionals were really starting to win, we stepped back and looked at that. Why is the, what's going on here? You know, why do people love our products? Why do they post on Instagram the way they do? Why do I see real life reflected back at me in the photos and comments that customers post? And the answer is because of those two attributes. And those two attributes we've broken down into a product development framework that if I had more time, I'd write and publish the book and open source it because I believe in it so much. And the outcome is truly sustainable products, products that are lovable, so you will keep them.
Even the Easter eggs, you know, look under the logo flap of that Sac, and you'll find a funny, stupid warning label that my general counsel probably hates because, you know, the Sac will only result in injury or death. It's a joke, and it's funny, and it's, you know, and it's posted online as an Easter egg. All the ways that we make the product lovable and fun and interesting, you know, to the drink holders, durable, it can go the distance. I mean, there's no sofa that matches ours in terms of just raw product quality. Now, I know that sounds strange from a company called Lovesac, but down to every stick of wood, every screw, every joint, we're the only one using wood screws anymore. Everyone else is glue and staples slapped together.
Even the best couches that you think you're buying out there from the best brands, I'm telling you. Why is that? Because we literally want them to go the distance. And because we've had so many years with them, we've refined them and refined them and refined them and refined them. And the Sactionals we're selling today are way better than the ones still in my living room set up from 17 years ago. But even those are valid because they've been through all these generations of refinement. That's the benefit of being on a truly extendable platform, maintainable, right? Adaptable, sustainable, reclaimable. We'll get to all these. We won't actually. But that's the product development framework. Designed for Life is not just a marketing slogan. People love us for these reasons. You know, they rearrange their Sactionals.
85% of them use many of some combination of these benefits that come uniquely from this product. And the Designed for Life selling prop, I mean, the proof is in the pudding, as I said. Lovesac Sactionals are probably the best-selling couch, best-selling Sactionals, best-selling Sactionals in the United States of America. It's a fragmented market, and it's a big business for us. We're committed to it. We carve it on the wall. Our customers understand it. They believe it. They invest in it for these reasons. And the product lives up to it. Okay? This really pays off our purpose, which, as exciting as our mission is to build a brand that's here for a few decades or hopefully forever, our purpose is what energizes this company.
We intend to inspire humankind to buy better stuff so they can buy less stuff, which I know probably to investors is not something that you would openly say, but I'm saying it, and I mean it, and yes, the implication is I won't be able to grow to the size of Apple by selling you the same thing, and this is, listen, congratulations, Apple. You win biggest company in the world award. Awesome. Awesome. But we'll get pretty flipping big, and the implication is we'll have to extend into other categories. And we love it because we will Design for Life. Them. And given enough time, we will extend into many, many categories. But we've demonstrated patience. We'll continue to demonstrate patience and discipline. Okay. We have these Designed for Life platforms that are built to last a lifetime, designed to evolve.
Let's dig into this customer acquisition engines because this is the unappreciated part of Lovesac. Okay? We have these five things that we've become pretty good at over all these years: brand marketing combined with performance marketing, right? All of the media activations, PR, influencers, social, tailored around this product platform, right? To build a brand while we're generating significant take, even at the first purchase. The truth is this LTV to CAC ratio is just the first year purchases. It almost doubles again by year five. Okay? But just to be super conservative, calculate it on a margin basis. It's pretty impressive what we're doing on the performance marketing side. But it's not just performance marketing. You'll never see a Lovesac TV ad with a sale, with a discount. You know, we're building the brand even as we do performance marketing through, well, a bunch of ways.
We'll show you in a second. Digital conversion, digital configuration. Okay? Our website is a serious moat. How is that possible? Everyone has a website. You can't put Sactionals in a shopping cart. You can't take a Designed for Life product with all these attributes, unique, you know, configurations, all of the possible permutations and drop it in a shopping cart, which is why most of our kind of copycat startup kind of competitors fail because they can, you know, take pretty pictures on Instagram. But by the time you get to the web experience, unless they're willing to invest the years and the dollars that we've invested to create a configuration experience that allows you to seamlessly rotate from deep to long, Adla Ricks here dying laughing, our head of digital, because I mean, she eats, sleeps, and breathes this.
And it's been a long, hard road to have a seamless digital experience to pay off these amazing Designed for Life products and the complexity, okay, of an experience that needs to feel simple for a product that looks simple but is remarkably complex. So it creates this unique digital moat for us. And our website conversion's only been going up even with all of the additions. And of course, our customer satisfaction rates improving in real time. The showroom experiences, look, a lot of the DTC brands spun out, started to open stores, thought it was the answer, even looked at us as an example of a successful model. It took 20 years to get really good at operating hundreds of locations across 48 states with all of the employment implications and everything else.
We're really good at this, building out a box tailor-made to do one or two things and do it well. They pay back in just over a year. This is best-in-class kind of stuff. It's 50% better than the competition. Partner demonstrations. We do it in Costco, Best Buy. We're doing more of these, and we're going to pursue more opportunities in this realm that's really exciting. Finally, customer relationships, right? If you sell a product meant to go the distance, you're signing up for a real relationship with those customers. And they come back, of course, and they do, and they expect to. And we prize that. We deliver in days instead of in months, like most of the competition. People love that. And our NPS scores are higher than, you know, two times higher than most of North American retail.
Finally, you know, why, you know, just to pay this off, this customer acquisition engine is a moat. It's not just about the Designed for Life products. It's not just about the uniqueness of what we offer. You know, take StealthTech. Why don't you see something like StealthTech out there? You know, there's lots of reasons for that. The Designed for Life reasons, right? If you can't do what Sactionals can do now, you're stuck with a Sony couch, a Samsung. I mean, you know, is that what you want in your living room? Is that what your spouse wants in the, you're right? But beyond the Designed for Life aspects, it's really about the moat of our customer acquisition engine. What do I mean? Our go-to-market. This is a highly complex situation. For all you know, this is a StealthTech couch sitting in front of you.
Subwoofer, front speakers, rear speakers embedded, more satellite subs, daisy-chained, you know, more rear speakers, invisible to you, charging devices embedded in the sofa. That is a complex sale layered on top of a complex sale called Sactionals. The ability to do that face-to-face with you in a showroom, that is where the staff knows it cold, right? This isn't a sea of 200 employees that might know something about a TV or a camera. This is a staff of five. They're rarely even there together. It's super efficient, and they are trained killers. They know exactly how to deliver to you the message, make it simple, and help you convert to the product. Okay? And happy to let you go do it online. This customer acquisition engine tailored to these deceivingly complex solutions gives us a monopoly in the realms that we choose to innovate in.
It's why you don't see Sactionals in other places. You can't sell Sactionals in a typical furniture gallery. Why? Because it's probably over there, still disassembled from the last guy who dared to take it apart as a part-time sales job, right? Collecting dust because, like, I don't even know how that thing works. But let me show you the other 86 couches we have on display that are easy to sell. Our customer acquisition engine is a moat equal unto our Designed for Life solutions. And we're going to apply it to new platforms. That's the most exciting part. Finally, as customers experience this, convert to our way of thinking, they're dropped onto our infinity flywheel to add on and repeat. A full 44% of our transactions are repeat business already, even with only selling a couple of products. Just imagine that.
With only selling a couple core products, right? It's not like we sell you the accessories for your bathroom like most of our competitors do. And we still achieve that level of repeat. And 34% of our awareness comes from word of mouth. It's our number one driver of awareness at this point. Why is that significant? Because we spend a lot of money on marketing. But isn't it cool that if we rewind just two, three, four years where, of course, marketing was the number one driver of awareness for Lovesac, it is now word of mouth. That flywheel has kicked in, and that flywheel will be generous to the new platforms that we bring to market and drop onto that spinning flywheel. Finally, Sacs give us a portal right into the hearts and minds of your children, right? Gaming, music, movies, TV.
We find ways to integrate, do collabs, do exciting things, usually around the Sacs brand, also Sactionals. I think half the NBA, NFL, MLB, half of Hollywood owns our stuff. It is just as relevant to a million, you know, to a $10 million LA mansion as it is to Middle America because of what it can do and how unique it is. And the brands sizzle around it. And this is just a taste. All of this action and energy and celebrity and collabs, high fashion collabs, fashion week, all just in the last 12-18 months. And it really does make us relevant. You know, we pull up at the X Games and the Lovesac bus back in the day. Name our top competitors that sell sofas at high-end and imagine their brands doing that.
Lovesac has this unique name, this unique lifestyle, this unique vibe that resonates unlike others. Okay, so what's our strategic outlook? All right. We're operating in a terrible backdrop. Housing markets in the toilet. Home categories linked to housing, et cetera. People moving, people stuck in their homes, interest rate, right? We all know this. Okay, so we're all waiting for some kind of recovery in this category. You know, on top of that, you know, the demise of DTC, a movement that we latched onto, you know, for chapter three. Thankfully, achieved escape velocity, achieved a size and scale where we matter, where we generate cash and have a bright future ahead, but bankruptcies across retail, layoffs across many consumer brands. And of course, layoffs are great for a stock, but not so great for a company's strategic go forward necessarily.
We're very proud to have navigated well, I think. In the context, in case, you know, you're not tracking this category like we are, it has been worse for three years than 2007, 2008, 2009, which was a housing-led recession. It's wild that that could be the case. I realize America hasn't experienced a proper recession, but this category has. Lovesac's done pretty well. We've held on to all of that growth. Isn't it remarkable that our top competitors in this landscape have given back all the growth that they experienced to COVID with just a little on top of it to date in real time? Lovesac has held on to all of it. We've tripled the company from before COVID, right? We've tripled the company from four years ago and didn't give any of it back.
I understand how dicey it can be in real time, quarter to quarter, operating in this landscape, right? But I think this is remarkable, and I'm proud of it. It's thanks to the team. It's a good team that's resilient. In fact, as exciting as it was to, oh my gosh, be a COVID beneficiary, they're printing money, they're spending it on couches. We'll take it. We've taken more market share since because as all the others gave it back, we continued to grow. We were shocked as we started to do this math, and we're proud of that. We're growing our customer base in real time today. We're up to a million and one households, which is amazing, but less than 1% of the entire United States. Why? Because we're not selling T-shirts and shoes. We're selling $10,000-$15,000 couches.
It's actually not that many people, which means we have all the others to go get with a superior product and a better marketing engine, right? So we've talked about our TAM for a long time. It's big. Furniture's big. Home is big. Couches is the biggest chunk of it. Seating, let's say. But in fairness, you know, if we want to really get surgical with it, let's do that. Okay. We've talked about this $46 billion. This is seating plus home audio because we've entered the home audio category. We're a legitimate player there. It's meaningful to us, right? $9.5 billion is a refined TAM. This is Sactionals plus home theater kind of audio. Okay. Lovesac is at a 7% share, which doesn't suck. We are a serious competitor in those realms. What about the rest of seating? We'll get to that. Okay.
The rest of upholstery land and the bigger opportunity because we're going after all of it. But first, by the way, tripling our household, that's the goal, right? What's our kind of line in the sand internally? We want to triple the number of households we're in to 3 million households by 2030. I'll let you do the math. Okay. What's our territory? What are we going to do, Shawn? What's next? Listen, think of all the stuff you own, all the things in your life from the mailbox to the backyard fence. That's our territory. Understand I'm speaking across the next few decades. I have, we have embodied tremendous discipline to stay focused. So don't imagine we're going to run out now and just go do it all. We have stayed super focused. That's been our strength.
But we will now broaden where we're going, still with guardrails around this blue ocean as we see it. We're home overlaps with tech, overlaps with services. What does this mean? We're customer obsessed. We know who our customers are. Like I said, we spend a lot of money and time digging in, understanding them. It's 45% of the U.S. population. It's 70% of the category spend. These three psychographics is how we focus, tailor all of our marketing. Okay. They're on the higher income side of things, households at 100K plus, which represents most of our buyers, but only 41% of America. Okay. Age 35 through 54, right? And we have all these brands coming to try to capture their attention. Let me double. And by the way, StealthTech is not one of these brands. In case you're wondering, where does StealthTech fit in?
It's not a platform. StealthTech is the glue, the sinews, the wires that connect it all. Understand all of these new realms that we're going to play in will be connected through a whole home ecosystem called StealthTech, hiding in front of you in plain sight to build the brand that we've described. And we'll do it. Okay. So a few takeaways before I get into these next new branches from Lovesac. We have a track record of profitable growth. We have these two superpowers, Designed for Life products, customer acquisition engines tailored to those product platforms. A massive TAM opportunity. Despite our seven-year CAGR of 31% growth, still huge opportunity. Digital platforms, showrooms, partners provide a long run. We have channel growth that we'll unlock for you next. Okay. So expansion. Okay. Get on with it. What's next? New product platforms.
Who wants to see what one of these new branches looks like? All right. Sacs, Sactionals. Okay. Hold on, just one more click. Okay. We've had a lot of action on our existing product platforms. Okay. I'll get there. Again, Sactionals plus home audio, $9.5 billion. We've already achieved a 7% share. We are a serious competitor. We are the competitor. We're the leader, I think, in that category because it's highly fragmented. We've added on and added on and added on to both the Sac and the Sactionals platform. We're really proud of all these new inventions. The AnyTable, you know, our first foray into case goods, the new drink holders and whatnot, the Charge Side, and PillowSac Accent Chair Frame and Sactionals pee protectors as we call them for your Sactionals. The customers have been asking for them for years and years and years.
Finally out from covers to accessories. We just continue to add on, layer on, and have all these cool new introductions. Just ways that you can enhance your, you know, really build a product catalog, but still stick with a platform mentality. That table is not just a coffee table. It integrates with your Sactionals. Of course, the pee protectors long needed to protect the investment you've made underneath those covers. And we just continue to give customers what they want. And we've got years and years of similar innovation coming on the platforms you're familiar with. Okay. The PillowSac chair accent, the PillowSac accent chair frame. I don't know. Did we bring? Oh yeah. So it's in the room. It's really cool if you haven't experienced it. It ignited on social media. More than a billion impressions across our partner marketing, our collaboration with KidSuper High Fashion Designer.
This accent chair frame just took off and we sold out of it. So we're recovering from that now. It's been really exciting. Finally, tech. What are we doing in tech? We talked about StealthTech and the moat that it provides. I spent a lot of time on that. I'll just play our video to now show off our newest addition to the StealthTech family that has been stealthily hiding in front of you in real time, right? And if you haven't experienced the Lovesac recliner, this is something that we spent years and years on. Okay. You didn't know these were recliners because they look exactly like regular Sactionals, right? The coolest thing about our recliner, besides the fact you have all the StealthTech possible, all the reconfiguration, you're looking at deep ways over here, right?
The rectangle rotated deep in case you're tall, you want to sit deep, slouchy for a movie. Over here, you're looking at Sactionals the long way. It's the same SKU. This is 35 inches wide, this foot piece. That's 29 inches wide. Wait, what? Yes. That is the exact same object as that object. Only that one is six inches wider. They have the remotes for that. How is that possible? It's not. It took three years of development, actually. It took 80,000 engineering and design hours for a flipping recliner. But it's a reclining unit now. We can sell for the next few decades because of its flexibility and Sactionals' ability to conform and morph with society, with trends, right? 350 unique parts in this thing. And it is bulletproof, has safety features unlike any recliner on the planet. It's silent. It's comfy. It's resilient. You know, no fear.
And my favorite part, you know, you can do that with it. Put your feet on it. It's so comfy. And so look, if you have time after the event, poke around, lift up the hood, look inside. It's as beautiful on the inside as it is on the outside. We're really proud of it. It's unlike anything you've ever seen from any furniture company ever. Our newest addition to the StealthTech platform. All right. And it's zero wall clearance. You know, a lot of, in a lot of companies, you pay a super premium to have a zero wall clearance recliner, which means it works with the seats. It works with the sides you already own. There's nothing magical about this back. That back can be an arm. It can be a back. You could have owned it for two decades and drop a recliner right into it.
And when you want to reconfigure it to the wide way, you can do it in about two minutes. How is that possible? We don't have time, but it's really pretty cool. We're really proud of it. We're really proud of the engineering and design team that's with me out in Utah at our Hub Two. It went from a couple people six years ago to 20, which is why you see the pace of innovation increasing at Lovesac, you know? And again, the industrial design, the engineering on this thing is unlike anything else. It's stealthy. It's beautiful. Even the extra parts that allow it to go from deep to wide, because this is a wider footprint with its own unique cover for the footrest, they ride on board down inside of that thing.
Unlike your vacuum, which you've already lost the attachments for, they're inside ready to go for you when you finally decide, maybe even years later, that you want to have a different configuration. Services, what does this mean? Mary spent more time on this. Trade in, trade up, resale. There is a Facebook group dedicated to Sactionals with more than 100,000 users. We do not run it. We peek into it to see what's happening. They buy and sell and trade amongst themselves. We would love to facilitate that and make it easier, more sustainable, leverage our FedEx rates, and make this available. We've already made it available already. It's an online experience that our own teams are utilizing. It's remarkable. I myself have duffels full of covers. I have all my ten set of covers.
I have duffels full of perfectly fine Sactionals covers that I grew tired of. I just wanted something new that are ready for resale, trade, trade up, a credit from Lovesac. And this will be a source of revenue, and this will be a unique aspect to this brand that no other brand can even do because not only have their products disintegrated already, but they're also behind the times, out of date, what have you. And so it's really exciting what we'll do with services over the next few years. All right. So again, Sactionals, we got it. Sacs, we got it. The third brand. Here we go. How about a fourth? How about a fifth? Not joking. Okay. With StealthTech and services tying it all together, a whole home ecosystem on its way. When already? When? We will continue to expand on the Sac platform.
We will continue to expand on the Sactionals platform. It will not end for the next decade, the next chapter of Lovesac, but the new platforms are coming this coming year. Number one, the year following. Number two, and the year after that, number three. Not new product introductions, new platforms, new rooms. But we're only going to reveal one to you today. Okay. What is it? It's right down the middle. Who could have guessed that we would have an opportunity so square in the crosshairs of the brand we've already bought and paid for? We told you now our refined TAM for Sactionals and home audio $9.5 billion. We just added the recliner, by the way. It's a quarter of Sactionals, a quarter of Sactionals we were locked out of a month ago because people want a recliner. And now we have one. We have the best one.
It's one SKU. Works deeper long. We'll go after it. The bigger part though of upholstered seating, sofas, love seats, chairs. $14 billion, way bigger than Sactionals. Remember, $9.5 billion was Sactionals plus home audio. $14 billion opportunity coming in at lower price points, making us finally more relevant to more households, more relevant to age groups outside of our core demographic even. All wrapped up in one beautiful product platform we call the EverCouch. And you're sitting in it. You're sitting in it. It's in the room. These are the EverCouch chairs. EverCouch sofas are those neat little, you know, unassuming sofas over there. You're like, "Wait, what? Lovesac, really? You came to NASDAQ to launch a couch?" Hell yeah. Because we don't sell couches. It is a tiny fraction. A single digit of our total sales barely goes to anything that is three seats and under.
We sell almost all exclusively big Sactionals. Why? Because it's not efficient in Sactionals land to build a small couch because you're paying again for this seat to be finished on all four sides for all the flexibility that comes with that. Now, Sactionals are fantastic and yes, you're looking at one. You can build a couch out of Sactionals. Nobody does it. We do think we're going to start selling a lot of single recliner chairs. You know, we'll go after La-Z-Boy, but in the meantime, a simple, beautiful, you know, kind of club chair experience, a love seat, a three-seater sofa that's more affordable, that doesn't have all the build that Sactionals does, but it's just as durable and reliable and unique, and I'd play a clever video for you, but that's how new it is. I don't even have one. Okay.
These are the first off the line. They're comfortable. They're beautiful. Again, you know, a better price point in many respects than Sactionals. And as we take them apart and kind of look under the hood, available in sofa, love seat, and armchair, the thing I'm most excited about, every one of them comes with storage, you know, this really cool Flexolator spring system because a lot of, you know, storage-based sofas are really just a box on top of a storage unit. You know, this Flexolator system is amazingly comfortable as you're experiencing right now, those of you sitting in those chairs out there. And you know, the part that I think is most unique, you know, of course it comes apart. Of course it's available for quick, easy UPS, FedEx shipping in just seconds. No tools required.
But we've invented this really cool connection system, removable washable covers, of course, that utilizes these steel pins. And you know, a lot of IP, of course, in the way this thing works. You guys know this. Pass these around. These are just so cool. I mean, you know, don't drop it on your toe. But you know, that Lovesac heft that you get from handling a Lovesac clamp, easy to do. Of course, have many of the same benefits of Sactionals, but lighter weight, going after that $14 billion bigger chunk of the couch category that we have never played in. Isn't that remarkable? Done as well as we have selling almost no couches, love seats, or chairs to date. I know it seems unintuitive, but it's true. Available in all kinds of covers, available the three-seater with two cushions or three.
You know, but how does this not cannibalize Sactionals? Again, we don't sell any couches, chairs, or love seats. We make very, very few. The EverCouch will be smaller, lighter, less expensive, easier to cover, quick to assemble, easy to move and relocate, just like Sactionals. Somewhat shape-shiftable. Come with three arm styles out of the gate. This is the swept. You see the square. There will also be what's called a tapered arm with a slouch pillow over the side for this trend that's going on right now. Equally durable, not rearrangeable, not interchangeable, not expandable. Won't have StealthTech, won't have recliner, at least for, you know, the next little while. And then lastly, I just want to show off this front rail.
So if you've ever experienced a broken couch in your life, you know, or had your, you know, your big uncle, whatever, sit on the thing in the middle and snap that thing, it's always the front rail. We call this the beam. This is just from the chair. So it's short. But if you look at the couch and love seat, it's even more impressive. But the heft of this thing, the quality of materials, we will be selling the best-made couch on the planet. It just happens to be UPS-able. It just happens to conform to all the right dimensions for that. And the finishes are beautiful. And so, you know, you can handle the quality. You can experience the product both in couch form, love seat form, and of course, chair form. And again, my favorite part, these steel pins, they're just gnarly.
So the EverCouch, right down the middle and quick win, big opportunity for Lovesac, leading to some of the other platforms that are a little further out. And by a little further out, I just mean the year after next. So this is mid-next year. A year after that, a whole other platform. A year after that, another one. Okay. And so lots of reasons that we think EverCouch will be competitive in the landscape. I think the thing that I'm most excited about is imagining this EverCouch branch growing just like the Sactionals branch with extensions, with opportunities, with ways to build this unique business separate and apart from Sactionals. But beyond the product platform, the customer acquisition engine for EverCouch will have some uniqueness as well. Let me explain. Okay. So we've talked about these customer acquisition engines and why Lovesac is so uniquely good at it.
We understand how we do it for Sacs. We understand how we do it for Sactionals. Right? You guys have, many of you have followed us for a long time. This is not new news. What's the big news for EverCouch? Well, in particular, besides, of course, our ability to bring it to market, advertise it, explain it, digitally configure it. And it rides on the same rails. It rides on the same infrastructure rails we already have. It rides in the same, you know, 300 plus showrooms, including shop-in- shops that we already own and operate today. There's very little capital expenditure to bolt on a bigger category than the one that we compete in today, which I know is hard to believe, but it's true. Partner demonstrations in particular. Remember I explained why we don't sell Sactionals in more traditional furniture places.
People that, by the way, that are actually out there looking for furniture that never even give us a shot because they've been conditioned to go to fill-in-the-blank place to buy their furniture. Sactionals can't live there. They're too complex. This can. And so partner demonstrations inside other channels is a big opportunity for us, of course, building the same long-term customer relationships that we most prize. Finally, the new platforms, right? EverCouch is mid-next year. The year after that, a new platform. The year after that, a new platform. And if you pay attention to this tree, this analogy that I will now wrap up with, some of those branches are bigger than the Sactionals platform. That's very intentional. We look forward to bringing them all to market. We look forward to a more fulsome product catalog, and it's going to happen really fast now. How is that possible?
Because we've been cooking on all three of these new platforms for years already, particularly the two outer ones. That's what we've been investing in. That's what we've been doing over there. You know, that's why our EBITDAs aren't as high as you'd all probably like them to be. We're playing a game in decades, not months, not years even. And it will all be tied together with StealthTech and services for a whole home ecosystem. And we will be the only company that can do this. We're already doing it at scale. StealthTech is double-digit% of our Sactionals business. It's a big deal for us. And it doesn't even connect to anything else yet. So just imagine when it does. The brand that will emerge from all this activity will be unlike any other. It will go for decades. We've already gone two and a half.
We've got the stamina to go another two and a half if that's what it takes, and I'm really proud of it, so we're prudently investing in the brand. Our pace of innovation is rapidly increasing. You've seen it. More launches in FY 2025 than we've ever done in our history. The same pace we'll roll into next year. In just months, we'll enter the bigger category of sofas, love seats, and armchairs in just months. Two more dominant Designed for Life platforms in the years beyond that, and our installed base, understand that we are the only company on planet Earth that has spent $500 million dedicated to establishing a brand in couches. All of our other competitors are generalists. They're just labels. They're curators of all kinds of stuff. This is the only brand synonymous with comfort and couches. We've bought it. We've paid for it.
Now we get to launch something right down the middle of the bowling lane onto that goodwill. With that vision, understanding that it needs a deep root system to continue to keep it upright, I'll hand it off to my business partner, President and COO Mary Fox, and Sam to take us into the next. All right. Hopefully you're feeling excited. By the way, for the room, I want everyone to stand up. Just take one second. It's just like, that's a lot of shunt. Stand up. We got to get Mary some new energy. Okay. Just like shake it out a little bit, you know? I'd make you power pose if you actually worked for Lovesac. These guys are all like, are you going to make me power pose? We're all like, straight up. Let's do a power pose. Just 10 seconds. Let's go. Hands over.
Oh, this is what we do at Lovesac. Did you know if you stand this way for two minutes straight, the endorphins kick in, right? The serotonin kicks in, like all the good hormones, oxytocin even, right? The testosterone's jacked. I mean, it gets you going. We call it power posing. All right. Put your hands down. This is great. Look at these guys. Appreciate you.
So we get to do that power pose when we are together as a whole team for our Manager Fest meeting, and generally, I think, Shawn, we will power pose for about three minutes. Most people start to break. However, it's a great energy, and Shawn, just a huge big thank you as you really talk through so much around our vision, how excited we are around the confidence for our future.
And the two superpowers that we have ahead of us are just so critically important for our success as a company. And as you got that visibility from Shawn today, you know, we talked about Design for Life products. We talked about the huge superpower we have around customer acquisition engines for the two platforms today, but also the three platforms that are coming in the next couple of years. So to enable the success of these five platforms, I'm going to stand down here. We're going to spend a bit of time around the customer acquisition engine, which is our second superpower, how each element works together, powering these engines from brand marketing through to our omnichannel experience. And I'll have Sam Martin at some point come up and actually be part of that overview.
So let's first start with brand marketing and what really powers our customer acquisition engine. This is where we are focused on building our brand over the long term, but also driving sales every single day. We think of our customers' journeys through the entirety of this customer funnel. And we have continued to hone our approach as we look at really delivering awareness at the maximum possible ROI all the way through to purchase conversion. So you know, Shawn talked about it earlier. We have a large, you know, very fragmented category. And generally for furniture, high-end furniture, the unaided awareness is very low. And you can see for us, we are kind of smack in the middle of multi-brand billion-dollar brands in terms of unaided awareness. That then jumps up to just over 63% in aided awareness.
Smack in the middle again of some very big brands that are in those multi-rooms. In the last year alone, our aided awareness has increased by four points, which is double the rate of the category, back to just so much of what Shawn talked as to why that happened.
For over 25 years, Lovesac has been rewriting the rules of comfort. It's okay to change your style. Get messy. Get immersed. With Lovesac, you make the rules.
You can see our team are doing a great job driving awareness. Just 15 seconds in telling the story around built to last, designed to evolve Lovesac product, all in just 15 seconds. This is one of many, many examples that we have where the teams are really developing out the content, whether it be linear TV for YouTube, social media.
And that brings thousands of customers into our funnel and then takes them through the customer acquisition engine through to purchase. So they come through to purchase. And you can see here that the average initial purchase is nearly $4,000. And the marketing funnel investments that we make to deliver this conversion pay back and much, much more from this first purchase. So you look at the value of just the 2024 cohort in the gross margin of their initial purchase, which sits at $2,275 of gross profit with a payback ratio, as Shawn said, of 3.5% on that first purchase with a customer acquisition cost of $644. From an ROI perspective, what we're really also pleased to see is our customers are actually buying more in their first purchase.
With our tight management around gross margin improvements with very minimal pricing increases, you can see how that cohort first purchase continues to grow. So they've bought their Lovesac. And what we love to see, as Shawn talked about, is 87% of our customers are interacting with our product after purchase. They're learning about us on the website. They're playing with the product. There's a very, very high engagement with our product. Shawn talked about the fact that then 44% of our transactions are repeat customers. And what we are seeing is generally they're coming back and they're buying more seats and sides. They're buying new covers. But we're also seeing them starting to really advance in terms of buying StealthTech, accessories, even buying Sacs as they've got to be introduced to them via Sactionals.
As we bring in EverCouch and this ability as a company that we've been investing in the last few years around how do we go after that repeat customer, give them great product with a reason to buy, and then be able to engage with them in CRM. This is probably one of my favorite slides. I think Keith, you love this one too. As they own us over the years, so they started with the initial purchase gross margin value. You can see then kind of the first couple of years they may be adding a few pieces, but there is an inflection point at year three where they really get used to our product. They then really start to add on to their initial investment.
So then by year five, the value of their gross margin lifetime value is up by 174% from their first year. And this continues to extend out. And by the way, this was before we even had Recliner and all the other innovations that we've just started to bring them this year. So we are very focused not only in getting them through the funnel, but also continuing to build on their lifetime value and giving them reasons to keep on buying. And then what's even more exciting as we sharpen around our repeat business, we sharpen our CRM strategy, is that we see a huge gross margin jump from those customers that are super fans. So they move from being in one of our categories that they're buying from a platform point of view when they then buy into multi-platforms. So they love our product.
They're buying Sacs and Sactionals. They are worth two and a half times more than a customer that's buying in one platform. And then Shawn said we have another platform coming next year, EverCouch. And then we're going to add two more as we go into other rooms. And you have that install base of 1.1 million households today. We're going to go to three. And all of them will be able to advance through the platforms. And every point of cross-sell improvement is worth $30 million. So a big part of the focus for the teams. So then Sam's going to come up and talk about the next elements of the customer acquisition engine, which is around our whole experience beyond the marketing and the initial purchase. So Sam, over to you.
Thank you, Mary. And good morning.
So the next component of our customer acquisition engines is the complementary interplay of our digital, physical, and partnership model that engages the customer with a branded experience on their terms. Our number one touchpoint for our customer is our website. And the foundation of our web experience is our world-class digital configurator. Shawn touched on this earlier. This creates a dynamic showcase for our DFL product platforms and allows the customer to wade through the near infinite number of permutations that they can create to add value to their lives from hundreds of cover choices, the configuration itself, add-ons, accessories. We see a lot of competitors trying to mimic selling this kind of technology without this kind of investment. And it just really doesn't work. It's clumsy. It's low conversion.
We've invested a lot, especially through these last couple of years of downturn, to ensure that we have the right platform as we bring the new innovation, EverCouch first, a new room in 2027, a new room in 2028. We've got the investment and the foundation to really make these pay back quickly. The other key element with the configurator is, as Shawn mentioned, a 30% increase in conversion rate just since FY 2023. Most important is MyHub, which is kind of our internal term for a program that we launched that really drives an entire omnichannel quote experience for the customer. So we capture data from the physical and the digital side to feed into our customer data platform and into our CRM engine.
So we can continue to target with the right messaging at the right moment to the right customer as we build out that launchpad for continuing Sacs and Sactionals platform expansion and launching our new platforms discussed earlier. We marry this with a really powerful showroom. We think of our showrooms not as stores. We think of them as brand amplifiers. They are little couple thousand, sorry, thousand sq ft selling space locations that allow us to bring the very complex Designed for Life platforms we talked about to life in a simple way to help those customers understand first with blocks and then taking them through the product, the countless ways that it can function within their lives. We're at 255 showrooms at the end of this year.
We will continue to follow a really, really great glide path and runway that we have ahead of us, always, of course, governed by an ROIC mindset as we continue to get these brand amplifiers closer to every major population center. This is just a couple. This is in the South Coast Collection, California. We've got Alderwood up in Washington and The Oaks in California as well. So obviously, California, a little bit easier to take a pretty picture at this time of year, but certainly just a smattering of the 255 locations we have. These are great investments on their own merits. Shawn called out before the ROI and the payback of 1.2 years from a four-wall perspective. Each individual one, on average, is doing 1.8 million in sales from around those 1,000 sq ft spaces.
And this isn't even including the incremental web lift we're seeing in the DMAs where we open new showrooms. That's up to 28% or about 2x the retail average lift from a web perspective in those markets. Finally, partners play a really important role in getting the Lovesac brand in front of customers that wouldn't find us naturally while still controlling the brand experience because we staff them with our own associates. We run the play entirely through the brand experience that we create at all Lovesac touchpoints. We ensure we partner with, I'm sorry, with the best retail partners to enhance our brand. Take Costco, for example. They're kind of the modern-day Good Housekeeping seal of approval when it comes to the brands that they sell.
With 120 million members and an insane amount of foot traffic on a weekly basis, we are in these great locations in the store capturing those footsteps and driving awareness and converting sales. As Shawn had mentioned earlier, Costco roadshows are up 336% since FY 2023 as we've really mastered the model that allows us to deliver the best possible ROI with that. Best Buy has been a great partner on StealthTech, right? Synonymous with technology. They have really helped us establish our credibility as a home audio brand in addition to a home brand. As Shawn mentioned, we are constantly exploring new win-win partnerships to power these customer acquisition engines. We'll continue to share those as they materialize over the next several quarters.
Finally, and most importantly, the last component of our customer acquisition engine is the customer relationships that we cherish so dearly as we build the most beloved brand and home. We are maniacal about measuring customer satisfaction and delighting them and are pleased to sit currently at an 86.2 CSAT score, which is a record level for us. That's up 310 basis points just from FY 2023. It's been achieved because of the recent investments we've made in capabilities and technology. As we look at retail industry as a whole, as Shawn had mentioned, an NPS this last quarter of 64.5, which is double the score of North America retail and best in class for any home brand. While these numbers are strong, we have a healthy paranoia that drives our continuous improvement agenda. We capture more than 30 metrics across the entirety of the customer omnichannel journey.
We're cross-functionally to ensure we're course-correcting every opportunity area. We're strengthening that experience throughout our customer acquisition engines. This attention to building that customer love is shown with very highly engaged installed base of customers. A recent survey showed incredibly strong brand affinity with 50% saying they loved their product, not just like their product, loved their product. This creates a through line to future purchase intent where eight out of 10 customers say they definitely will or probably will buy from us in the future. If you think of that snowball starting to roll downhill as we bring the EverCouch to market, this installed base is going to be a powerful catalyst for really taking off with that customer. Equally important, these customers become our best marketers. The very strong brand advocacy, 58% of our customers will share their opinion on Lovesac unsolicited.
They tell their friends and their family members, and this word of mouth, as Shawn had called out earlier, our number one source of awareness for new customers. It's a powerful algorithm with an incredible payback, which is why we obsess so much about building the most loved brand, and it really flows through in how the Lovesac shopper shops differently. Our brand advocates convince their friends and family members in such a way that four out of 10 don't even consider shopping another furniture brand when they shop the category. And those who do, on average, are only considering one other brand as opposed to the average in furniture, which is roughly about 5.5%, cross-shopping rather. This shows just a couple of snippets of customers expressing love back, and we love hearing from them.
Whether it's adding StealthTech, reconfiguring after a move, changing the color, adding pieces, or just appreciating that a 10-year-old piece of furniture can look and perform like brand new, our customers love the small role we play in bringing total comfort to their lives. And their pride inspires us to do better every day and bring more value to their investments. So with that, I'll turn it back to Mary for the key takeaways.
All right. So as you heard, just so much energy in terms of our customer acquisition engines. They're simplifying what is very complex products for very efficient conversion. Our model is immediately profitable, as we shared. And it continues to increase as customers invest in their initial purchase and continue into our platforms. We marry the power of digital, physical, and partner models to meet the customer where they are in their journey.
Our customer obsession really converts our customers' brand love into them being our strongest marketing engines for us. So as Sam and I have shared through this, I now want to talk to you through three core growth enablers that really are the roots of our company's foundation, and they feed our superpowers. So the first one that we really wanted to talk about was around insights and innovation. Then I'm going to talk a little bit around advantage supply chain and then talk about the winning culture that Shawn touched on in the beginning. So as we've shared through, one of the key things around insights in EverCouch, as you've seen here, and then Shawn talked about the two new Sacs that are coming, this tremendous velocity that's coming in the next three years for our Designed for Life innovations pipeline.
While most of our competitors that you may compare us to, that they have a retailer approach to sourcing and selling, we approach it much more like a branded consumer goods company. We have been investing in deep consumer insights and product development that really tell us how do our customers think, how do they live their lives, what motivates them, and how can we uniquely solve their unmet needs. We are inventors, not merchants. We take that research to create new-to-the-world inventions that can last a lifetime while evolving as the customers' lives do. We've made significant investments, as you can see here, in the last two years to double our product and development commercialization teams that enables us then to increase our speed to market.
So when we talk about entering two new rooms in the next couple of years, it is because of these investments and the capabilities as a team that we've been able to deliver. So you take EverCouch here, which, by the way, look at it afterwards. It's a phenomenal engineering feat in the product. We reduce the lead time from insight to actually being able to have it fully developed, ready to go to market by 50%. So you start to get a sense of how this engine is going to increase in speed and the velocity that we will have. And at the same time, the resources that have been working on this have all been working on the new rooms to come.
So then as we look at then the pipeline, you've seen in terms of the velocity increasing, particularly this year, the biggest level of investments that we've seen. And then as we pull forward to the new pipelines that are coming and the ability for us to bring EverCouch as well as the significant growth curve that will come as we enter the new rooms, all on the credits of the foundation that we have around our obsession of insights and really bringing that innovation muscle to life. So then as we've developed this incredible product, we talk a lot around our advantage supply chain. This is a huge advantage for us that we continue to strengthen not only to deliver the two platforms we have today, but to satisfy and enable the three additional platforms that are coming.
We've built a highly flexible, diversified supply chain with very long-standing partners that enable us to deliver this amazing quality and with full redundancy across country of origin and factories. Thanks to our unique SKU light platforms selling just a few SKUs, we're able to hold that very deep in stock levels that Shawn talked about even as demand spikes up. Our 3PL networks allow for deliveries in days versus weeks. All of this allows us to be incredibly efficient from innovations to factory through to our customer, as we've demonstrated earlier with our launch for Recliner that came in basically four months earlier. Our team has done a great job diversifying our geographic footprint. You guys asked us this question all the time.
You can see with our long-term vendor partners moving dependency on China down significantly in the last few years, and that's going to continue to go down as we leverage both our existing vendor partners as well as new partners across all of Southeast Asia. We will continue to diversify regardless of whatever macroeconomic policies come through, but always ensuring we have the best and highest quality product at the optimal price. The second part, as you think in those boxes that we deliver to customer homes, they are incredibly efficient as we transport from factories through to the DCs. You can just see this is one of our containers. On an average, we can fit 65 three-seater couches in a cubed container. Then you can see compared to a competitor, on average, they can fit up to 45 three-seater couches. That's a 44% advantage.
When you think about the cost of moving that product across, it's a huge advantage. We will continue to have this efficiency lens as we bring all of the new platforms to you over the next few years. We've talked a lot in the last couple of years as we've been building this scaled growth, enabling us to be able to deliver to our customers. That transformation in our supply chain is critical. We've accomplished significant wins this year alone, both in terms of rolling out ERPs around transportation and order management, which are so critical as the velocity of the company continues.
Through our amazing logistics teams, we now have long-term partnerships that enable us, with the world's largest carriers, to ensure that we no longer have dependency on that spot market that we did have for the last few years, all of which brings us immediate benefit to our P&L as well as increasing our customer satisfaction. We're well down the path of transforming our network and our carrier models through even further partnerships, and this has yielded just a step-up change in our inventory turnover by 26% just in the last couple of years. So, as we talk about, we're always obsessed about getting our product out to our customers just in a matter of days, and we've always had that strength.
Even through COVID, when the demand spiked to 50% growth, we were still delivering in a matter of days where many others were delivering in a matter of months, even sometimes years. And all of that is driven by our core SKU concentration. So as we look and we're advancing our network through next year, adding in another DC, and we will be able to ship practically everywhere with a three-day ground distance, with most of the large population centers at just one day. And if you think of the immediacy of your own lives, you order stuff, it arrives tomorrow or the day after through so many ways we shop in our lives. This is a massive advantage to others that just are not delivering in that timescale at all. So we'll continue to expand this out.
We are maniacal both mapping in where our showrooms are, where the population growths are to ensure that we satisfy, but we have that scaled benefit so that as we bring the new platforms in, these networks will be able to manage that increased velocity, so then the third and probably one of my most favorite is back to the top ambition that Shawn talks about, and make no mistake, there is top ambition in every aspect of our team today. I've had the privilege to experience many cultures at the best companies in the world, and there truly is something very different here that is truly magical, and the advantages that we have of this winning culture that fuels our performance. As Shawn said, our number one core value is top ambition, and we are relentless. We do not give up.
And as you look at some of the inventions that have come through, there'll be things that we come up against where it's not quite working. We will try many, many times until we get to deliver something that we ultimately know the customer is going to love. And that drives us in how we think about everything from our associates to our stakeholders to our investors. That top ambition is what we're all about. So then as it translates through, one of the key aspects that we look at so much, our team are really, really bought into the vision. And we are delivering engagement scores for the whole company at 10 points ahead of North American retailing, which includes even our part-time associates. With this leadership in performance, we're proud of. The one I'm particularly proud of is the second data point that you can see.
Our showroom managers, the managers out on the front line working with thousands of our customers, look at their engagement results at 78%, 22 points above the North American standard. They are the ones engaging with the customers, telling them about Lovesac, why Lovesac is so great, getting them to write a quote, converting them, and then enabling them to understand the value of the investment they've made in their platform, and to be 22 points ahead is something we're proud of, but we will continue to pioneer ways to have a very engaged team out there that we believe is really leading North America retail.
So, as those brand ambassadors at the front line continue to be so ahead of in terms of driving that customer engagement, we are all united by the mission that Shawn talked about of building the most loved brand and gaining at least three million households by 2030. They're also inspired by our purpose. It's a lot of what people say as to why they come here. And most importantly, from Shawn, Keith, Sam, all of our team here, all the way through to our front line, every single person is compensated based on the performance of the company, both financially and also in terms of delivering the ultimate customer satisfaction. That is every single person in the whole company. We see that this top ambition really comes through in terms of performance. It matters. We are delivering a high-performing culture.
So you can see the performance that we've delivered in terms of growth over the last four years, but also you can see as a delta to the rest of the category. And then as Sam talked about, the NPS, that is more than double the best brands you know in home. And this is what we are delivering. We will continue to drive that energy and that focus around top ambition. And we do not take lightly the task ahead of us. As we advance from the two platforms that you know today, delivering the customer acquisition engine and the Design for Life platforms that we've built with Sacs and Sactionals while driving three new platforms over the next few years, we have assembled a leadership team that not only knows how to do it, they also know the pitfalls around scaling brands into the billions.
They've done it before. And the advantage for us having that tenured leadership team that has done it and can help guide us around what do we need to build, what do we need to advance, and what do we need to watch out for as we really scale the business is because we are so determined to make this happen. They know what great looks like. They will be very motivated around the compensation and the aspirations for this brand. And they're really very motivated to deliver Lovesac over the years to come. So as we wrap up before we go to Keith to really talk about how does this all come together around our financial model, there are four key takeaways I really want to leave you with.
So we have fortified our insights and innovation teams together to support this rapid platform expansions that you've seen, and we have only just got going. So you will continue to see a lot of excitement there. Our capital light supply chain model unlocks speed and agility that really catalyzes profitable growth at scale. And again, this is continuing to gain velocity. The frontline engagement that I talked about is a huge competitive advantage. They are facing our customers, and we really believe that they will continue to change and convert them into the advocates that we talked about. And then we have assembled the world-class team that will enable us to lead and scale for our next chapter of growth. So with that, I'm now going to hand you over to Keith, who will talk you through the financial model and our outlook. Keith. Thank you, Mary.
So I've known many of you for quite some time. Back before I joined corporate, I worked on Wall Street for many years as an equity research analyst. So it's fun to see some of the faces that have spanned 20 years of my career. And as an equity research analyst on Wall Street, covering multiple sectors throughout that time, I saw growth stories of all sorts and sizes and shapes and flavors. I really feel like we have something different here, something special. This stands out to me. And over the next couple of minutes, what we're going to talk about first is just going to level set. We're going to recap where we've been, that foundation of strength off of which we're going to enter this next chapter. From there, we're going to talk about everything you just heard from Shawn and Mary and Sam.
We're going to condense that into more crystallized financial terms and then we're going to wrap that in a financial model at the end so you can know how to expect this to play out over the next couple of years. Let's start with the slide that you've seen multiple times now. I'm not going to dwell on this point. We've done well. We've grown. We've beaten peers. We've beaten the category. To be clear, this last quarter and the last couple of weeks is not acceptable to us. We are on this. I'm sure this will come up later, but we're happy to talk about it. We're going to get back on trend. That's our commitment. Gross margins. Historically, we've had very high absolute gross margins, but they've been volatile. You can see that. That's changed. We have put in programs in place.
We have people, a world-class team. We have systems, a transportation management system, an order management system that fundamentally changes us. We've addressed our supply chain and logistics through a BCO, a Beneficial Cargo Owner relationship with Gemini. A lot of that source of volatility we have addressed. We are much more confident in the predictable, stable nature of this gross margin. We have new categories and platforms to come. And I'm going to talk more about this when we get to the outlook ahead in a minute. But high 50s%, pushing 60%, this is a good level for us. Throughout this presentation and throughout our recent quarters, you've heard us talk about investments in systems, investments in people, investments in product development. All the stuff that you just saw is coming this year and next year and next year and for years beyond that. We have funded that.
You've also known about the category headwinds, and you've also known about non-recurring expenses, in particular those related to our restatement of financials. Despite all of that, we have materially inflected our profitability. This is not our ambition. This isn't the end. This is where we are now. And as you'll see, when this all comes together in that financial model, it's a really exciting future. This is just the start, not the end. Now for the balance sheet, starting with inventory. This is some really powerful data. This chart really sings to me as a CFO. This is a unique model to do the business we're doing, adding the SKUs simply and efficiently, and all the systems that we just talked about to see a 27% reduction in pre-holiday season inventory at the end of Q3.
The point I really want to make with this is this is the area where we started the investments in the foundations of this business first. And look at what you've seen. This is the type of thing that we're getting after across this business. And this has been a major contributor to our cash balance. What you see here is the end of third quarter. This is seasonally our trough because we build inventory into the holiday sales season. $62 million end of third quarter. This is really powerful for us. It provides flexibility. It gives us tremendous optionality to take that cash, to take the excess capital, to invest back in the business, to accelerate growth or enhance returns or all the above. So we'll talk about that more in a moment. All right. So now let's talk about the outlook, the runway, starting with the top line.
Where does the top line growth come from? Where is the value created? So let's start with our superpower one, Designed for Life. We will take market share with our existing products and platforms. We have a plan. You've heard us talk about a lot of different things that have contributed to that continued market share. Another one of the areas you've heard us talk about on the call last week is we know as good as we have been, we can be even better on a number of things, such as how we expand and enhance our approach to marketing. And we're in the market right now for a CMO to help lead us as we transition from a product to a brand. There's a lot to be excited about here.
I want to take a second as we shift into the next superpower, though, to give you a sense of how we think about moving off of products and into new platforms. We start from an approach of market share. What is our market share potential? What right do we have in that market? And then from there, we say, what's the most efficient way to take it? All right. Well, the most efficient way to take it is with a digital ecosystem that is a true competitive advantage. It's the highest flow-through sale that we have. It's the beating heart of our relationship with our customers. This is where the CRM tool is. All the other channels feed data into Lovesac.com. And so when you saw the EverCouch before, that is a very internetable product that plays off all of the equity we've already earned.
And it can start right in digital. From there, we're going to test and learn. What's the right physical approach? How can it be a brand amplifier for us? All right. We think it still plays a very meaningful role. Net 30 is showrooms a year. But let's be clear, showrooms and physical for our existing platforms will start to tail off as we reach that critical mass, that effectiveness, that optimal return. But those new platforms will pick up the mantle. 30 is the right number, we think, for now, for you to think about the role it plays. Net 30 expansion per year. And then last but not least is partners. This is multipurpose. It can drive awareness. It can have standalone financials that really sing. It can enhance the brand. Hopefully, it does all three.
We'll approach this pragmatically and let the data tell us where to go. I'll give you an example. What if we were to introduce something that was highly seasonal? This might be the appropriate way, the highest return, maybe more so than physical, if that were to be the case. That's the type of mindset we'll take to expanding with partners, so stay tuned. So, margins. We've spoken a lot about gross margins already today, right? So a couple of things I want to talk about here. This is a balancing act between top-line growth and bottom-line growth, and we will optimize that equation. We've taken that into account in this financial model we're going to give you today. 59%-60%, we think this is the right long-term for us for now. I also want to be clear.
There's a lot of scenarios out there about tariffs and what that might do to our business. We're on it. We're not going to put financials around that today because there's a lot of different regimes that will play out different ways. We are continuing to expand our geographical exposure to mitigate risk. And we are scenario planning around multiple ways we would address pricing and/or other factors to deal with this depending on what happens early next year. We are on this. But today, we're not going to build in any wildcard tariff regimes into these numbers. If and when that happens, we'll come back to you and tell you our plans. Advertising and marketing. Look, there's two jobs. One is to drive sales overnight. The other is to build the brand over time.
We plan to focus on the efficiency of that spend to get more out of it, to be more effective, right? We're here for decades, as Shawn said. Our plan for now is to maintain the 12 and a half, but make it work much harder for us. Okay? And then last but not least, SG&A. This is really where the big leverage can come in this model. And I want to be clear, we don't need a category growth to recover to get significant leverage on this line. We have a company-wide cross-functional effort we call Fuel for Growth. Everyone at Lovesac that you meet either in this room or in your life, you ask them about this, they can tell you. We are on this. We're looking at processes. We're looking at any form of efficiency. We take a zero-based budget approach to third-party spend.
This was launched just a couple of months ago, earlier this year. This is a company-wide initiative and plays a big part, as well as leveraging all the investments we've made in the scalable systems over the last couple of years. Now, mind you, we'll do this without a category growth. If the category growth does come through and the macro does come, you'll see that in comps, omnichannel comps, and that's a lot of leverage. It'll accelerate margin expansion. It'll accelerate the model we're going to talk through in a moment, but we could do it even without that. That's our commitment and then in terms of capital, priority number one, reinvest in the business. The truth is most of that's going to go through the margin discussion we just had, right? We actually don't have a very core traditional CapEx-heavy model because of the uniqueness of that model.
$20-$25 million covers that whole physical expansion and some of the other investments that we just talked through. What that means is we'll have excess capital. We'll be opportunistic. We'll be flexible. We'll be strategic in our process. You've heard many of us up here, not just me, talk about a return approach to how we allocate and how we think about things. That is the approach. We have a lot of share repurchase authorization remaining, and we see great value in our shares. This is the default. This is where we start when we think about allocating that excess capital. We'll think about it not only from that perspective, but the other options would be, can we accelerate growth or otherwise expand returns?
Put that all together, and what we're talking about is a very long-term approach to building a brand and building a business with a return-based framework for how we allocate capital. We believe will drive maximum shareholder value creation for everybody here and online. All right. So let's put this to actual numbers now. You all saw this, I'm sure, earlier this morning. Over the medium term, we see a normalized year as double-digit top-line growth, no category growth required. If the category bounces back and we see years like we did on that chart you saw earlier, that's upside from here. We can grow double digits without it. All on the back of that secular growth story you heard about today. Gross margins, 59%-60%. Advertising and marketing, 12.5%, increasingly efficient and effective. Adjusted EBITDA, plus 50-100 basis points a year.
That's really that SG&A program that I just talked about coming through, and EPS growth north of 25% a year. We can do this. I want to take a second to talk about 26, though, because fiscal 25 drives some outlier math that makes 26 look different than this normalized year. So let's take a look at that. These are our preliminary numbers for fiscal 26. 7%-12% top-line growth. That is the 10%-15% outperformance of the category. We're taking a very cautious and pragmatic approach to thinking about this category rebounding. We're assuming a slightly negative category continues in fiscal 26. Should it not? Should it be better? Then we'll do better as well. Even with that, gross margins 59%. Advertising and marketing at the 12.5.
Adjusted EBITDA, 100-150 basis points of expansion and EPS growth north of, hopefully even well north of, 100% for next year. Even while continuing to invest in and prepare for the launch of new platforms that could be, in some cases, as Shawn mentioned, as big, if not bigger, than the Sactionals are right now, so hopefully all of you can see why we're so confident in the secular growth outlook for this business, and the best part is we are uniquely positioned to over-participate in that macro recovery. It's going to happen, and because of the nature of our business, our inventory position, and the way we ship in days, we're ready to go real-time and faster than any of our peers to capitalize on that recovery when it happens. We don't need any capital for any of this story.
In fact, we expect to throw off excess capital. And as I mentioned, we'll be opportunistic. We'll be thoughtful, and we'll apply it to accelerate this whole story any chance we can. And with that, we'll take your questions. Team, come on up. Here comes Shawn.
All right, Keith. All right. Great to be with you guys. Yeah. All right. So please wait for a microphone to come around so the folks online can hear the questions. Stand over there. Let's go. Let's start with Matt. Matt's right there. Let's start with Matt.
All right. Matt Kuranda with Roth Capital. Thanks, guys, for all the detail in the presentation. Really appreciate it. Maybe just starting with the product innovation and the EverCouch that you guys introduced. I know you're probably going to get the question, so I'll just ask it. How are we factoring in cannibalization there?
I know you mentioned not a lot of smaller configurations on the Sactionals platform, so probably not going to be a lot, but maybe just touch on that and the price points that we're thinking about for the EverCouch to start with. And then how does this, I guess the other tough question is, how does this not sort of run counter to the modularity thesis around Lovesac and the Design for Life component of the thesis for you guys? Maybe just touch on those points first.
Great question. So, oh, absolutely. We're all over this. I mean, this didn't just, this wasn't just conceived yesterday. We put a lot of thought and energy to not just the conceptualization of the product, but the business around it, okay? So first of all, yeah, the number of Sactionals configurations that we sell that are one, two, and three-seaters is almost de minimis.
I mean, it's shocking how small it is, and in fact, when we run those calculations, the little bit that there is is actually mostly add-ons to existing big Sactional setups, and by big, that doesn't necessarily mean big Sactionals. It means left Sactional, right Sactional, Chaise, but that's about where we kind of bottom out, so this is really net pickup for us, for sure. Sactionals just don't perform at those sizes. Not only that, those Sactionals configurations that are, let's say, a two-seater like this one, they're just really quite large, so imagine Manhattan, right? We have a thriving showroom network here that does millions per year per location in just Sactionals.
But as anyone who spent any time in Manhattan knows, the EverCouch scale is far more appropriate, generally speaking, for this environment and many other urban environments just to start with, not to mention all kinds of different home layouts, all kinds of different room layouts. Like me, as a Sactionals super user, I have numerous places in my own home where EverCouch is a better answer. And so we expect to, for sure, face a now more complex selling environment where people have to make decisions, right? Not quite as In-N-Out Burger as we have been to date, but nonetheless, we view it as net pickup. We've factored in cannibalization to some degree. We don't believe it will be severe for lots of reasons, not just our own intuition or something, but customer research that we've done around the product.
And then we've really systematically designed the product to be separate from Sactionals. It doesn't integrate. It doesn't have all of the bells and whistles and extensions. It's feature light, and it is modular. So it is absolutely a Design for Life product. Understand that up until now, the only way you can conceive of Design for Life is through the lens of Sactionals because that's what we've shown you. But if you get back to first principles on Design for Life, it's built to last a lifetime and designed to evolve. EverCouch can do all of that. It's just less modular than Sactionals. We will have other platforms in the future that will certainly have modularity, just like EverCouch has modularity.
Like right now, I can go from a square arm to a swept arm to a tapered side, and these core pieces that I own will still be valid even if I make that shape shift down the road, right? This front beam that I'm so proud of that will never, ever compromise is valid for years and years, and look at it. It's crazy. There's not even a box anymore. Like with Sactionals, you have essentially the box that you sit on with the suspension. Now you have a separate suspension lid. You have storage in every piece, and so it's modular in its own way, but it's not modular like Sactionals. It's a new platform, and so there's all of these ways that we've separated it from Sactionals, lightened it up, reduced the cost, right? Because you don't have the full box.
You don't have, therefore, full box covers, et cetera, et cetera on down the line, and so the price point, your next piece of the question, is markedly different. Okay. So we haven't yet published it, but if you're comparing, let's say, like for like, a love seat in Sactionals to a love seat in EverCouch, it's almost half. And so to the customer, that's a better option, and from a cost standpoint for us, of course, from a margin standpoint, it's a better option to sell someone a sofa because it's just not competitive. We're just not competitive in those sizes. We are, as soon as we launch this. And remember, it's remarkable to us. It's crazy as a company that's kind of known as a couch brand that the biggest couch opportunity is actually the one, two, three-seaters. Like, what the heck?
How have we built a business this large on the smaller portion of the category? It's crazy, but it's true. And so this is really exciting to us. I mean, as we do the math, perhaps EverCouch could eclipse Sactionals ultimately in terms of overall volume. I mean, it's like blasphemy coming out of my lips. It hurts to say, but it might be true. And I really believe that we've made a superior chair. I mean, you're sitting in it. And by the way, there's reasons for EverCouch to exist, reasons for Sactionals to exist. The sit is different in EverCouch. It's an angled top surface. Sactionals are not. But Sactionals have all other kinds of advantages, right? So it will complicate the selling process. We admit that. We're working through that. We're experts at that.
But I think the other thing that we're super excited about too is, as we mentioned, other channel partner opportunities because Sactionals are not fit for that world either. And so we have all of these kind of puts and takes. We recognize there will be cannibalization. We've factored that in. And even with cannibalization, we view this as a massive net pickup.
Yeah. So two things to that, Matt. So one of the single most powerful aspects of Designed for Life for the Sactionals is that expandable, modularity, rearrangeable, all that stuff. That won't quite do that. You can't put two of them together, right? It ships to you. You can wash the covers. You can change the covers, but you can't fundamentally grow it and change its shape, right? So that is a tremendous value add to this platform that doesn't get undermined.
So that is one thing to keep in mind. And look, we've spent a lot of time thinking about that cannibalization piece and how do we avoid it. The other thing that I mentioned this before, but this really, really is important. When you remove the confusion of the configurability, which consumers have to get their head around, you have a very internetable product right there. People are very comfortable buying that sight unseen. That could do huge work for us for people who don't have the time and capacity to make it to a showroom and get a full demo. They'll trust us because we have brand equity in that category, and they'll order it from wherever they are because they do that now. At a lower entry point.
At a lower entry point where the brand knows that they trust, they know we make good stuff, and you can still wash your covers.
Yeah. One thing I failed to mention is a phenomenon that we've observed and are really interested in is online. People don't refer typically to their Sactionals as Sactionals. Very rarely. What do they say?
Check on my Lovesac. Yeah. I'm here on my Lovesac. They say my Lovesac as if they're saying my Mercedes. Do you know what I'm saying? They're not saying my C-Class or my SL, whatever. They're saying my Lovesac, but they're talking about a couch, a Sactional. That's actually what we want. That's how we've built now our brand strategy around the Oak Tree. We're building a master brand. We're not even interested in the brand EverCouch as a brand, admittedly.
Of course, we'll trademark and protect all those things, but we're interested in building a Lovesac brand. What's Lovesac known for? Couches. What's EverCouch? A flipping couch at a much lower entry point. What is the demand that we've established after $500 million in spend over a decade? The desire for a Lovesac couch. And what do we finally have? We're very proud of the sectional platform. We're going to continue to lever into it. You can only get reclined. I mean, it's kind of like it's a lot like the Strada inside of a car brand, right? Sactionals are everything. EverCouch is lighter weight, but it still represents the same Mercedes quality. Let's use that analogy. And it's really good. We're just becoming a more complex menu and, I think, a more fulsome offering. We have to. I mean, come on.
We've been feeding off this one platform for so long. We're grateful for it. But we will not go down as a brand that's afraid to innovate on its own innovations. Those brands die.
Y eah. Okay. Can I ask one quick fiscal 2026 follow-up? So maybe just for Keith, it sounds like the product is launching in the middle of 2026. Would you venture to kind of give us a rough contribution of how much is built into next year from EverCouch? And then maybe just you mentioned category negative next year is the assumption, still outgrowing nicely. Does anything in the range that you provided factor in a positive inflection in your omni comps next year? And maybe just timing of when we might think that could happen.
Two things. So there's not a meaningful, let's call it material contribution required from EverCouch to get into the range. There's not.
I'd love for this to be that material contribution, for sure. And yes, the Omnicomps need to inflect. This quarter, we just guided to negative revenue growth. Now we're guiding to double-digit revenue, or let's call it the midpoint, close to double-digit. That is a meaningful inflection in Omnicomps underneath it. Hey, Drew, can we go to Mike actually in the corner? He was the first one, actually.
Thanks. Got my hand up quick. Mike Baker from D.A. Davidson. I wanted to ask you, maybe weaving in a little bit of what happened in the fourth quarter into next year, the double-digit quotes, how much is built into that 7%-12% growth for next year in terms of coming back to closing some of those quotes? And what's the typical timeframe when you have quotes? How long does it typically take to close, et cetera?
And then maybe as part of that, if you could just what happened in the fourth quarter that you think won't happen such that you'll hit those numbers in 2025?
You want to start?
Sure. I'll start with this. So look, first things first. Fourth quarter was an unusual pattern for closure of quotes for us. That was not the normal. Fourth quarter so far. Not over yet. Correct. For all intents and purposes, just a couple of weeks. That was an unusual consumer behavior pattern for us. So using history as the precedent for what we expect to happen is not what we're doing. We are all over this. There's plenty of folks in this room who can attest. We're going after all forms of conversion, and we're going after that now. We're not waiting till next year, right? We're addressing this now.
We're changing how we think about everything from top-of-funnel awareness to bottom-of-funnel conversion and everything in between. We have the entire field system trying out new ways to compel that conversion, whether it's gift with purchase, whether it's changes to discount, whether it's what we do with our financing offers, with our partner Synchrony, and how we create something that's really compelling on that front, to on and on and on. We are on this. We're after that. And we hope that we'll get back on a more normal conversion trend. So as we get into next year, it's going to be more of the same. It's going to be driving top-of-funnel awareness, driving bottom-of-funnel conversion, leveraging the recliner, leveraging the other new products that have been fully annualized, leveraging EverCouch that's coming in the middle of the year. There's a lot that we can do to lean on this.
We'll have some physical footprint expansion as well. So when you start to add up all the bits and pieces that could lead us to getting a better growth next year, it's not one, two, three, four, five. It's 10 plus when we're on it.
Okay. Just one quick follow-up. Is that 7-12? I guess it's more of a yes or no question, so it could be quick, but I presume that ramps throughout the year. Is that a fair assumption just based on how you think of the category? Just so we can sort of level set our models in terms of it's 7 at the beginning of the year, 12 at the end of the year, or even, or how should we think about that?
So the answer is no because don't forget, we had a little bit of an own goal. Q1.
Q1 of last year, right? So we have that to lap. So actually, Q1 should look like a decent quarter. Beyond that, we'll give you a lot more details when we give you the fourth quarter early next year. This is just a preliminary look, but it's not as simple as a run-through of the year because we do have an easy compare at Q1.
Fair enough. Thank you.
For room two.
Just introduce yourself.
Oh, I'm sorry. Alex Silverman, AWM. For room two and room three, will they be able to fit in an existing box, in an existing store, or are you actually going to have to launch new stores for those?
It's a great question. I don't think we're ready to be prescriptive on that, but some and some of the other.
I think that as Lovesac continues to sophisticate its menu in products, we will also do the same with our customer acquisition engines, and as we explore new partnerships, for instance, around EverCouch, it will lead us to new terrain as we continue to refine our retail capabilities. I mean, I think one thing I think y'all should be prepared for is if everything we put on that presentation is real, you're going to see us in activities probably toward the end of next year that we'll probably have no choice but to make visible as we test and learn our way into some of these new rooms and new platforms, and we're really excited about it. We're not afraid of it. We have generated, let's just speak to them crassly, retail boxes that are the most generative in all of retail.
There's a couple of retailers that might beat us on sales per square foot, but not by much. And I'm not talking about furniture. I'm talking about all of retail. We're talking about operating 800 sq ft showrooms with five people total that rarely see each other because our model is so light that are really good at pushing millions through this 800 sq ft model. We should be so lucky as to have an opportunity to scale that again with a platform that's equally as powerful as, let's say, Sactionals. And we think some of these new rooms are. So will they be bigger? Will they be different? You'll see us test and learn into all this. We'll make the right decisions. And that's the key is what you're investing in is. Yeah, we've got some really cool patents.
We've got patents on a lot of the new stuff that you'll see. We'll continue to generate more. All that's really cool. But what you're really counting on are these people to make great decisions across a thousand realms, right? And as proud as I am of what we've built, you're looking at a really fantastic team. I mean, I'm so lucky to have Mary as a partner. She carries so much of this weight, and it helps us make these great decisions, test our way into it. And we're really excited to onboard a world-class CMO. I mean, the kind of talent that we get to attract. Can you imagine if you're a CMO out there working in corporate America? We can both afford you and attract you because we have the goods, right?
We're not just a corporate machine doing its things, stamping out year after year of growth. We're going to double and triple this company. That's exciting for a lot of people, especially at our scale. And so I don't mean to take it there except to say that you really have to be investing with that in mind. And I say that really forthrightly. But we do have. It's not a blank page. We do have a lot of already hypotheses and postulates we're testing into, we will test into, and we're really excited about it.
Second, just really quick question. You mentioned services very briefly. You and I have spitballed before over coffee. When do we see exchange? When do we see in-home reconfiguration?
Yeah. I'm going to let Mary take this one because it's near and dear to her heart.
Yeah. Yeah.
So I think we shared actually. I can't believe it was only last week on our earnings call, so we just launched the beta test of our website for resale with all of our team because we need to really work through the kinks, see how it works, and we're partnering actually with a company that helped do Patagonia Worn Wear, Eileen Fisher, and many, many others, so they know how to do it, and we're really seeing amazing results, Alex, from that, so from that, then we will go customer-facing at some point next year, so we'll then be able to be selling that resale and then activate. We already did a pilot on trade-in just a few weeks ago, which we again saw great positive momentum from and some really good learnings, so we would then kind of balance that.
If you think about just the power of this, you've got someone. I've had my Sactional for 14 years. I want to change the covers, the ability to trade in my covers, get a credit to then be able to trade up, to be able to get new covers or StealthTech or EverCouch or whatever. It's just a huge power that we keep them in our ecosystem and then be able to trade them up. So we're very passionate about it. You'll be able to see a lot more progress coming customer-facing next year. And then we will continue to scale state by state from there.
Yeah. And to that end, Lovesac is a people business, and we're proud of it. Not just our culture that we built and all this and, of course, these people, but we love these relationships we get to build with customers.
We think that in the place where everyone's just going full AI, full remote, you don't even know who you're talking to, what you're doing. And we're leveraging AI, and we can drop it in our earnings releases, I guess, if that's useful or something. But in reality, we want to be the brand in 10 years from now that we're the only one you know. Our people are really good at what they do, and it's not some faceless person delivering your couch. I mean, it might be the person that helped you configure it in your home, maybe even helping you redecorate, make decisions like trading up and trading in and building a relationship that no one else has, where we have access to that customer and we build this relationship that's meaningful that no one else has in a day that's purely digital.
And so we're not at all ignorant, and we're looking for a really efficient way to do that. But we view this ultimately as another moat for this brand that might be counterintuitive, but we very much see it that way. And that's part of the reason that our ambition ties back to building a brand. We think that we have the bones to do this, where a lot of other companies, of course, that have brands do not. And it will be these attributes that we're kind of building brick by brick that will make it the kind of endearing brand that can persevere and become a Nike kind of scale someday.
And I think the last piece, services, will be such a moat for us compared to anyone else. The economics don't work when you're trying to move a whole couch. It just doesn't work.
We've seen it in the P&L, but we actually have a P&L structure that really does work, and then the ability for people to be able to trade in, trade up because of that is something uniquely we will own that we see as very, very important and enables Design for Life in the platform, and then also, as we keep adding the platforms, people see that intrinsic value in their investment because they're able to then be able to make changes over time, so again, super important to understand really the bigger game of what we're trying to achieve with services.
And by the way, it's also a blessing of having a two-and-a-half-decade history. Mary Fox is in our CRM, right, from 12 years ago, 14 years ago now. 14. Sorry.
The years fly by because she bought them in New Jersey on a she needed a couch that would fit in her.
Who knew I'd end up with him?
And those pieces are still yeah, I mean, it's wild. We don't even know each other. She didn't know the brand or anything. But it's a testament to this deep-rooted CRM we have. And as proud as we are of that million-and-one customer base, it's tiny compared to the population still available to us with these really cool solutions that we're still working on getting the word out. So I know it feels to many of you like Sactionals is old news, but we're still just scratching the surface and excited about everything that it represents.
All right. You can tell how passionate we all are. So let's go one question per so we can go quickly. Brian.
Thanks, Keith.
So, Brian Nagel from Oppenheimer. First off, congrats. Great presentation. Thank you. So my question will be on gross margin. It's going to have two parts, though. Sure. First off, I guess just given the longer-term guidance you outlined, it seems to me that the new products you're introducing are basically gross margin neutral. So that's kind of a yes or no. But I guess the bigger question I have, and look, I mean, the steadiness and the level of gross margin is highly impressive. But to what extent do you discuss using gross margin maybe in some strategic way to drive better sales, even though your sales have been good relative to the market? But I guess do you test this basically? And what do you see?
Yeah. So here's the thing. You saw on Mary's slide, when you're talking about logistics, there was inbound, warehousing, and outbound.
Two of the three were in progress. We still have fruit to pick there. So when we give you a forecast for gross margins basically at this 59%-60% level, implicitly what we're doing is building in some of that balance, using some of that to drive more sales, which will drive better overall profitability. Look, we reserve the right to adjust some of this should we find that the test tells us something different. If there is a better one, we'll do that, and we'll tell you. Our test showed us the following, and therefore we're going to make a tweak. But we are already doing that implicitly within that guidance that we have there. So again, like what I was talking about is we're going to let the data tell us what to do. This is a good starting point.
And again, much higher than 59-60, I think we'd be doing exactly what you're afraid of, which is giving up some sales for too much margin.
Yeah. And I think, Brian, we've talked about it. I think even back in Q1, we learned that we couldn't go lower than the three handle from a promotion point of view. And we did a lot of testing. The team moved really fast. It's really impressive. We can have a conversation today. We then get something into market the next day. And because of all the CRM access of the tools, we're actually able to reach out to customers very fast. So we'll continue to test and learn. We just tested gift with purchase over the weekend. So good to see the results there.
So just continuing to not just look around promotions, but really just thinking about those added value elements that the customer values right now.
Maybe one thing I'll throw in, Brian, to Shawn's point earlier about how we kind of think of this category differently and more like a consumer goods company. We do a lot of volumetric pricing testing to really understand where that sweet spot is. And so that's something we'll continue to do. So we're striking that balance between profitability and volume. Yeah.
Drew, let's go over here. Maria, yes, please.
Maria Ripps from Canaccord Genuity. Thanks so much for the presentation and all the color. Shawn, you said that the team is excited to double or triple the size of the company. Can you maybe share your thoughts on how investors should think about sort of a timeline for that?
Yeah.
I won't share any thoughts on timeline or my general counsel. My CFO will strangle me and leave me on the floor. But look, let me put it in this context. Mary Fox could be running like any company in the United States. Former Walmart executive, ran a division of L'Oréal. She's built an amazing career and is really just an amazing business partner. She's here to do that. She's not here at Lovesac, the couch company, to try and earn a bonus and, I don't know, spend the last whatever piece of her career or something doing this. She's here to double and triple a company and build a brand that's here forever. I think the same is true for Keith. I think the same is true for that whole stack of people you see up here.
And so the answer is as fast as we possibly can while being profitable, cash flow positive, living to the model Keith just put in front of you. And so while many want to see what's the mature model and what kind of evidence can you look, we have the highest gross margins in the category. So what kind of net margins can we get to? Probably the highest in the category eventually, I bet. Why not? Makes sense, right? Just do the math. But that is so far away from us because we have so much opportunity to expand out of burgers and fries and shakes into just maybe a chicken sandwich or something to start with that that's a ways off. So we have a model that's great. It will continue to tick up on all the right metrics, and it won't be slow.
Listen, we're at one of those points, just like we were back in that transition when we made the DTC switch, that things are in that transition phase. But with the launch of EverCouch, which is the bigger piece of the category with two new rooms and platforms, the size of Sactionals following in year two and three, I don't think it's going to be slow. But I will not commit to a timeline on that.
No, but do you think, Maria, just taking EverCouch, so it's a $14 billion category. We have a phenomenal product that has been developed by the teams, superior in the comfort, superior in terms of all the elements Shawn talked about. We just get one share point of that very fragmented category. You're at $140 million. And trust us, we have very bold ambitions.
We already have seven and a half in the sectional and home audio category. So I want that and more.
We're not even talking, by the way, about the product that launched just a few weeks ago, which I like Brian's math. What was that? It was if we sold one recliner to
half of the household,
half of the people that own Sactionals, how m uch was that?
Well, over $100 million.
What was that? And so look, you add all this together. We're playing now. It is a multifaceted, multi-layered thing. Here's my simple math.
We're in 1 million cumulative households all the time. We just showed you we want to get to 3, and we also showed you that we're going to be aggressively focused on driving substantially more sales into the 1 million that we already have as well. All right?
So when you start to do that math, this doesn't take that long. Tom's been really patient.
Thank you. Tom Forte, Maxim Group. So thanks for outlining everything. Just one question. How should we think of the pace of innovation? So you outlined a launch a year for the next three years. How should we think of the pace of new launches after those?
Yeah. Thank you. Yeah. We only showed you five. I mean, look, it's not going to stop. If we have enough time, we will take everything meaningful in your life and DFL it. We all know what's happening. If I have enough time, I'll write a second book, and it's going to be an excoriation on the entire product consumer industry because we've all been conned into buying too much crap to impress people we don't even like. That's destroying the planet.
And we don't even have to do it from an ideological standpoint. We get to do this from a what's in it for me standpoint. How about a couch that can do everything? How about fill in the blank that can do all the things that this couch can do for me in another aspect of my life and then connect it all through technology? What of my competitors is remotely thinking this way? Zero. And so you can choose to believe it or not, but we believe that there will be meaningful branches to extend out of this master brand for as long as I can probably go, if you'll let me. How fast will I look, in all honesty, these next two branches beyond even the EverCouch are chunky and might represent whole new channel business models for us, admittedly. And we won't go into them wantonly.
There will be all the right people planning, testing, and execution to leverage those. It took us a long time. It took us about a decade to figure out how to sell Sactionals at scale, and then it took us the better part of a decade to really get it to this scale, so we will have to let some of those new branches gestate. It might take us then a few years to scale those out, but the good thing is we will be both more muscular, both more well endowed with cash, and have more brand momentum. Look at that customer referral rate as our number one driver of awareness, and that's in the context of a 12.5% ad spend. That was not true two years ago.
And it's only stacking up on top of itself because, by the way, the people experiencing, as you know, Tom, our product in real life become more satisfied with it at year five than they were when they shelled out the money in the first place because that's what we do. And they're kind of shocked that this new thing that we just launched. I should have waited, should have waited for the new iPhone, whatever. Not in our world. How satisfying is that as just a person on the earth? Forget you as an investor. Just as a consumer, there is no other brand leveraging this ethos. There is not in any category. And so I don't know, man, 20, 25 years of branches. Now, in the meantime, these two new ones, these three new ones will need some time to gestate. But that's the timeline we're on.
And it may seem ambitious, but remember, we have been cooking on some of these platforms now for a few years in engineering and design. And so it's real. We're really excited about it. But all the things, all the things that are meaningful.
I think the great thing as well is our customers tell us where they want us to go. So whether it be through Reddit, all the great relationships in the showrooms, they're constantly saying, "If only you would do because I'm so frustrated because." So for us, again, to that point of the research, the ability to really invent solutions is truly unique versus the merchant mentality, which is, "Let me just go and pick one of 12 couches that are in a factory and so forth." It's just a very, very different mindset.
That customer obsession, listening to their feedback, and then giving them the solutions that they really want, and then they love more and more over time. We're so excited to getting their feedback as to where else we need to go.
By the way, you may say, "Look, for a brand called Lovesac, it's in furniture. It's kind of limited." Listen, if in the 1980s I had told you I'm starting a computer company, it's going to be called Banana Computer. It sounds ridiculous. A brand and a name can come to mean anything given enough time and given the right strategy and rollout practice, right? I don't think when I say Apple, you even think of a computer anymore. Right? We believe that this special name that you can love or hate, but you won't forget it.
You might have to explain to your spouse what meeting you're going to, but at least you won't forget the interaction, right? And by the way, it will go international. It will work internationally. It's the most powerful word on earth in our main handle and on NASDAQ as well. We're really proud of that. So listen, given enough time, we're going to do a lot of things, but these next three branches are really going to beef this thing up. Thank you. Yeah. Anything else? We'll mill around. You can grab us.
Yeah. Please come and look at the product as well because certainly EverCouch, when you actually look in it, it's phenomenal engineering and high, high quality. So definitely recommend. You can see there's a two-seater out there, a three-seater. I'll give you some demos on the next month. Amazing recliner.
If you haven't tried it, come try all the product and
yeah. And I'll just close out with this. Look, just two slides to close us out. As on the screen, we have the best team. If you haven't had the chance to interact with Lovesac, let me go back one. If you haven't had the chance to interact with Lovesac on a personal level, you're all, by the way, invited to our Manager Fest. We had at least one day of it. We throw some amazing parties, and we have an amazing culture. And so we love building a family around this brand that we call it our extended #LovesacFamily that includes everyone, of course, who works for us. But listen, all of you as well. You own the company, or you should own the company. And we take it seriously.
Listen, I'm a kid who made a beanbag in my parents' basement. We're dealing now in the hundreds of millions. I take this really effing seriously, and I'm super grateful for the support. But we have, from those humble roots, built something that I truly believe will be a Nike, an Apple, a Disney. And maybe we'll never achieve necessarily that exact scale, but in terms of brand loyalty and love, a brand that achieves becoming the most loved brand in America, if that's even remotely possible, is probably pretty big. It's probably pretty valuable and probably has the ability to extend itself, especially if it doesn't lose its ambition and just becomes some kind of wealth extraction machine. And that's what's crazy.
I get asked by some of you, like, "How is it possible, Shawn?" 26 years in, you still seem kind of excited about this, where most of my peers are on their fourth company, have sold other stuff, and flying around in planes or something. And I'm still running the company. I started 10 days out of high school, technically. I made the first Sac. And the answer is because, holy crap, as this has evolved and I've been able to partner up with the people that you've seen on the stage, and by the way, many others that you're not seeing, I think this is totally possible. If Phil Knight did it, why not me? Why not us? It's not like these are imaginary humans on the earth. And so we're going to do this.
You can believe it or not. Today, it doesn't matter to me that that's what we're going to do. And it's going to be really cool, and we're going to be really proud of it. And when we finally extend some of those branches, Tom, Lovesac will emerge at some point as a towering oak amongst oaks, as something that is big and beautiful. And you will have had a hand in helping us build it. And I say that super sincerely. And so thank you for bothering to come today. Thank you for supporting us. Please stick around, explore the products, and have a great time. Thank you.