LEHI, Utah , Aug. 9, 2022 /PRNewswire/ -- Purple Innovation, Inc. (NASDAQ: PRPL) ("Purple"), a comfort innovation company known for creating the "World's First No Pressure ™ Mattress," today announced results for the second quarter ended June 30, 2022 .
Second Quarter Financial Summary (Comparisons versus Second Quarter 2021 and First Quarter 2022)1
"We continue to make important progress improving Purple's operational health despite increasing macro headwinds," said Chief Executive Officer Rob DeMartini . "The meaningful improvement in second quarter adjusted EBITDA compared with the first quarter on similar revenue underscores the work we've done since the start of this year right sizing our cost structure. While the continued shift in demand away from home related categories and the impact of inflation on consumer discretionary spending is delaying our top-line recovery, we remain confident that our four strategic initiatives – operational excellence, brand elevation, channel development and accelerating innovation – are the right building blocks for delivering long-term profitable growth. We are moving forward focused on executing our plans and preparing the Company to emerge from the current macroeconomic environment well positioned to accelerate growth and expand market share."
Second quarter 2022 net revenue decreased 21.1% to $144.1 million , compared to $182.6 million in the second quarter of 2021. This decrease was primarily due to the challenging year-over-year comparison created by the pull forward of demand driven by the effects of COVID and economic stimulus in the second quarter of 2021, changing demand for home related products, inflationary pressure on discretionary consumer spending, and an intentional reduction in advertising spend, which was down 56.0% compared with a year ago. By channel, versus prior year, wholesale net revenue declined 5.9% and direct to consumer net revenues declined 29.8%. Within DTC, ecommerce declined 39.2%, reflecting the aforementioned pullback in ad spend. This was partially offset by a 150% increase in showroom net revenue driven largely by the opening of 27 net new showrooms over the past 12 months.
Gross margin for the second quarter 2022 declined to 33.9% compared to 44.7% in the year ago period. This decline was primarily attributed to lower revenue with an increased wholesale channel revenue, which carries a lower gross margin than DTC channel revenue and unfavorable cost absorption from lower than planned production volumes in prior months. Additionally, the decline in gross margin reflects the impact of elevated levels of materials, labor and overhead costs, partially offset by benefits realized from our workforce restructuring. Wholesale net revenues comprised approximately 43% of net revenue for the quarter compared with approximately 36% in the same quarter last year.
Operating expenses were 42.3% of net revenue for the second quarter of 2022 compared to 46.1% in the year ago period. The decrease in operating expenses as a percent of net revenue compared with the prior year period was driven primarily by the intentional reduction in advertising spend to improve marketing efficiency and stabilize profitability in the current environment and the restructuring of the marketing organization that occurred in the second quarter of this year. Advertising spend for the second quarter was reduced $24.1 million , or 56.0% year-over-year and $4.9 million , or 20.6% from the first quarter of 2022.
Operating loss was $(12.1) million for the second quarter 2022 compared to $(2.5) million in the prior year period.
Net loss was $(8.3) million for the second quarter 2022 compared to a net income of $2.6 million in the year ago period. As previously disclosed, the Company determined that its outstanding warrants should be accounted for as liabilities and recorded at fair value on the date of the transaction and subsequently re-measured to fair value at each reporting date. For the three months ended June 30, 2022 and 2021, the Company recognized non-cash gains of $0.3 million and $4.9 million , respectively, associated with the change in fair value of warrant liabilities.
Adjusted net loss, which excludes adjustments for certain non-cash items and other items the Company does not consider in the evaluation of ongoing operational performance, including gains associated with the change in fair value of warrant liabilities, was $(8.8) million , or $(0.11) per adjusted diluted share, compared to adjusted net income of $3.6 million , or $0.05 per adjusted diluted share in the prior year period. Adjusted net loss has also been adjusted to reflect an estimated effective income tax rate of 31.7% for the current year period resulting in an adjusted income tax benefit and 25.4% for the comparable prior year period resulting in an adjusted income tax benefit.
EBITDA for the second quarter 2022 was $(8.0) million compared to $3.9 million in the second quarter 2021. Adjusted EBITDA, which excludes the adjustment for non-cash gain associated with the change in fair value of warrant liabilities, Tax Receivable Agreement benefit, new production facility start-up costs, non-cash stock-based compensation, executive search costs, vendor separation fee, severance, showroom opening costs, product reserve and COVID-19 related expenses, was $(0.3) million compared to Adjusted EBITDA of $11.0 million in the prior year period.
As of June 30, 2022 , the Company had cash and cash equivalents of $41.2 million compared to $91.6 million as of December 31, 2021 and $62.7 million at March 31, 2022 . The decrease compared with March 31, 2022 was driven primarily by cash used in operations of $8.5 million , capital expenditures of $13.0 million primarily related to showroom expansion. In addition to the $41.2 million in cash at the end of the second quarter, the Company has the full $55 million amount available under its credit facility. Based on its current projections, the Company believes its cash on hand, amounts available under its revolving line of credit, and expected cash to be generated from e-commerce, wholesale, and Purple retail store channels will be sufficient to meet its working capital requirements, comply with debt covenants and cover anticipated capital expenditures for the next 12 months and beyond.
Inventories at June 30, 2022 were $84.9 million , a decrease of 14% compared with $98.7 million at December 31, 2021 and a decrease of 19.8% compared with $105.8 million at March 31, 2022 . The decrease in inventories since the end of Q1 driven by a reduction in mattress inventories and resale finished goods as we right-size our inventories to the current demand environment.
Based on second quarter results combined with a more cautious view on the remainder of the year due to the current macroeconomic environment, the Company is amending its 2022 outlook. It now expects full year 2022 net revenue to be between $570 million and $590 million , compared with its prior range of $650 million to $690 million .
Adjusted EBITDA for 2022 is now expected to be between $(15) million and $(5) million , compared with its prior range of $21 million to $27 million .
The Company expects second half 2022 gross margins to improve compared with second quarter 2022 levels and exit the year with gross margins between 37% to 38%.
Conference Call and Webcast Information
Purple Innovation, Inc. will host a live conference call to discuss financial results today, August 9, 2022 at 4:30 p.m. Eastern Time . To access the call dial (888) 882-4478 (domestic) or (646) 828-8193 (international) and provide the Conference ID: 6808645. The call is also being webcast and can be accessed on the investor relations section of the Company's website, investors.purple.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.
Purple is a digitally-native vertical brand with a mission to help improve lives through innovative comfort solutions. We design and manufacture a variety of innovative, premium, branded comfort products, including mattresses, pillows, bedding, frames and more. Our products are the result of over 30 years of innovation and investment in proprietary and patented comfort technologies and the development of our own manufacturing processes. Our proprietary gel technology, GelFlex Grid, is the foundation of many of our comfort products and provides a range of benefits that differentiate our offerings from other competitors' products. We market and sell our products through our direct-to-consumer online channels, traditional retail partners, third-party online retailers and our owned retail showrooms. Visit Purple online at purple.com and "like" Purple on Facebook and "follow" on Instagram.
Certain statements made in this release that are not historical facts are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements include but are not limited to statements relating to our expected continuing expansion of market share from investment in capacity, innovation and showrooms; our ability to achieve profitability; expected improvements in performance quarter-over-quarter; expected improvement in margin rates; our ability to successfully execute on improvement strategies; expected improvements in our operating performance; our ability to improve brand recognition; demand for our products; expectations regarding consumer behavior; our ability to develop and expand our distribution channels; our ability to accelerate production innovation; the adequacy of our cash other capital resources; and expected financial and operating results for the full year 2022. Statements based on historical data are not intended and should not be understood to indicate the Company's expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Factors that could influence the realization of forward-looking statements include, among others: uncertainties regarding the extent and duration of the impact of the COVID-19 pandemic on many aspects of our business, operations and financial performance; disruptions to our manufacturing processes; changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices and cost of labor; the financial condition of our customers and suppliers; competitive pressures, including the need for technology improvement, successful new product development and introduction; changes in consumer demand, including pullbacks in consumer spending; and the risk factors outlined in the "Risk Factors" section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 1, 2022 , as amended by our Annual Report on Form 10-K/A filed with the SEC on March 16, 2022 and our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2022 . The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per diluted share are non-GAAP financial measures that remove the impact of certain non-cash and non-recurring costs. Management believes that the use of such non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. Refer to the attached table for the reconciliation of such non-GAAP financial measures to the most comparable GAAP financial measure.
With respect to the Company's Adjusted EBITDA outlook for full year 2022, a quantitative reconciliation to the corresponding GAAP information cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted, including but not limited to warrant liabilities and stock based compensation. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.
Investor Contact: Brendon Frey , ICR brendon.frey@icrinc.com 203-682-8200
1 Reconciliations for non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the "RECONCILIATION OF GAAP TO NON-GAAP MEASURES" tables at the end of this press release.
PURPLE INNOVATION, INC. Condensed Consolidated Balance Sheets (unaudited - in thousands, except par value) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 41,169 $ 91,616 Accounts receivable, net 31,578 25,430 Inventories, net 84,886 98,690 Prepaid expenses 5,111 8,064 Other current assets 5,369 5,702 Total current assets 168,113 229,502 Property and equipment, net 127,752 112,614 Operating lease right-of-use assets 88,986 68,037 Intangible assets, net 14,687 13,204 Deferred income taxes 223,952 217,791 Other long-term assets 1,617 1,322 Total assets $ 625,107 $ 642,470 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 39,986 $ 79,752 Accrued sales returns 5,111 7,116 Accrued compensation 9,370 8,928 Customer prepayments 5,132 10,854 Accrued sales tax 3,129 4,672 Accrued rebates and allowances 7,315 10,169 Operating lease obligations – current portion 9,882 7,053 Warrant liabilities 69 — Other current liabilities 8,047 13,470 Total current liabilities 88,041 142,014 Debt, net of current portion 37,198 94,113 Operating lease obligations, net of current portion 103,457 81,159 Warrant liabilities — 4,343 Tax receivable agreement liability, net of current portion 161,970 162,239 Other long-term liabilities, net of current portion 15,320 12,061 Total liabilities 405,986 495,929 Commitments and contingencies (Note 13) Stockholders' equity: Class A common stock; $0.0001 par value, 210,000 shares authorized; 82,764 issued and outstanding at June 30, 2022 and 66,493 issued and outstanding at December 31, 2021 8 7 Class B common stock; $0.0001 par value, 90,000 shares authorized; 448 issued and outstanding at June 30, 2022 and at December 31, 2021 — — Additional paid-in capital 501,997 407,591 Accumulated deficit (283,667) (261,825) Total stockholders' equity 218,338 145,773 Noncontrolling interest 783 768 Total stockholders' equity 219,121 146,541 Total liabilities and stockholders' equity $ 625,107 $ 642,470
(unaudited - in thousands, except par value)
Operating lease obligations – current portion
Debt, net of current portion
Operating lease obligations, net of current portion
Tax receivable agreement liability, net of current portion
Other long-term liabilities, net of current portion
Class A common stock; $0.0001 par value, 210,000 shares authorized; 82,764 issued and outstanding at June 30, 2022 and 66,493 issued and outstanding at December 31, 2021
Class B common stock; $0.0001 par value, 90,000 shares authorized; 448 issued and outstanding at June 30, 2022 and at December 31, 2021
Total liabilities and stockholders' equity
PURPLE INNOVATION, INC. Condensed Consolidated Statements of Income (unaudited - in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues, net $ 144,109 $ 182,586 $ 287,288 $ 369,015 Cost of revenues 95,297 100,899 186,850 199,804 Gross profit 48,812 81,687 100,438 169,211 Operating expenses: Marketing and sales 40,373 59,844 90,332 114,212 General and administrative 18,779 22,461 36,667 36,987 Research and development 1,748 1,923 3,891 3,646 Total operating expenses 60,900 84,228 130,890 154,845 Operating income (loss) (12,088) (2,541) (30,452) 14,366 Other income (expense): Interest expense (707) (569) (1,730) (1,139) Other income (expense), net (136) 26 (119) (42 Change in fair value – warrant liabilities 346 4,860 4,274 14,007 Tax receivable agreement expense — (381) — (207) Total other income (expense), net (497) 3,936 2,425 12,619 Net income (loss) before income taxes (12,585) 1,395 (28,027) 26,985 Income tax benefit (expense) 4,175 1,167 5,986 (3,484) Net income (loss) (8,410) 2,562 (22,041) 23,501 Net income (loss) attributable to noncontrolling interest (70) (16) (199) 99 Net income (loss) attributable to Purple Innovation, Inc. $ (8,340) $ 2,578 $ (21,842) $ 23,402 Net income (loss) per share: Basic $ (0.10) $ 0.04 $ (0.29) $ 0.36 Diluted $ (0.10) $ (0.03) $ (0.29) $ 0.14 Weighted average common shares outstanding: Basic 82,703 66,277 74,924 65,439 Diluted 83,151 66,864 75,372 68,341
Condensed Consolidated Statements of Income
(unaudited - in thousands, except per share amounts)
Change in fair value – warrant liabilities
Total other income (expense), net
Net income (loss) before income taxes
Net income (loss) attributable to noncontrolling interest
Net income (loss) attributable to Purple Innovation, Inc.
Net income (loss) per share:
Weighted average common shares outstanding:
PURPLE INNOVATION, INC. Condensed Consolidated Statements of Cash Flows (unaudited - in thousands) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cash flows from operating activities: Net income (loss) $ (8,410) $ 2,562 $ (22,041) $ 23,501 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 3,741 1,995 7,583 3,544 Non-cash interest 212 128 360 257 Change in fair value - warrant liabilities (346) (4,860) (4,274) (14,007) Tax receivable agreement expense — 381 — 207 Stock-based compensation 1,275 1,113 1,817 1,592 Deferred income taxes (4,249) 1,335 (6,161) 3,170 Changes in operating assets and liabilities: Accounts receivable (2,572) 16,514 (6,148) 4,007 Inventories 20,940 (1,513) 13,804 931 Prepaid inventory and other assets 2,460 (4,372) 3,481 (2,263) Operating lease, net 3,760 641 4,178 785 Accounts payable (21,127) (1,375) (37,027) (11,783) Accrued sales returns (35) (1,318) (2,005) (1,466) Accrued compensation (2,403) (567) 354 (5,002) Customer prepayments 271 9,433 (5,722) 11,081 Accrued rebates and allowances 306 1,306 (2,854) (4,021) Other accrued liabilities (2,346) (543) 1,851 936 Net cash provided by (used in) operating activities (8,523) 20,860 (52,804) 11,469 Cash flows from investing activities: Purchase of property and equipment (11,602) (13,877) (24,233) (26,162) Investment in intangible assets (1,375) (216) (1,822) (285) Net cash used in investing activities (12,977) (14,093) (26,055) (26,447) Cash flows from financing activities: Payments on term loan — (562) (2,531) (1,125) Payments on revolving line of credit — — (55,000) — Payments for debt issuance costs — — (1,242) — Proceeds from stock offering — — 93,125 — Payments for public offering costs (29) — (259) — Proceeds from InnoHold indemnification payment — — — 4,142 Tax receivable agreement payments — — (5,847) (628) Distributions to members — (308) — (853) Proceeds from exercise of warrants — — — 116 Proceeds from exercise of stock options — 369 166 452 Net cash provided by (used in) financing activities (29) (501) 28,412 2,104 Net increase (decrease) in cash (21,529) 6,266 (50,447) (12,874) Cash, beginning of the period 62,698 103,815 91,616 122,955 Cash, end of the period $ 41,169 $ 110,081 $ 41,169 $ 110,081 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 482 $ 428 $ 1,345 $ 858 Cash paid during the period for income taxes $ 175 $ 3,628 $ 219 $ 4,434 Supplemental schedule of non-cash investing and financing activities: Property and equipment included in accounts payable $ 3,648 $ 3,367 $ 3,648 $ 3,367 Non-cash leasehold improvements $ — $ 2,538 $ — $ 3,239 Accrued distributions $ 228 $ — $ 228 $ — Tax receivable agreement liability $ — $ 3 $ — $ 780 Deferred income taxes $ — $ 3 $ — $ 974 Exercise of liability warrants $ — $ 26 $ — $ 64,172
Condensed Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Change in fair value - warrant liabilities
Changes in operating assets and liabilities:
Prepaid inventory and other assets
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of property and equipment
Net cash used in investing activities
Cash flows from financing activities:
Payments on revolving line of credit
Payments for debt issuance costs
Payments for public offering costs
Proceeds from InnoHold indemnification payment
Proceeds from exercise of warrants
Proceeds from exercise of stock options
Net cash provided by (used in) financing activities
Net increase (decrease) in cash
Cash, beginning of the period
Cash, end of the period
Supplemental disclosures of cash flow information:
Cash paid during the period for interest
Cash paid during the period for income taxes
Supplemental schedule of non-cash investing and financing activities:
Property and equipment included in accounts payable
PURPLE INNOVATION, INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES (In thousands)
Management believes that the use of the following non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. These non-GAAP financial measures are EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per diluted share. Other companies may calculate these non-GAAP measures differently than we do. These non-GAAP measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for our financial results prepared in accordance with GAAP.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP EBITDA and Adjusted EBITDA
A reconciliation of GAAP net income (loss) to the non-GAAP measures of EBITDA and adjusted EBITDA is provided below. EBITDA represents net income (loss) income before interest expense, other (income) expense, net, and depreciation and amortization. Adjusted EBITDA represents EBITDA excluding costs incurred due to stock-based compensation expense, debt extinguishment, warrant liability, vendor separation fee, nonrecurring legal fees, interim CFO and consulting fees and severance costs. We believe EBITDA and Adjusted EBITDA provide additional useful information with respect to the impact of various adjustments and provide meaningful measures of our operating performance.
Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 GAAP net income (loss) $ (8,410) 2,562 (22,041) 23,501 Interest expense 707 569 1,730 1,139 Income tax (benefit) expense (4,175) (1,167) (5,986) 3,484 Other income, net 136 (26) 119 42 Depreciation and amortization 3,741 1,995 7,583 3,544 EBITDA (8,001) 3,933 (18,595) 31,710 Adjustments: Warrant Liability (346) (4,860) (4,274) (14,007) Stock-based compensation expense 1,275 1,113 1,817 1,592 Vendor separation fee 3,136 — 3,136 — Tax Receivable Agreement expense — 381 — 207 Legal fees 104 8,547 266 9,659 Executive interim and search costs 1,356 785 3,070 1,145 Severance costs 1,191 122 2,469 315 Showroom opening costs 900 410 1,576 490 New production facility start-up costs 85 504 348 2,566 Previous period sales tax liability — 85 — 85 COVID-19 related expenses 2 1 331 39 Adjusted EBITDA $ (298) $ 11,021 $ (9,856) $ 33,801
Executive interim and search costs
New production facility start-up costs
Previous period sales tax liability
Reconciliation of GAAP Net Income to non-GAAP Adjusted Net Income and Adjusted Net Income per Diluted Share
Our presentation of adjusted net income assumes that all net income is attributable to Purple Innovation, Inc. (i.e. there is no allocation of net income or loss to noncontrolling interests), which assumes the full exchange at the beginning of the period of all outstanding Paired Securities for shares of Class A common stock of Purple Innovation, Inc., adjusted for certain nonrecurring items that we do not believe directly reflect our core operations. Adjusted net income per share, diluted, is calculated by dividing adjusted net income by the total shares of Class A common stock outstanding plus any dilutive warrants, options and restricted stock as calculated in accordance with GAAP and assuming the full exchange of all outstanding Paired Securities as of the beginning of each period presented. Adjusted net income and adjusted net income per diluted share, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net income and earnings per share, as calculated in accordance with GAAP. We believe adjusted net income and adjusted net income per diluted share, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of net income (loss), the most directly comparable GAAP measure, to adjusted net income and the computation of adjusted net income per diluted share, are set forth below:
(in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net income (loss) $ (8,410) $ 2,562 $ (22,041) $ 23,501 Income tax (benefit) expense, as reported (4,175) (1,167) (5,986) 3,484 Tax receivable agreement expense — 381 — 207 Change in fair value – warrant liabilities (346) (4,860) (4,274) (14,007) Secondary offering expenses — 7,858 — 7,858 Adjusted net income (loss) before income taxes (12,931) 4,774 (32,301) 21,043 Adjusted income tax benefit (expense)(1) 4,106 (1,213) 6,977 (5,345) Adjusted net income (loss) $ (8,825) $ 3,561 $ (25,324) $ 15,698 Adjusted net income (loss) per share, diluted $ (0.11) $ 0.05 $ (0.34) $ 0.23 Adjusted weighted-average shares outstanding, diluted(2) 83,151 67,312 75,372 68,800 (1) Represents the estimated effective tax rate of 31.74% and 21.6% for the three and six months ended June 30, 2022, respectively and 25.4% for the three and six months ended June 30, 2021, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates. (2) Assumes dilutive warrants, options and restricted stock calculated in accordance with GAAP and the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. A reconciliation of net income (loss) per share, diluted, to adjusted net income per diluted share is set forth below for the three and six months ended June 30, 2022 and 2021:
(in thousands, except per share amounts)
Income tax (benefit) expense, as reported
Change in fair value – warrant liabilities
Adjusted net income (loss) before income taxes
Adjusted income tax benefit (expense)(1)
Adjusted net income (loss) per share, diluted
Adjusted weighted-average shares outstanding, diluted(2)
(1) Represents the estimated effective tax rate of 31.74% and 21.6% for the three and six months ended June 30, 2022, respectively and 25.4% for the three and six months ended June 30, 2021, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates.
(2) Assumes dilutive warrants, options and restricted stock calculated in accordance with GAAP and the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period.
A reconciliation of net income (loss) per share, diluted, to adjusted net income per diluted share is set forth below for the three and six months ended June 30, 2022 and 2021:
For the Three Months Ended June 30, 2022 June 30, 2021 Net Income Weighted Average Shares, Diluted Net Income per Share, Diluted Net Income Weighted Average Shares, Diluted Net Income per Share, Diluted Net income (loss) attributable to Purple Innovation Inc.(1) $ (8,340) 83,151 $ (0.10) $ 2,578 66,864 $ (0.03) Assumed exchange of shares(2) (70) — (16) 448 Net income (loss) (8,410) 2,562 Adjustments to arrive at adjusted income (loss) before taxes(3) (4,521) 2,212 Adjusted income (loss) before taxes (12,931) 4,774 Adjusted income tax benefit(4) 4,106 (1,213) Adjusted net income (loss) $ (8,825) 83,151 $ (0.11) $ 3,561 67,312 $ 0.05 (1) Represents net income attributable to Purple Innovation, Inc. and the associated weighted average diluted shares, of Class A common stock outstanding. (2) Assumes the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. Also assumes the addition of net income attributable to noncontrolling interests corresponding with the assumed exchange of the Paired Securities for shares of Class A common stock. (3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes. Also assumes the dilutive warrants, options and restricted stock as calculated in accordance with GAAP. (4) Represents the estimated effective tax rate of 31.7% and 25.4% for the three months ended June 30, 2022 and 2021, respectively, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates.
For the Three Months Ended
Net Income per Share, Diluted
Net Income per Share, Diluted
Net income (loss) attributable to Purple Innovation Inc.(1)
Adjustments to arrive at adjusted income (loss) before taxes(3)
Adjusted income (loss) before taxes
(1) Represents net income attributable to Purple Innovation, Inc. and the associated weighted average diluted shares, of Class A common stock outstanding.
(2) Assumes the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. Also assumes the addition of net income attributable to noncontrolling interests corresponding with the assumed exchange of the Paired Securities for shares of Class A common stock.
(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes. Also assumes the dilutive warrants, options and restricted stock as calculated in accordance with GAAP.
(4) Represents the estimated effective tax rate of 31.7% and 25.4% for the three months ended June 30, 2022 and 2021, respectively, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates.
For the Six Months Ended June 30, 2022 June 30, 2021 Net Income Weighted Average Shares, Diluted Net Income per Share, Diluted Net Income Weighted Average Shares, Diluted Net Income per Share, Diluted Net income (loss) attributable to Purple Innovation Inc.(1) $ (21,842) 75,372 $ (0.29) $ 23,402 68,341 $ 0.14 Assumed exchange of shares(2) (199) — 99 459 Net income (loss) (22,041) 23,501 Adjustments to arrive at adjusted income before taxes(3) (10,260) (2,458) Adjusted income before taxes (32,301) 21,043 Adjusted income tax benefit (expense)(4) 6,977 (5,345) Adjusted net income $ 25,324 75,372 $ (0.34) $ 15,698 68,800 $ 0.23 (1) Represents net income attributable to Purple Innovation, Inc. and the associated weighted average diluted shares, of Class A common stock outstanding. (2) Assumes the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. Also assumes the addition of net income attributable to noncontrolling interests corresponding with the assumed exchange of the Paired Securities for shares of Class A common stock. (3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes. Also assumes the dilutive warrants, options and restricted stock as calculated in accordance with GAAP. (4) Represents the estimated effective tax rate of 21.6% and 25.4% for the six months ended June 30, 2022 and 2021, respectively, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates.
For the Six Months Ended
Net Income per Share, Diluted
Net Income per Share, Diluted
Net income (loss) attributable to Purple Innovation Inc.(1)
Adjustments to arrive at adjusted income before taxes(3)
Adjusted income tax benefit (expense)(4)
(1) Represents net income attributable to Purple Innovation, Inc. and the associated weighted average diluted shares, of Class A common stock outstanding.
(2) Assumes the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. Also assumes the addition of net income attributable to noncontrolling interests corresponding with the assumed exchange of the Paired Securities for shares of Class A common stock.
(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes. Also assumes the dilutive warrants, options and restricted stock as calculated in accordance with GAAP.
(4) Represents the estimated effective tax rate of 21.6% and 25.4% for the six months ended June 30, 2022 and 2021, respectively, applied to adjusted net income before income taxes. The estimated effective tax rates are what the Company would be subject to and consist of the combined federal statutory tax rate and the Company's blended state tax rates.
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