Grove Collaborative Holdings Inc.

03/05/2026 | Press release | Distributed by Public on 03/05/2026 15:19

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included in Item 8 of this report. In addition to historical information, this discussion and analysis contains forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those discussed in the section titled "Risk Factors" and elsewhere in this Annual Report on Form 10-K, that could cause actual results to differ materially from historical results or anticipated results.
Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "Grove," "we," "us," and "our" refer to Grove Collaborative Holdings, Inc., a Delaware public benefit corporation formerly known as Virgin Group Acquisition Corp. II., and its consolidated subsidiary. References to Virgin Group Acquisition Corp. II. or "VGAC II" refer to the Company prior to the consummation of the Business Combination.
Overview
On June 16, 2022 (the "Closing Date"), we became a publicly traded company as a result of the consummation of Grove Collaborative, Inc.'s ("Legacy Grove") merger with Virgin Group Acquisition Corp. II, a Cayman-domiciled blank check company ("VGAC II"), which we refer to herein as the "Business Combination".
Grove is a sustainability-oriented consumer products company. We use our connection with consumers to create and curate authentic, disruptive brands and products. We build natural products that perform as well as or better than many leading CPG brands (both conventional and natural), while being healthier for consumers and the planet.
We primarily operate an online direct-to-consumer website and mobile application ("DTC platform") where we both sell our Grove Brands and other leading natural and mission-based CPG brands, providing consumers with a selection of curated products across many categories and brands. We refer to this part of our business as "DTC." In the fourth quarter of 2024, we made the decision to exit the business of selling Grove Co. products in brick and mortar retail channels and completed this exit in 2025. We expect our exit from brick-and-mortar retail to improve our profitability while having an insignificant impact on our revenue.
Grove is a public benefit corporation and a Certified B Corporation, meaning we adhere to third party standards for prioritizing social, environmental, and community well-being. We believe that improved innovation grows both revenue and, over the long term, can expand margins as our innovation has historically tended to be both market expanding and margin accretive. Since inception, we have invested heavily in building out both our ecommerce platform and Grove Brands, and over this period we have operated at a loss. We have an accumulated deficit of $660.2 million as of December 31, 2025.
Restructuring and Facilities Closures
As a part of our focus on reducing our operating expenses and focus on becoming profitable, we have recently implemented company-wide workforce restructurings and facilities reductions. In connection with the reorganizations, we recorded charges totaling $1.9 million and $2.0 million related to the reductions in our workforce, warehousing facilities and headquarters office footprint for the years ended December 31, 2025 and 2024, respectively.
Key Factors Affecting Our Operating Performance
We believe that our future business is dependent on many factors. While each of these factors presents significant opportunities for us, they also pose important challenges that we must successfully address to enable us to grow our business and improve our operations while staying true to our mission, including those discussed below and in the section entitled "Risk Factors".
Ability To Grow our Brand Awareness
Our brand is integral to the growth of our business and is essential to our ability to engage with our community. Our performance will depend on our ability to profitably attract new customers and encourage consumer spending across our product portfolio. We believe the core elements of continuing to grow our brand awareness in a manner that increases our market penetration are highlighting our products' qualities of being natural, sustainable and effective and the effectiveness of our marketing efforts.
Cost-Efficient Acquisition of New Customers and Retention of Existing Customers on our DTC Platform
Our ability to attract new customers is a key factor for our future growth. In recent years, changes in the algorithms used for targeting and purchasing online advertising, changes to privacy and online tracking, changes to our purchase flow and subscription processes, supply and demand dynamics in the market, and other factors have caused the cost of marketing on these channels to increase consistently. Failure to effectively adapt to changes in online marketing dynamics or changes to our internet platform, or to otherwise attract customers on a cost-efficient basis would adversely impact our path to revenue growth, our profitability and our operating results. Our ability to balance cost-efficient customer acquisitions while driving consumer awareness may impact the cost of our acquiring new customers, our profitability and our operating results.
The future activity level and profitability of our DTC customer base will depend on our ability to continue to offer a compelling value proposition to consumers including strong selection, pricing, customer service, smooth and compelling web and mobile application experience, fast and reliable fulfillment, and curation within natural and sustainable products. Our success is also dependent on our ability to maintain relevance with our consumers on a regular basis through high performing products and a consumer-friendly refill and fulfillment process, and most importantly to provide consumers with products that consistently outperform their expectations. Our ability to execute on these key value-driving areas for consumers, and to remain competitive and compelling, are necessary for our future growth. A lack of success in these areas would materially impact our operating results and financial performance.
Ability to Achieve Profitable Growth; Positive Cash Flow and Scale
We believe we are in the early stages of realizing a substantial opportunity to transform the consumer products industry into a force for environmental and human good by creating and curating planet-first, high-performance brands and products. In recent years, we have substantially reduced our expense structure and operations in light of declining revenue, and as a result we have reduced our operating losses and cash consumption. To grow and achieve profitability over the longer term, we will need to re-invest to expand our DTC business and achieve a scale that will allow us to drive efficiencies in generating brand awareness, acquiring and retaining customers, creating operating leverage over headcount and other overhead, and fulfilling orders. Our recent gains in approaching profitability may not be sustainable in the near term due to the effects of steps we may take to drive growth or other factors. If we are unable to achieve profitable growth, our prospects may be materially and adversely affected.
Ability to Successfully Transition our ecommerce platform
In March 2025, we began migrating our ecommerce platform from our legacy internally-developed solution to third party service providers that offer ecommerce solutions. We have completed the migration and are in the process of resolving issues identified after the migration while simultaneously working towards optimizing the customer experience. We expect this migration to provide us with significant advantages, such as enhanced scalability, access to advanced ecommerce functionalities, and improved security measures. To date, we have experienced and expect to continue experiencing disruptions to platform operations, including user experience, inventory management, fulfillment operations and payment processing, which has adversely affected our operating results and financial condition.
This transition away from our legacy platform exposes us to vendor-specific risks, such as service disruptions, changes in pricing and inventory management, potential reduced flexibility in our ecommerce experience or alterations in the platform's features and execution and fulfillment risks as we migrate our customer experience to the new platform. Our ability to realize the expected benefits of this transition is substantially dependent upon our ability to address these issues.
Key Operating and Financial Metrics
In addition to our consolidated financial statements, included elsewhere in this Annual Report on Form 10-K, we assess the performance of our overall business using the following metrics and measures, among others. We use the metrics to aid us in identifying trends, formulating financial projections, making strategic decisions, assessing operational efficiencies and monitoring our business.
Our DTC platform remains a core part of our strategy and customer value proposition in addition to providing key data and customer feedback driving our innovation process.
The following table presents our key operating metrics for the periods presented:
(in thousands, except DTC Net Revenue Per Order)
Year Ended December 31,
2025 2024
Financial and Operating Data
DTC Total Orders 2,420 2,930
DTC Active Customers 599 688
DTC Net Revenue Per Order $ 67 $ 67
DTC Total Orders
We determine our number of DTC Total Orders by counting the number of customer orders submitted through our website and mobile application that have been shipped within the period. The metric includes orders that have been refunded, excludes reshipments of customer orders for any reason including damaged and missing products, and excludes retail orders. Refunded orders are included in DTC Total Orders as we believe this provides more meaningful order management performance metrics, including fulfillment cost efficacy and refund rates. Changes in DTC Total Orders in a reporting period capture both the inflow of new customers, changes in order frequency of existing customers and customer attrition. We view the number of Total DTC Orders as a key indicator of trends in our DTC platform, and our future success in this channel will depend in part on our ability to drive growth through new customer acquisition and by increasing existing customer engagement. In the year ended December 31, 2025, DTC Total Orders declined primarily due to our lower advertising spend in prior years, resulting in fewer new customers and therefore fewer overall orders. Additionally, DTC Total Orders was negatively impacted by technology disruptions to our DTC platform.
DTC Active Customers
As of the last day of each reporting period, we determine our number of DTC Active Customers by counting the number of individual customers who submitted orders through our DTC platform, and for whom an order has shipped, at least once during the preceding 364-day period. The change in active customers in a reporting period captures both the inflow of new customers as well as the outflow of customers who have not made a purchase in the last 364 days. We view the number of active customers as one of the key indicators of growth in our DTC channel. In the year ended December 31, 2025, DTC Active Customers declined primarily due to our lower advertising spend, resulting in fewer new customers and therefore fewer overall orders, and negative impacts from technology disruptions to our DTC platform.
DTC Net Revenue Per Order
We define DTC Net Revenue Per Order as our DTC Total Net Revenue in a given reporting period, divided by the DTC Total Orders in that period. We view DTC Net Revenue per Order as a key indicator of the performance of our DTC business. DTC Net Revenue Per Order had a slight improvement in the year ended December 31, 2025 compared to the prior year comparative period due to improved promotional strategies, as well as an increase in higher priced items in customer orders.
Non-GAAP Financial Measures: Adjusted EBITDA and Adjusted EBITDA Margin
We prepare and present our financial statements in accordance with U.S. GAAP ("GAAP"). In addition, we believe that Adjusted EBITDA, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. For these reasons, management uses Adjusted EBITDA in evaluating our operating performance and resource allocation and forecasting. As such, we believe Adjusted EBITDA provides investors with additional useful information in evaluating our performance.
We calculate Adjusted EBITDA as net loss, adjusted to exclude: stock-based compensation expense; depreciation and amortization; changes in fair values of derivative liabilities; interest income; interest expense; restructuring costs; transaction related costs related to certain strategic merger & acquisition projects; loss on extinguishment of debt; provision for income taxes and certain litigation and legal settlement expenses that we do not consider representative of our underlying operations. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net revenue. Because Adjusted EBITDA excludes these elements that are otherwise included in our GAAP financial results, this measure has limitations when compared to net loss determined in accordance with GAAP. Further, Adjusted EBITDA is not necessarily comparable to similarly titled measures used by other companies. For these reasons, investors should not consider Adjusted EBITDA in isolation from, or as a substitute for, net loss determined in accordance with GAAP.
The following table presents a reconciliation of net loss, the most directly comparable financial measure stated in accordance with GAAP, to Adjusted EBITDA, for each of the periods presented.
Year Ended December 31,
2025 2024
Reconciliation of Net Loss to Adjusted EBITDA
(in thousands)
Net loss $ (11,716) $ (27,423)
Stock-based compensation 4,284 11,995
Depreciation and amortization 1,680 9,821
Changes in fair value of derivative liabilities (404) (9,888)
Interest income (455) (3,057)
Interest expense 1,225 12,777
Restructuring expenses (1)
1,919 2,032
Transaction related costs (2)
1,275 -
Loss on extinguishment of debt - 5,004
Provision for income taxes 33 40
Total Adjusted EBITDA $ (2,159) $ 1,301
Net loss margin (6.7) % (13.5) %
Adjusted EBITDA margin (1.2) % 0.6 %
(1) Restructuring expenses for the year ended December 31, 2025 consisted of $1.0 million in severance-related charges and $0.9 million related to the impairment of operating lease right-of-use assets and fixed assets of our San Francisco lease. Restructuring expenses for the year ended December 31, 2024 consisted of $3.1 million gain from our modification of the lease at our San Francisco headquarters offset by $1.3 million of costs related to our move to a new distribution facility in Nevada, $2.5 million in severance-related charges, and $1.3 million related to impairment of operating lease right-of-use assets.
(2) Transaction related costs are costs and expenses primarily associated with the acquisitions of Grab Green and 8Greens. These costs include costs of integrating the businesses and costs for third-party legal, accounting, consulting and other similar type professional services. These costs are considered incremental to our normal operating charges and were incurred solely as a result of the transactions.
Components of Results of Operations
Revenue, Net
We generate revenue primarily from the sale of both third-party and our Grove Brands products through our DTC platform. Customers purchase products through the website or mobile application through a combination of directly selecting items from the catalog, items that are suggested by our recommendation engine, and featured products that appear in marketing on-site, in emails and on our mobile application. Most customers purchase a combination of products
recommended by us based on previous purchases and new products discovered through marketing or catalog browsing. Customers can opt to subscribe and have orders auto-shipped to them on a specified date or shipped immediately through an option available on the website and mobile application. We recognize revenue from the sale of our products through our DTC platform net of discounts, sales tax, customer service credits and estimated refunds. Sales tax collected from customers is not considered revenue and is included in accrued liabilities until remitted to the taxing authorities.
While our historical financial results have included selling in brick-and-mortar retail channels, we completed our exit from these channels in 2025.
In December 2025, we introduced our Green Rewards customer loyalty program which enables our customers to earn a rewards balance from purchases and other activities that these customers can apply to future purchases. We defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our Green Rewards customer loyalty program and Green Rewards VIP Membership.
Cost of Goods Sold
Cost of goods sold consists of the product costs of merchandise, inbound freight costs, vendor allowances, costs associated with inventory shrinkage and damages and inventory write-offs and related reserves.
Gross Profit and Gross Margin
Gross profit represents revenue less the cost of goods sold. Gross margin is gross profit expressed as a percentage of revenue. To help motivate first-time customers to purchase on our DTC platform, we generally offer higher discounts and free product offerings, and as a result, our overall margins can be adversely affected in periods of rapid new customer acquisition. Our gross margin also fluctuates from period-to-period based on promotional activity, product and channel mix, the timing of promotions and launches, and inbound transportation rates, among other factors. Our gross profit and gross margin may not be comparable with that of other retailers because we include certain fulfillment related costs in selling, general, and administrative expenses while other retailers may include these expenses in cost of goods sold.
Operating Expenses
Our operating expenses consist of advertising, product development, and selling, general and administrative expenses.
Advertising
Advertising costs are expensed as incurred and consist primarily of our customer acquisition costs associated with online advertising, as well as advertising on television, direct mail campaigns and other media. Costs associated with the production of advertising are expensed when the first advertisement is shown.
Product Development
Product development expenses are related to the ongoing support and maintenance of our DTC platform, as well as amortization of capitalized, internally developed software and the product and packaging innovation in our Grove Brands products. Product development expenses consist primarily of personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation expense. Product development costs also include allocated facilities, equipment, depreciation and overhead costs.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of compensation and benefit costs for personnel involved in general corporate functions, including stock-based compensation expense, and certain fulfillment costs, as further outlined below. Selling, general and administrative expenses also include the allocated facilities, equipment, depreciation and overhead costs, marketing costs including qualified cost of credits issued through our referral program, costs associated with our customer service operation, and costs of environmental offsets. Selling, general and administrative expenses have declined in 2025 as a result of decreases in fulfillment costs largely driven by lower sales and our cost management initiatives. In November 2025, we executed a reduction in force as part of an initiative to streamline selling, general, and administrative expenses, which is expected to lower our ongoing cost structure and deliver savings. We anticipate this reduction in force will result in operating efficiencies for our business.
Fulfillment costs represent those costs incurred in operating and staffing our fulfillment centers, including costs attributable to receiving, inspecting and warehousing inventories, picking, packing and preparing customer orders for shipment, outbound shipping and handling expenses, packing materials costs and payment processing and related transaction costs. These costs are included within selling, general and administrative expenses in the consolidated statements of operations.
Non-operating expenses, net
Interest expense consists primarily of interest expense associated with our debt financing arrangement. In fiscal year 2025, we have recorded lower interest expense due to the extinguishment of the Structural Debt Facility (as defined below). To the extent there are changes in prevailing interest rates in future periods, we anticipate cash payments for interest and interest expense to fluctuate as interest rates change.
Loss on extinguishment of debt relates to the full payoff of the Structural Debt Facility in 2024 that was accounted for as an extinguishment.
Change in fair values of derivative liabilities consists primarily of changes in fair values of Earn-Out Shares, Public Warrants and Private Placement Warrant and the derivative liability related to our term debt we extinguished in 2024 (the "Structural Derivative Liability"). Changes in the fair value of our derivative liabilities may fluctuate significantly in future periods primarily due to fluctuations in the fair value of our common stock.
Other income, net consists primarily of interest income.
Provision for Income Taxes
We account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statements and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We recognize the benefits of tax-return positions in the financial statements when they are more likely than not to be sustained by the taxing authority, based on the technical merits at the reporting date. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes. We recognize interest and penalties related to unrecognized tax benefits, if any, as income tax expense.
Results of Operations
The following table sets forth our results of operations for each period presented:
Year Ended December 31,
2025 2024
(in thousands)
Revenue, net $ 173,716 $ 203,425
Cost of goods sold 80,443 94,077
Gross profit 93,273 109,348
Operating expenses:
Advertising 9,710 10,265
Product development 7,484 18,456
Selling, general and administrative 87,396 103,174
Operating loss (11,317) (22,547)
Non-operating expenses:
Interest expense 1,225 12,777
Loss on extinguishment of debt - 5,004
Changes in fair value of derivative liabilities (404) (9,888)
Other income, net (455) (3,057)
Total non-operating expenses, net 366 4,836
Loss before provision for income taxes (11,683) (27,383)
Provision for income taxes 33 40
Net loss $ (11,716) $ (27,423)
The following table sets forth our consolidated statements of operations data expressed as a percentage of net revenue:
Year Ended December 31,
2025 2024
(as a percentage of revenue)
Revenue, net 100 % 100 %
Cost of goods sold 46 46
Gross profit 54 54
Operating expenses:
Advertising 6 5
Product development 4 9
Selling, general and administrative 50 51
Operating loss (6) (11)
Non-operating expenses:
Interest expense 1 6
Loss on extinguishment of debt - 2
Changes in fair value of derivative liabilities - (5)
Other income, net - (2)
Total non-operating expenses, net 1 4
Loss before provision for income taxes (7) (13)
Provision for income taxes - -
Net loss (7) % (13) %
Comparisons of the Year Ended December 31, 2025 and December 31, 2024
Revenue, Net
Year Ended December 31, Change
2025 2024 Amount %
(in thousands)
Revenue, net:
Grove Brands $ 71,940 $ 82,942 $ (11,002) (13) %
Third-party products 101,776 120,483 $ (18,707) (16) %
Total revenue, net $ 173,716 $ 203,425 $ (29,709) (15) %
Revenue decreased by $29.7 million, or 15%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily driven by a decrease in DTC Total Orders from lower advertising expenses in previous periods and disruptions related to the migration from our internally developed legacy ecommerce platform to third party service providers for the year ended December 31, 2025 compared to the prior year.
Cost of Goods Sold and Gross Profit
Year Ended December 31, Change
2025 2024 Amount %
(in thousands)
Cost of goods sold $ 80,443 $ 94,077 $ (13,634) (14) %
Gross profit 93,273 109,348 (16,075) (15) %
Gross margin 54 % 54 % - %
Cost of goods sold decreased by $13.6 million, or 14%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily driven by a decrease in DTC Total Orders.
Gross margin in the year ended December 31, 2025 decreased by 6 basis points compared to the year ended December 31, 2024, driven by the removal of certain customer per-order fees and a decreased release of previously reserved for inventory from the prior period. These decreases were offset by improved promotional strategies which resulted in fewer discounts offered to customers and increased allowances from our vendors.
Advertising Expenses
Year Ended December 31, Change
2025 2024 Amount %
(in thousands)
Advertising $ 9,710 $ 10,265 $ (555) (5) %
Advertising expenses decreased by $0.6 million, or 5%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to decreases in online advertising, offset by increases in television advertising expenses.
Product Development Expenses
Year Ended December 31, Change
2025 2024 Amount %
(in thousands)
Product development $ 7,484 $ 18,456 $ (10,972) (59) %
Product development expenses decreased by $11.0 million, or 59%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a $6.2 million decrease in amortization expenses related to certain internally developed software which was fully amortized at the end of fiscal year 2024, a $3.6 million decrease in salaries and stock based compensation from reductions in headcount and a $0.9 million decrease in severance-related expenses.
Selling, General and Administrative Expenses
Year Ended December 31, Change
2025 2024 Amount %
(in thousands)
Selling, general and administrative $ 87,396 $ 103,174 $ (15,778) (15) %
Selling, general and administrative expenses decreased by $15.8 million, or 15%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. Stock-based compensation decreased by $7.2 million for the year ended December 31, 2025as compared to the year ended December 31, 2024due to decreases in the grant date fair value of awards and reductions in headcount. Corporate salaries decreased by $2.7 million for the year ended December 31, 2025as compared to the year ended December 31, 2024 driven by reductions in headcount. Fulfillment costs decreased by $5.9 million for the year ended December 31, 2025as compared to the year ended December 31, 2024 due to a lower volume of orders. Other general and administrative costs, excluding stock-based compensation expense and corporate salaries and fulfillment costs, decreased by $4.6 million, which includes a $1.9 million decrease in depreciation expense primarily due to accelerated depreciation associated with the closure of our Missouri facility in the prior period that did not recur in the current period, a $1.0 million decrease in other expenses related to closing our Missouri facility, a $0.6 million decrease in professional fees, a $0.6 million decrease in insurance expenses and a $0.5 million decrease in impairment related to our operating lease right-of-use assets, for the year ended December 31, 2025as compared to the year ended December 31, 2024. These decreases were offset by the absence of a $3.1 million gain recorded for the year ended December 31, 2024related to a partial lease termination of our San Francisco office that occurred in March 2024 and a $1.3 million increase in certain fees and expenses to support our acquisitions.
Interest Expense
Year Ended December 31, Change
2025 2024 Amount %
(in thousands)
Interest expense $ 1,225 $ 12,777 $ (11,552) (90) %
Interest expense decreased by $11.6 million, or 90%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024 primarily due to the extinguishment of the Structural Debt Facility in 2024. See the section titled "Liquidity and Capital Resources" below for further details.
Non-operating expenses, net
Year Ended December 31, Change
2025 2024 Amount %
(in thousands)
Loss on extinguishment of debt $ - $ 5,004 $ (5,004) (100) %
Changes in fair value of derivative liabilities (404) (9,888) 9,484 (96) %
Other income, net (455) (3,057) 2,602 (85) %
Loss on extinguishment of debt resulted from the repayment of our Structural Debt Facility during the year ended December 31, 2024. See the section titled "Liquidity and Capital Resources-Loan Facilities" below for further details.
The change in the fair value of derivative liabilities for the year ended December 31, 2025, was primarily driven by the settlement of the Structural Derivative in connection with the payoff of the Structural Debt Facility.
Other income, net decreased by $2.6 million, or 85%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to the full payoff of the Structural Debt Facility in 2024, which reduced the cash balance available for earning interest income.
Liquidity, Capital Resources and Requirements
As of December 31, 2025, we had $8.5 million in unrestricted cash and cash equivalents (which excludes restricted cash of $3.3 million). We incurred negative cash flow from operating activities of $7.0 million for the year ended December 31, 2025. We have incurred significant losses since inception and have an accumulated deficit of approximately $660.2 million. To date, we have funded our operations principally through redeemable convertible preferred stock and common stock financings, the incurrence of debt and the closing of the Business Combination. We have total outstanding indebtedness of $7.5 million as of December 31, 2025.
On August 11, 2023 (the "Series A Preferred Stock Closing Date"), we entered into a subscription agreement with Volition Capital Fund IV, L.P. ("Volition") and received gross proceeds of $10.0 million in exchange for 10,000 shares of our Series A Redeemable Convertible Preferred Stock (the "Series A Preferred Stock"), a warrant to purchase 1,579,778 shares of our Class A common stock at an exercise price of $6.33 (the "Volition Warrants") and a warrant to purchase 20,905 shares of our Class A common stock at an exercise price of $0.01 per share (the "Volition Penny Warrants"). The Series A Preferred Stock was redeemable, at the option of the holder, for the original issuance price plus any declared but unpaid dividends following the seventh anniversary of the Series A Preferred Stock Closing Date ("Optional Redemption").
On September 20, 2024, we entered into a subscription agreement with Volition where we received gross proceeds of $15.0 million in exchange for 15,000 shares of our Series A' Redeemable Convertible Preferred Stock (the "Series A' Preferred Stock" and together with the Series A Redeemable Convertible Preferred Stock, the "Preferred Stock"). In connection with the issuance of the Series A' Preferred Stock, we agreed with Volition to cancel the Volition Warrants, cancel the Volition Penny Warrants and modify certain redemption terms of the Series A Preferred Stock already held by Volition, such that it is no longer subject to Optional Redemption. The holders of our outstanding Preferred Stock are entitled to receive cumulative dividends at the rate of 6% per annum of the original issuance price of each share. Such accruing dividends are payable only when, as and if declared by our Board of Directors.
On March 10, 2023, we entered into the Siena Revolver (defined below) with Siena Lending Group, LLC ("Siena") which permits us to receive funding through a revolving line of credit with an initial commitment of $35.0 million. The total borrowing capacity under the Siena Revolver is subject to certain conditions, including our inventory, accounts receivable balances and certain qualifying cash balances held with third party processors and other limitations as specified in the agreement. Additional borrowing capacity from the Siena Revolver was $1.1 million as of December 31, 2025. On May 8, 2025, the Company entered into a third amendment to the Siena Revolver which, among other things, extended the maturity date of the Siena Revolver to April 10, 2028 and eliminated the financial covenant applicable to the Siena Revolver. On September 26, 2025, the Company entered into a fourth amendment, which among other things, amended the Siena Revolver to include certain qualifying cash balances held with third party processors in the borrowing base, subject to such balances meeting eligibility criteria.
On May 15, 2025, we received notice from the New York Stock Exchange (the "NYSE") that we are not in compliance with the requirement of Section 802.01B of the New York Stock Exchange Listed Company Manual (the "NYSE Manual") that we have an average market capitalization of not less than $50.0 million over a consecutive 30 trading-day period and stockholders' equity of not less than $50.0 million (the "Minimum Market Capitalization Standard" and such notice, the "NYSE Notice"). Pursuant to the NYSE Notice, we are subject to the procedures set forth in Sections 801 and 802 of the NYSE Manual and submitted a business plan on June 27, 2025 that demonstrated how we expect to return to compliance with this continued listing standard within 18 months of receipt of the NYSE Notice (the "Cure Period"). The NYSE informed us that it had accepted the plan on August 5, 2025. As a result, the NYSE will review us on a quarterly basis during the Cure Period to confirm compliance with the plan. If we fail to comply with the plan or do not meet the Minimum Market Capitalization Standard by the end of the Cure Period, we will be subject to NYSE's prompt initiation of suspension and delisting procedures.
On July 18, 2022, we entered into the Standby Equity Purchase Agreement ("SEPA") with YA II PN, LTD. ("Yorkville"), whereby we have the right, but not the obligation, to sell to Yorkville up to $100 million of our shares of common stock at our request until July 18, 2025, subject to certain conditions. On July 8, 2025, we and Yorkville amended the SEPA (the "Amended SEPA") to extend the term to August 1, 2027. The shares of our common stock that may be issued under the SEPA may be sold by us to Yorkville at our discretion from time to time and sales of our common stock under the SEPA will depend upon market conditions and other factors. Additionally, in no event may we sell more than
6,511,532 shares of our common stock to Yorkville under the SEPA, which number of shares is equal to 19.99% of the shares of the Company's common stock outstanding immediately prior to the execution of the SEPA (the "Exchange Cap"), unless we obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap in accordance with applicable NYSE rules or comply with certain other requirements as described in the Amended SEPA. Unless our average stock price exceeds $15.33, we will be unable to sell the full $100.0 million commitment to Yorkville without seeking stockholder approval to issue additional shares in excess of the Exchange Cap. As of December 31, 2025, we have sold 147,965 shares under the SEPA and there were 6,363,567 shares available to be sold to Yorkville under the Exchange Cap. As of February 27, 2026, under the terms of the SEPA we would be able to raise additional gross proceeds of approximately $8.8 million.
Management believes that currently available resources will provide sufficient funds to enable us to meet our obligations for at least one year following the date these consolidated financial statements are available to be issued. Cash from operations could be affected by our customers and other risks detailed in the section titled "Risk Factors." In the event we raise additional capital to execute strategic initiatives and fund our operations, our ability to raise additional capital may be adversely impacted by the trading price of our common stock. We may seek access to additional funds by utilizing the SEPA. Additionally, we may seek additional funds through new public or private equity offerings or new debt financings, through partnering or other strategic arrangements, through the exercise of certain of our warrants, or a combination of the foregoing. There can be no assurance that any such new debt or new equity financing arrangements will be available on terms acceptable to the Company, or at all.
To the extent that we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. Debt financing arrangements may require us to pledge certain assets or enter into covenants that could restrict our operations or our ability to pay dividends or other distributions on our common stock or incur further indebtedness. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. In addition, our Class A Common Stock trading price may not exceed the respective exercise prices of our Public Warrants, Private Placement Warrants and/or our other outstanding warrants before the respective warrants expire, and therefore we may not receive any proceeds from the exercise of warrants to fund our operations. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition could be materially and adversely affected.
Contractual Obligations and Other Commitments
Our most significant contractual obligations relate to our loan facility, purchase commitments on inventory and operating lease obligations on our fulfillment centers and corporate offices. As of December 31, 2025, we had $11.2 million of enforceable and legally binding inventory purchase commitments predominantly due within one year. For information on our contractual obligations for operating leases, see "Leases" in Note 8 of the Notes to our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024 included in this filing on Form 10-K.
Loan Facility
On March 10, 2023, we entered into a Loan and Security Agreement (the "Siena Revolver") with Siena Lending Group, LLC which permits us to receive funding through a revolving line of credit with an initial commitment of $35.0 million. The borrowing capacity under the Siena Revolver is subject to certain conditions, including our inventory, accounts receivable balances and certain qualifying cash balances held with third party processors and other limitations as specified in the agreement. If at any time the amount of outstanding borrowings under the Siena Revolver exceeds the borrowing capacity, we are required to prepay borrowings sufficient to eliminate the excess. As of December 31, 2025, there was an outstanding principal amount of $7.5 million and additional borrowing capacity was $1.1 million under the Siena Revolver.
The interest rates applicable to borrowings under the Siena Revolver are based on a fluctuating rate of interest measured by reference to either, at our option, (i) a Base Rate plus 3.25% or (ii) the term Secured Overnight Financing Rate ("Term SOFR") then in effect, plus 4.25%. The Base Rate is defined as the greatest of: (1) Prime Rate as published in the Wall Street Journal, (2) federal funds rate ("Federal Funds Rate") plus 0.50% and (3) 5.00% per annum. In accordance with the agreement, Siena has been provided with our periodic financial statements and updated projections to facilitate their ongoing assessment of the Company. The Siena Revolver matures on April 10, 2028.
Cash Flows
The following table summarizes our cash flows for the periods presented:
Year Ended December 31,
2025 2024 Change
(in thousands)
Net cash used in operating activities $ (6,954) $ (9,749) (28.7) %
Net cash used in investing activities (3,999) (1,621) 146.7 %
Net cash used in financing activities (1,559) (59,189) (97.4) %
Net decrease in cash, cash equivalents and restricted cash $ (12,512) $ (70,559)
Operating Activities
Net cash used in operating activities was $7.0 million for the year ended December 31, 2025, primarily attributable to our net loss of $11.7 million, non-cash adjustments of $6.5 million, and an increase in our net operating assets and liabilities of $1.7 million. Non-cash adjustments consisted primarily of a $4.3 million stock-based compensation expense, $1.7 million in depreciation and amortization, $0.9 million in asset impairment and $0.3 million in non-cash interest expense, partially offset by $0.4 million in changes in fair value of derivative liabilities and $0.3 million in changes to our inventory write-downs. The change in operating assets and liabilities primarily resulted from a $2.5 million net decrease in accounts payable and accrued expenses due to overall decreases in our expenses and timing of payments, a decrease of $1.3 million in deferred revenue, a $1.2 million increase in prepaid expenses and other assets and $0.4 million decrease in other liabilities, partially offset by a $3.3 million decrease in our inventory and a $0.5 million increase in net operating lease right-of-use assets and liabilities.
Net cash used in operating activities was $9.7 million for the year ended December 31, 2024, primarily attributable to our net loss of $27.4 million, non-cash adjustments of $15.2 million, and an increase in our net operating assets and liabilities of $2.4 million. Non-cash adjustments consisted primarily of a $12.0 million stock-based compensation expense, $9.8 million in depreciation and amortization, $5.0 million in loss on extinguishment of debt, $3.4 million in non-cash interest expense and $1.3 million in asset impairment, partially offset by $9.9 million in changes in fair value of derivative liabilities, $3.1 million gain on lease modification and $3.1 million in changes to our inventory write-down. The change in operating assets and liabilities primarily resulted from a $4.3 million decrease in net operating lease right-of-use assets and liabilities primarily driven by payments related to the modification of our lease at our San Francisco offices and a $5.9 million net decrease in accounts payable and accrued expenses, partially offset by a $12.5 million decrease in our inventory.
Investing Activities
Net cash used in investing activities of $4.0 million for the year ended December 31, 2025 was primarily due to $2.8 million of cash paid for strategic acquisitions and $1.2 million for the purchases of property and equipment.
Net cash used in investing activities of $1.6 million for the year ended December 31, 2024 was primarily due to purchases of property and equipment, including capitalized software development.
Financing Activities
Net cash used in financing activities of $1.6 million for the year ended December 31, 2025 primarily consisted of payments related to stock-based award activities of $1.3 million and repayment of $0.3 million on financed insurance premiums.
Net cash used by financing activities was $59.2 million for the year ended December 31, 2024 and primarily consisted of the repayment of debt, including the settlement of the Structural Derivative Liability of $72.3 million, net payments related to stock-based awards of $1.4 million, payment of Series A' Preferred Stock issuance costs of $0.5 million and payment of debt issuance costs of $0.3 million. These outflows were partially offset by $15.0 million in proceeds from the issuance of the Series A' Preferred Stock.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet financing arrangements, as defined in Item 303 of Regulation S-K, as of the year ended December 31, 2025.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that can have a significant impact on the amounts reported in those consolidated financial statements and accompanying notes. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our consolidated financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. Our significant accounting policies are described in Note 2 to our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024 included in this Annual Report on Form 10-K.
Public Warrants and Private Placement Warrants
Historically, we have relied on the public trading price of the Public Warrants to value the related Public Warrant and Private Placement Warrant Liabilities. On June 12, 2023, the Public Warrants were delisted by the New York Stock Exchange due to the low trading price. The Public Warrants that were previously traded on the NYSE under the symbol GROV WS may be quoted and traded in the over-the-counter market. As there is no longer a publicly available trading price for the Public Warrants, we estimate the value of the Public Warrant and Private Placement Warrants using a Black-Scholes pricing model. The Black-Scholes option-pricing model utilizes inputs and assumptions which involve inherent uncertainties and generally require significant judgment. As a result, if factors or expected outcomes change and significantly different assumptions or estimates are used, our Public Warrant and Private Placement Warrant liabilities could be materially different. Significant inputs and assumptions include:
Fair Value of Common Stock - The fair value of the shares of common stock underlying the warrants has been determined based on market prices
Expected Term - The Company's expected term represents the period that the Company's Public Warrant and Private Placement Warrant are expected to be outstanding and is determined to be the contractual term of such warrants
Expected Volatility - Because we were privately held prior to the Business Combination and there was no active trading market for our common stock, the expected volatility is estimated based on a weighted-average volatility of our publicly traded common stock and publicly traded companies that we consider to be comparable, over a period equal to the expected term of the warrants.
Risk-Free Interest Rate - The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the Public Warrant and Private Placement Warrants.
Expected Dividend - We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.
Earn-Out Share Liability
At the closing of the Business Combination, certain Legacy Grove shareholders were issued an aggregate of 2,799,696 shares of Grove Class B Common Stock ("Earn-Out Shares"). Certain shareholders have surrendered an aggregate 197,292 Earn-Out Shares which, per terms of the Merger Agreement (as defined below), were cancelled by the Company and not reallocated among the remaining holders. The remaining 2,602,404 shares are subject to vesting and forfeitures based upon certain triggering events that can occur during a period of ten years following the closing of the Business Combination (the "Earn-Out Period"). The triggering events that will result in the vesting of the Grove Earn-Out Shares during the Earn-Out Period are the following:
• 1,301,202 shares will vest if the share price of our Class A Common Stock is greater than or equal to $62.50 over any 20 trading days within any consecutive 30 trading day period during the Earn-Out Period;
• 1,301,202 shares will vest, including the shares subject to the $62.50 threshold if not previously vested, if the share price of our Class A Common Stock is greater than or equal to $75.00 over any 20 trading days within any 30 consecutive trading day period during the Earn-Out Period; and
• If, during the Earn-Out Period, there is a Change of Control Transaction (as defined in the Merger Agreement), then all remaining triggering events that have not previously occurred and the related vesting conditions shall be deemed to have occurred.
If, at any time prior to the expiration of the Earn-Out Period, any holder of Grove Earn-Out Shares forfeits all or any portion of such holder's Grove options and restricted stock units, all unvested Grove Earn-Out Shares issued to such holder with respect to any such awards shall be automatically forfeited to the Company and distributed to the other holders of Legacy Grove securities as of immediately prior to the closing of the Business Combination on a pro rata basis. Earn-Out shares which are subject to a service condition are accounted for under Accounting Standards Codification ("ASC") 718. See Note 4-Fair Value Measurements and Fair Value of Financial Instruments and Note 10-Common Stock and Warrants.
Earn-Out Shares which are not subject to service conditions were accounted for as liability classified instruments in accordance with ASC Topic 815-40, as such shares were not solely indexed to the common stock of the Company and the events that determine the number of Earn-Out Shares required to vest include events that are not solely indexed to the fair value of common stock of the Company. Such Earn-Out Shares will be measured at fair value at each reporting date until they are settled or meet the criteria for equity classification, and changes in the fair value will be recorded in the consolidated statements of operations. The fair value of the Earn-Out Shares liability is estimated using a Monte Carlo options pricing model utilizing assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The expected volatility assumption is estimated using an average of the implied volatility of our publicly traded common stock and an implied volatility based on our peer companies estimated using the Monte Carlo simulation of the stock prices based on the implied market volatility.
We have historically been a private company with limited company-specific historical and implied volatility information. Accordingly, the volatility assumption used in the model is subjective and requires significant management judgment. Management estimated the expected volatility assumption based on the implied market volatility. Changes in this assumption, including the selection of or quantities of companies with the peer company set, could materially affect the estimate of the fair value of these instruments and the related change in fair value of these instruments that will be recorded in the Company's consolidated statements of operations.
Inventories
Inventory is recorded at the lower of weighted average cost and net realizable value. The cost of inventory consists of merchandise costs and inbound freight, net of any vendor allowances. Inventory valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers or liquidations, and expected recoverable values of each disposition category. We record inventory write-downs based on the excess of the carrying value or average cost over the amount we expect to realize from the ultimate sale of the inventory.
Stock-Based Compensation
We recognize the cost of share-based awards granted to employees and non-employees based on the estimated grant-date fair value of the awards.
For stock option awards with service only vesting conditions, we recognize expenses on a straight-line basis over the requisite service period, which is generally the vesting period of the award. We estimate the grant-date fair value of the stock option awards with service only vesting conditions using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model utilizes inputs and assumptions which involve inherent uncertainties and generally require significant judgment. As a result, if factors or expected outcomes change and significantly different assumptions or estimates are used, our stock-based compensation could be materially different. Significant inputs and assumptions include:
Fair value of Common Stock - The fair value of the shares of common stock underlying our stock options has been determined based on market prices.
Expected Term - The expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).
Expected Volatility - Because we were privately held prior to the Business Combination and there was no active trading market for our common stock, the expected volatility is estimated based on the average volatility for publicly traded companies that we consider to be comparable, over a period equal to the expected term of the stock option grants.
Risk-Free Interest Rate - The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.
Expected Dividend - We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.
The fair value of RSU awards is determined using the price of our common stock on the grant date. For restricted stock unit ("RSU") awards with performance vesting conditions, we evaluate the probability of achieving the performance vesting condition at each reporting date.
For awards with both market and service vesting conditions, we recognize expenses over the derived service period using an accelerated attribution method. The fair value of stock option awards with both market and performance conditions is estimated using multifactor Monte Carlo simulations. The Monte Carlo simulation model incorporates the probability of satisfying a market condition and utilizes inputs and assumptions which involve inherent uncertainties and generally require significant judgment, including our stock price, contractual terms, maturity and risk-free interest rates, as well as volatility.
Emerging Growth Company Status
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The JOBS Act permits companies with emerging growth company status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates. We will continue to be an emerging growth company through December 31, 2026 unless any of the following events occur earlier: (i) we have more than $1.235 billion in annual revenue, (ii) we have more than $700.0 million in market value of our Class A Common Stock held by non-affiliates or (iii) we issue more than $1.0 billion of non-convertible debt securities over a three-year period.
Smaller Reporting Company Status
We are a "smaller reporting company" meaning that the market value of our stock held by non-affiliates is less than $250 million. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements in our Annual Report on Form 10-K, and, similar to
emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the end of that year's second fiscal quarter and our annual revenue exceeds $100 million during such completed fiscal year, or (ii) the market value of our common stock held by non-affiliates exceeds $700 million.
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