Grove Collaborative (NYSE:GROV) reported its first quarter as a public company with both positive net income and positive adjusted EBITDA, although a tariff refund contributed to the results and revenue continued to decline from a year earlier.
The company also narrowed its full-year 2026 outlook and said fourth-quarter revenue is now expected to fall modestly from the third quarter, reversing its prior expectation for sequential growth in each remaining quarter of the year.
Third-quarter net revenue was $36.8 million, down 15.8% year over year but up 0.7% from the second quarter. It was Grove’s second consecutive quarter of sequential revenue growth.
Refund Boosts Profitability
Grove recorded net income of $0.1 million, compared with a $3 million loss a year earlier. Adjusted EBITDA was $1.4 million, versus a loss of $1.2 million, marking the company’s fourth consecutive quarter of positive adjusted EBITDA.
Both figures included a $1.2 million refund of previously paid tariffs, which Grove recorded as a reduction in cost of goods sold. CEO Jeff Yurcisin said adjusted EBITDA would have remained positive without the refund. During the question-and-answer session, he said the company does not expect additional tariff refunds.
Gross margin rose to 55.8% from 53.3% a year earlier. Principal Financial Officer Flip van den Bosch attributed the increase to the refund and more targeted promotional spending, partially offset by a higher share of lower-margin QVC revenue.
Operating expenses fell 22% year over year to $20.3 million. Yurcisin cited lower personnel costs and reduced fulfillment and shipping costs following changes to the company’s carrier strategy. Grove plans to reinvest some savings in acquiring and reactivating customers where returns support the spending, he said.
Customer Base Shrinks as Revenue per Order Rises
Grove had 458,000 active customers as of Sept. 30, down 30.6% from a year earlier. Van den Bosch said the decline reflected the lingering effects of reduced advertising spending and customer attrition tied to disruptions during the company’s 2025 e-commerce platform migration.
Direct-to-consumer orders fell 23.6% to 473,000, although an increase in order frequency per active customer partially offset the smaller customer base. Direct-to-consumer net revenue per order rose 6.1% to $70.85, helped by more efficient promotional spending, a larger mix of higher-priced items and increased shipping revenue per order.
The sequential revenue increase was driven by QVC, including $1.2 million from a Today’s Special Value program, and was partially offset by a slight decline in direct-to-consumer revenue, van den Bosch said.
Grove spent $1.8 million on advertising during the quarter, down 43.3% year over year but up from the second quarter. Yurcisin said the company hopes marketing spending will increase as a percentage of revenue in 2027, with investment potentially directed toward reactivating former customers and supporting sales on Amazon as well as acquiring new shoppers.
Outlook and Growth Plans
Grove narrowed its full-year revenue forecast to approximately $144 million to $146 million, from $142.5 million to $152.5 million. It now expects adjusted EBITDA of approximately $1 million to $2 million, compared with its previous outlook of break-even to positive low single-digit millions.
Van den Bosch said Grove does not expect a QVC program comparable to the third-quarter Today’s Special Value event in the fourth quarter. The company expects direct-to-consumer revenue to be approximately flat sequentially.
Yurcisin said Grove is planning to return to year-over-year revenue growth in 2027 but did not provide a quarterly timetable. He outlined a strategy centered on human health, including a broader assortment, improved shopping experience and efforts to bring former customers back.
Grove’s dropship assortment recorded its first sales in the third quarter, giving the company a way to offer products such as air and water filtration without holding inventory. The company also plans to launch an AI shopping assistant and simplify its Autoship service in the fourth quarter, Yurcisin said. He added that Grove expects Amazon sales to grow in the fourth quarter.
Grove ended the quarter with $11.1 million in cash equivalents and restricted cash, compared with $11.4 million at the end of the second quarter. Operating cash flow was positive $0.2 million, including the tariff refund, versus negative $1 million a year earlier.
About Grove Collaborative (NYSE:GROV)
Grove Collaborative Holdings, Inc. operates an online marketplace focused on natural and environmentally conscious household, personal care and beauty products. The company offers cleaning supplies, laundry products, paper goods, personal care items, cosmetics, wellness products and pet-care essentials through its digital platform. Grove sells products under its own brands, including Grove Co., as well as products from selected third-party brands. Its platform is designed to support recurring purchases and convenient home delivery, while emphasizing ingredient transparency, sustainability and reduced packaging impact.
