Bedding and comfort retailer Purple (NASDAQ: PRPL) fell short of the market’s revenue expectations in Q2 CY2026, with sales falling 6.5% year on year to $98.27 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $430 million at the midpoint, or 250% above analysts’ estimates. Its non-GAAP loss of $1.52 per share was 31.8% above analysts’ consensus estimates.
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Purple (PRPL) Q2 CY2026 Highlights:
- Revenue: $98.27 million vs analyst estimates of $102.4 million (6.5% year-on-year decline, 4.1% miss)
- Adjusted EPS: -$1.52 vs analyst estimates of -$2.23 (31.8% beat)
- Adjusted EBITDA: $2.07 million vs analyst estimates of $1.33 million (2.1% margin, relatively in line)
- Revenue Guidance for Q3 CY2026 is $430 million at the midpoint, above analyst estimates of $123 million
- EBITDA guidance for the full year is $22.5 million at the midpoint, above analyst estimates of $19.55 million
- Operating Margin: -4.3%, up from -13.5% in the same quarter last year
- Free Cash Flow was -$1.30 million compared to -$6.97 million in the same quarter last year
- Market Capitalization: $41.7 million
"The second quarter demonstrated continued progress in the areas we can control, even as industry conditions remained challenging and we fell short of our top-line expectations," said Rob DeMartini, CEO of Purple Innovation.
Company Overview
Founded by two brothers, Purple (NASDAQ: PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Purple’s demand was weak and its revenue declined by 9.1% per year. This was below our standards and suggests it’s a low quality business.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Purple’s annualized revenue declines of 7.2% over the last two years suggest its demand continued shrinking. 
This quarter, Purple missed Wall Street’s estimates and reported a rather uninspiring 6.5% year-on-year revenue decline, generating $98.27 million of revenue. Company management is currently guiding for a 262% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.6% over the next 12 months. Although this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Purple’s operating margin has been trending up over the last 12 months, but it still averaged negative 13% over the last two years. This is due to its large expense base and inefficient cost structure.
In Q2, Purple generated a negative 4.3% operating margin. The company’s consistent lack of profits raises a flag.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Purple, its EPS declined by 20.2% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
In Q2, Purple reported adjusted EPS of negative $1.52, up from negative $2.75 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Purple to improve its earnings losses. Analysts forecast its full-year EPS will improve from negative $7.27 to negative $6.25.
Key Takeaways from Purple’s Q2 Results
It was good to see Purple beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue missed. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $9.17 immediately following the results.
Purple put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
