Grove Collaborative secures $15 million from Volition Capital By Investing.com

SAN FRANCISCO – Grove Collaborative Holdings, Inc. (NYSE: GROV), a sustainable consumer products company and certified B Corporation, announced today a $15 million investment from growth equity firm Volition Capital. This investment follows a prior $10 million investment from Volition in August 2023, totaling $25 million to date.

The latest funding is part of Grove’s strategy to pay off its remaining $30 million term debt facility, with a commitment to apply at least $10 million of the investment proceeds by November 30, 2024. The company has already repaid $42 million of its term debt in July. Post-repayment, Grove will have $7.5 million in debt under an asset-based loan facility, with cash and cash equivalents standing at approximately $40.6 million, pro forma for the July repayment.

In conjunction with the investment, Grove issued Volition 15,000 shares of its Series A’ Convertible Preferred Stock, which are initially convertible into 7,760,761 shares of Grove’s Class A common stock at a conversion price of $1.9328 per share. This price reflects a 45% premium over the 30-day trailing volume-weighted average price (VWAP) prior to the financing agreement.

Jeff Yurcisin, CEO of Grove Collaborative, stated that the investment supports the company’s goal to eliminate term debt and continues its positive-adjusted EBITDA trend over the last four quarters. Larry Cheng, managing partner and co-founder of Volition, expressed confidence in Grove’s fundamentals and the management team’s ability to strengthen the balance sheet and drive revenue growth in the future.

Grove Collaborative is an online retailer offering a range of sustainable products for household cleaning, personal care, and other categories. The company is focused on reducing plastic usage and providing environmentally friendly options for consumers.

The investment and related financial maneuvers are detailed in the Current Report on Form 8-K to be filed by the company with the Securities and Exchange Commission today.

This announcement is based on a press release statement and contains forward-looking statements regarding the company’s debt repayment plans and future revenue growth. These statements involve risks and uncertainties, and actual results may differ materially from those projected.

In other recent news, Grove Collaborative has announced a strategic technological shift to enhance its e-commerce capabilities. The sustainable consumer products company is integrating Shopify (NYSE:), Ordergroove, and Tapcart into its infrastructure, aiming to improve customer experience and operational efficiency. This move is part of a broader strategy to offer sustainable products and meet evolving market trends. The transition, which began in July 2024, is expected to be completed by Q1 2025.

In its Q2 2024 financial results, Grove Collaborative reported a decline in revenue and orders, but an increase in net revenue per order and a positive adjusted EBITDA. The company also repaid $42 million in term debt, aiming to reduce interest expenses. Full-year guidance was updated, projecting net revenue in the range of $205 million – $215 million, with an adjusted EBITDA margin of 0.5% – 1.5%.

These recent developments underscore Grove Collaborative’s commitment to a transformation aiming at sequential revenue growth by Q4 2024 and improving customer experience. The company’s ongoing strategic adjustments are aimed at boosting profitability and driving future revenue growth.

InvestingPro Insights

Grove Collaborative’s recent financial moves to repay term debt and attract growth equity investment from Volition Capital suggest a strategic pivot towards strengthening its balance sheet. The company’s market capitalization stands at a modest $51.43 million, reflecting a cautious market stance towards its valuation. This perspective is echoed by InvestingPro Tips that highlight concerns over Grove’s cash burn rate and anticipation of a sales decline in the current year. Additionally, analysts are not expecting the company to turn a profit this year, which underscores the importance of the equity investment and debt repayment strategy for Grove’s financial health.

The company trades at a low revenue valuation multiple, with a Price/Book ratio of 74.4, which may raise eyebrows considering its negative revenue growth of -21.49% over the last twelve months as of Q2 2024. However, Grove’s liquid assets do exceed its short-term obligations, which may provide some financial flexibility in the near term. It’s also worth noting that while the company operates with a moderate level of debt, the equity investment and debt repayment efforts are aimed at further reducing this burden.

For investors looking for deeper insights into Grove Collaborative’s financials and future prospects, there are additional InvestingPro Tips available that could provide more nuanced analysis, including valuation implications and price performance metrics. In total, there are 12 InvestingPro Tips available for Grove Collaborative at https://www.investing.com/pro/GROV, offering comprehensive guidance for those considering an investment in the company.

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