Grove Collaborative (GROV) Q3 2025: SG&A Cut Delivers $5M Savings as Platform Fix Remains Priority
Grove Collaborative’s third quarter revealed a disciplined shift toward cost containment and core experience repair, as management pulled back on advertising and enacted a $5 million SG&A reduction to weather persistent friction from its e-commerce platform migration. While revenue declines moderated, the company signaled that topline stabilization will remain elusive until technology and customer pain points are resolved, with leadership prioritizing liquidity and profitability over near-term growth. Investors should watch for signs of customer cohort recovery and successful platform fixes as the main levers for a return to scalable, profitable growth in 2026.
Summary
- Cost Structure Reset: SG&A headcount reduction targets $5 million in annualized savings, aligning expenses with current scale.
- Platform Migration Disruption: Ongoing e-commerce and mobile app issues weigh on customer retention and revenue trajectory.
- Growth on Hold Until Experience Fixes: Leadership will only resume growth investments once customer experience and paybacks meet hurdle rates.
Performance Analysis
Grove’s Q3 performance underscored a business in strategic triage mode, with revenue of $43.7 million down 9.4% year over year and nearly flat sequentially. The company’s active customer base shrank 7% to 660,000, and total orders fell 12.5% year over year, reflecting both reduced advertising investment and persistent friction from its migration to Shopify, a third-party e-commerce platform designed to enable faster iteration and deeper personalization. While net revenue per order was stable, up 2.4% sequentially, customer experience issues—particularly in the mobile app, subscriptions, and payments—continued to dampen engagement and repeat activity.
Gross margin improved modestly to 53.3%, aided by more targeted promotions and a favorable product mix. Advertising spend increased 11.8% year over year early in the quarter, but was pulled back in September to preserve liquidity and protect profitability. Product development costs dropped sharply as technology investments wound down post-migration. Most notably, SG&A expenses decreased 14% year over year, reflecting cost containment and a November reduction in force that aims to deliver $5 million in annualized savings. Despite these efforts, adjusted EBITDA was negative $1.2 million, and net loss widened to $3 million, with cash balances declining to $12.3 million.
- Customer Attrition Continues: Lower advertising and platform friction drove a 7% active customer decline, directly impacting order volumes.
- Margin Management Offsets Volume Pressure: Improved promotional discipline and product mix supported gross margin stability despite revenue headwinds.
- Liquidity Preservation Drives Strategy: Pullback in advertising and SG&A reset prioritized cash flow over short-term growth, with positive adjusted EBITDA targeted for Q4.
The quarter’s results reflect a business pausing growth ambitions to address foundational issues, with future performance hinging on successful technology fixes and a return to customer acquisition once payback thresholds are met.
Executive Commentary
"Our near-term focus is improving the mobile app and subscription experience, two components of the user experience that directly drive engagement, retention, and lifetime value. At the same time, our transformation continues to be guided by four key pillars, balance sheet strength, sustainable profitability, revenue growth, and environmental and human health."
Jeff Yerkeson, CEO
"We executed a headcount reduction earlier this month that aligns our cost base with current scale while preserving the talent and capabilities needed to complete the transformation. These actions are difficult but necessary, and they reinforce our commitment to operating with financial discipline."
Tom Siragusa, CFO
Strategic Positioning
1. Platform Migration and Customer Experience Repair
Grove’s migration to Shopify, a leading e-commerce platform, was intended to unlock faster iteration and deeper personalization. However, the transition has been rocky, with customer friction in mobile, subscription, and payment flows directly impacting retention and engagement. Leadership is laser-focused on resolving these issues over the next one to two quarters, viewing successful remediation as the gating factor for future growth investments.
2. Cost Discipline and Operating Leverage
The company’s SG&A reset and headcount reduction aim to deliver $5 million in annualized savings, aligning expenses with the current revenue base and preserving liquidity. Advertising spend remains tightly controlled, with incremental investments deferred until customer experience metrics and paybacks improve. This discipline is designed to protect cash flow during the transition and enable operating leverage as growth resumes.
3. Curated Marketplace and Category Expansion
Grove is positioning itself as a curated marketplace for clean, sustainable, and non-toxic products, expanding its third-party assortment by 50% in brands and 61% in SKUs year over year. Category focus is shifting toward high-potential verticals like clean beauty, wellness, and baby, with baby showing early positive traction. However, leadership is now prioritizing discovery and shopping experience upgrades over further SKU expansion in the near term, recognizing that selection growth has outpaced the platform’s ability to convert and retain customers.
4. Strategic Optionality and M&A Discipline
While the stated priority remains building a durable standalone company, Grove is evaluating acquisitions, partnerships, and potential divestitures that could accelerate scale or unlock value. Leadership emphasized that any capital deployment—whether for M&A or advertising—will be subject to strict payback criteria and capital efficiency principles.
Key Considerations
This quarter’s results highlight Grove’s pivot from growth-at-all-costs to a focus on operational discipline and foundational repair. Investors should weigh the following:
- Technology Execution Is the Critical Bottleneck: Platform migration issues are the primary cause of customer attrition and revenue drag; resolution is essential for a return to growth.
- SG&A Reset Buys Time but Not Growth: Cost reductions provide runway, but topline will not recover until customer experience stabilizes and acquisition resumes.
- Advertising Remains on Hold: Management will only increase spend when paybacks and cohort performance meet internal thresholds, signaling a measured approach to scaling.
- Marketplace Positioning Faces Competitive Headwinds: Grove’s differentiated curation and sustainability focus must overcome Amazon and broader D2C competition to capture share.
- Strategic Alternatives Under Consideration: M&A and partnerships are being evaluated, but will be pursued only if accretive and aligned with long-term shareholder value.
Risks
Execution risk remains elevated, with the success of technology fixes and customer experience improvements uncertain and subject to further delays. Liquidity risk is contained for now, but prolonged revenue stagnation could pressure cash reserves. Competitive threats from larger, better-resourced e-commerce players persist, and any misstep in platform or marketing execution could erode Grove’s niche positioning.
Forward Outlook
For Q4 2025, Grove guided to:
- Revenue roughly flat sequentially
- Positive adjusted EBITDA, benefiting from cost actions and reduced advertising
For full-year 2025, management maintained guidance:
- Revenue of $172.5 million to $175 million, tracking to the low end of the range
- Adjusted EBITDA in the negative low single-digit millions to breakeven
Management highlighted that no macro weakness is impacting results; all pressure is from internal execution and advertising pullback.
- Customer experience fixes are expected to take one to two more quarters
- Growth investments will resume only after paybacks and retention metrics recover
Takeaways
Grove is in a self-imposed holding pattern, prioritizing technology and cost repair over growth until foundational issues are resolved.
- Technology and Experience Are the Gating Factors: Customer friction from the platform migration must be fixed before revenue and customer growth can resume.
- Cost Cuts Stabilize Liquidity, Not Growth: SG&A reductions and advertising discipline buy time, but do not address the core growth challenge.
- 2026 Will Be the Proving Ground: Investors should monitor progress on customer retention, payback acceleration, and the timing of renewed marketing investments as signals for a potential inflection.
Conclusion
Grove Collaborative’s quarter was defined by operational discipline and a pause on growth investments, as leadership works urgently to fix the customer experience and align costs with scale. The path to renewed growth is clear but contingent on successful execution, with investors advised to watch for signs of customer cohort stabilization and platform reliability as leading indicators for a 2026 turnaround.
Industry Read-Through
Grove’s experience offers a cautionary tale for D2C and e-commerce operators: Platform migrations and digital friction can derail customer retention and growth, even with a differentiated product strategy. Cost discipline and liquidity management are essential during periods of operational disruption, but do not substitute for a compelling, frictionless customer experience. Broader industry players should note the importance of aligning technology investments with customer expectations, as well as the risks of delaying growth investments without a clear path to experience repair. Marketplace curation and sustainability differentiation remain strategic, but require flawless execution to compete against scaled incumbents.