In a recent shift of its financial oversight, Grove Collaborative Holdings, Inc. has announced a change in its independent accounting firm. The retail company, specializing in catalog and mail-order houses, disclosed in a filing with the Securities and Exchange Commission on Thursday that it has appointed Moss Adams LLP to oversee its audits for the fiscal year ending December 31, 2024.
The decision, made by the Audit Committee of the Board of Directors on Wednesday, marks the end of Grove Collaborative's professional relationship with Ernst & Young LLP (EY), which had served as the company's auditor for the past two years. According to the filing, the dismissal of EY was effective immediately on October 9, 2024, and there were no reported disagreements or issues with EY's audits for the fiscal years of 2022 and 2023.
The company, which is listed on the New York Stock Exchange under the ticker NYSE:GROV, confirmed that the audit reports by EY for the mentioned periods did not contain any adverse opinions or disclaimers and were not qualified or modified in terms of audit scope or accounting principles. Additionally, Grove Collaborative stated that there were no disagreements or reportable events that would have influenced EY's reports.
In compliance with regulatory requirements, Grove Collaborative provided EY with a copy of the disclosure regarding the change prior to the SEC filing. EY has responded with a letter, dated today, agreeing with the statements made by the company, which is included as an exhibit to the SEC filing.
The newly appointed firm, Moss Adams, will commence its services starting with the company's quarter ending September 30, 2024. Prior to their engagement, Moss Adams had not been consulted on any accounting principles or auditing matters by Grove Collaborative.
In other recent news, Grove Collaborative Holdings, Inc., a sustainable consumer products company, has announced a series of significant developments. The company recently secured a $15 million investment from Volition Capital, bringing the total investment from Volition to $25 million. This funding is part of Grove's strategy to eliminate its remaining term debt, with a commitment to apply at least $10 million of the investment proceeds by November 30, 2024.
In addition to the financial news, Grove Collaborative has integrated Shopify (NYSE:SHOP), Ordergroove, and Tapcart into its infrastructure in a strategic technological shift to enhance its e-commerce capabilities. This move is expected to improve both customer experience and operational efficiency, with the transition projected to be completed by Q1 2025.
Turning to earnings and revenue, 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 updated its full-year guidance, 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.
InvestingPro Insights
Grove Collaborative's recent change in auditors comes amid challenging financial circumstances for the company. According to InvestingPro data, Grove's revenue for the last twelve months as of Q2 2024 stood at $227.25 million, with a concerning revenue decline of 21.49% over the same period. This decline aligns with an InvestingPro Tip indicating that analysts anticipate a sales decline in the current year.
The company's financial health appears precarious, with an adjusted operating income of -$19.52 million for the last twelve months as of Q2 2024. This is reflected in another InvestingPro Tip, which notes that Grove is quickly burning through cash. The market seems to have taken notice of these challenges, as the stock price has fallen significantly over the last three months, with a total return of -23.35% during this period.
Despite these headwinds, Grove Collaborative maintains a market capitalization of $51.55 million. Investors considering this stock should be aware that InvestingPro offers 12 additional tips for Grove Collaborative, providing a more comprehensive analysis of the company's financial situation and market position.
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