Purple Innovation heads into its third-quarter report with a company that looks healthier on the inside and smaller on the outside. Showrooms are growing, e-commerce has nearly stopped shrinking and cash flow has turned positive, yet management has cut its full-year revenue outlook three times and the stock has been cut by more than half since the last report. The November 4 release, due after the close, is the first real look at whether the June price increase is lifting profits or quietly chasing customers away.

Wall Street expects revenue of about $108.1 million, a 9% decline from $118.8 million a year ago, and a loss of $0.72 per share against a $0.08 loss in the prior-year quarter. Per-share comparisons carry less weight than usual after the reverse split, so adjusted EBITDA and cash flow are better gauges of progress. The revenue figure would be a sequential step up from the $98.3 million posted last quarter, which fits normal seasonality but still describes a business in contraction. Management's latest guidance calls for 2026 revenue of $420 million to $440 million, down from $465 million to $485 million and an original $500 million to $520 million. The full-year consensus of roughly $466.9 million sits well above even the top of the new range, which suggests some estimates have not caught up. Expect that number to fall regardless of how the quarter lands.

The central question from the last call is price elasticity. Management raised prices 8% to 10% in June, counting on a larger margin benefit in the second half, then admitted consumer resistance was worse than modeled and said it would wait until after Labor Day to judge the response. This report should deliver that verdict. A stable or rising gross margin alongside revenue near consensus would validate the pricing strategy. A miss on the top line with only modest margin improvement would suggest the company paid for price with volume. Keep in mind that last quarter's 45.2% gross margin was flattered by roughly 505 basis points of fee reclassification and a $5.3 million tariff refund, so the true run rate is harder to read than the headline figure.

The channel mix matters just as much. Showroom comps accelerated to 18% last quarter, the fourth straight positive quarter, and e-commerce narrowed to a 1.4% decline with help from double-digit Amazon growth. Management warned, though, that the third quarter is a difficult direct-to-consumer comparison because of the timing of last year's Rejuvenate launch deliveries, so some slowdown in showroom comps would not be alarming in itself. The bigger worry is wholesale, which fell 19.1% after rising nearly 40% two quarters earlier. Contra-revenue from co-op payments and related-party manufacturing work grew to $5.3 million from $4.9 million, and further growth in that drag would signal that partners are demanding more support just to keep Purple on the floor.

Profit guidance is the other pressure point. Adjusted EBITDA of $2.1 million in the second quarter leaves a lot of ground to cover to reach the trimmed $20 million to $25 million full-year target, so the second half needs to carry most of the load. Another trim would be poorly received, especially with petroleum-linked input costs flagged as a risk.

Sentiment has moved from clearly bearish before the last report to roughly neutral, while the stock, at $3.29, sits far below its 200-day average near $10.65 and closer to the bottom of its post-earnings range of $1.83 to $7.72. The bar is low, but credibility is thin. What matters most is whether management can hold its newly lowered outlook. A fourth guidance cut would undercut the turnaround story no matter how strong the showrooms look, while a steady outlook backed by real pricing gains would let the improving direct business finally speak for itself.