Company: GROVW
Filing Date: 2025-03-19
Form Type: 10-K
Source: 0001628280-25-013839
Chunk: 106

Company: Grove Collaborative Holdings, Inc.
Filing Date: 2025-03-19
Form: 10-K
Item: Item 7
Chunk 106
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ization of capitalized, internally developed software, and related to the product and packaging innovation in our Grove Brands products. Product development expenses consist primarily of personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation expense. Product development costs also include allocated facilities, equipment, depreciation and overhead costs. As a result of our restructuring efforts and decision to transition to the Shopify platform, we expect product development costs as a percentage of revenue to decrease throughout 2025.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of compensation and benefit costs for personnel involved in general corporate functions, including stock-based compensation expense, and certain fulfillment costs, as further outlined below. Selling, general and administrative expenses also include the allocated facilities, equipment, depreciation and overhead costs, marketing costs including qualified cost of credits issued through our referral program, costs associated with our customer service operation, and costs of environmental offsets. Selling, general and administrative expenses have declined in 2024 as a result of decreases in fulfillment costs largely driven by lower sales and our cost management initiatives. We expect to continue to drive efficiencies in selling, general & administrative expenses throughout 2025.

Fulfillment costs represent those costs incurred in operating and staffing our fulfillment centers, including costs attributable to receiving, inspecting and warehousing inventories, picking, packing and preparing customer orders for shipment, outbound shipping and handling expenses, packing materials costs and payment processing and related transaction costs. These costs are included within selling, general and administrative expenses in the consolidated statements of operations. We expect fulfillment costs to remain relatively stable over 2025 on a per order basis due to increased outbound shipping costs.

Non-operating expenses, net

Interest expense consists primarily of interest expense associated with our debt financing arrangements. In fiscal years 2024 and 2023, we have recorded higher interest expense due to higher interest rates on our Structural Debt Facility (as defined below) and increases in the prime rate. We expect interest expense to decline following our full repayment of our term debt under the Structural Debt Facility (as defined below) in 2024. To the extent there are changes in prevailing 

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interest rates in future periods we anticipate cash payments for interest and interest expense to fluctuate as interest rates change.

Loss on extinguishment of debt relates to the full payoff of the Structural Debt Facility (as defined below) in 2024 that was accounted for as an extinguishment.

Change in fair values of derivative liabilities consists primarily of changes in fair values of HGI Additional Shares, Earn-Out Shares (