Company: GROVW
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001628280-25-025541
Chunk: 217

Company: Grove Collaborative Holdings, Inc.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 8
Chunk 217
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 product and channel mix, the timing of promotions and launches, and inbound transportation rates, among other factors. Our gross profit and gross margin may not be comparable with that of other retailers because we include certain fulfillment related costs in selling, general, and administrative expenses while other retailers may include these expenses in cost of goods sold.

Operating Expenses

Our operating expenses consist of advertising, product development, and selling, general and administrative expenses.

Advertising

Advertising costs are expensed as incurred and consist primarily of our customer acquisition costs associated with online advertising, as well as advertising on television, direct mail campaigns and other media. Costs associated with the production of advertising are expensed when the first advertisement is shown.

Product Development

Product development expenses are related to the ongoing support and maintenance of our proprietary technology, including our DTC platform and 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.

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 

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administrative expenses have declined for the first quarter of 2025 compared to the first quarter of 2024 as a result of decreases in fulfillment costs largely driven by lower sales and our cost management initiatives.

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, 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 statements of operations.

Non-operating expenses, net

Interest expense consists primarily of interest expense associated with our debt financing arrangement. In previous periods, we have recorded higher interest expense due to higher outstanding debt balances and higher prime rates. To the extent there are changes in prevailing interest rates in future periods, we anticipate cash payments for interest and interest expense to fluctuate as interest rates change.

Change in fair values of derivative liabilities consists primarily of changes in fair values of Earn