Purple Revenue Growth Strategy

39 39 Non-GAAP Reconciliation purple Management believes that the use of adjusted EBITDA, which is a non-GAAP financial measure, provides investors with additional useful information with respect to the impact of various adjustments, which we view as a better measure of our operating performance. Other companies may calculate this non-GAAP measure differently than we do. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this information in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of GAAP net income (loss) to the non-GAAP measure of adjusted EBITDA is provided below. Adjusted EBITDA represents net income (loss) before interest expense, net other income and depreciation and amortization, excluding certain non-cash and non-recurring costs incurred. Fiscal year end December 31 ($ in 000's) 2019 2020 Restated Restated GAAP Net Income (Loss) Depreciation & amortization $(30,925) 1Q '20 Restated $(229,780) $ 28,001 4,308 7,899 Other income, net (545) 91 1Q '21 $ 20,939 1,778 1,549 68 Interest expense 5,180 4,654 1,389 Income tax expense (benefit) 400 (43,749) (284) (90) 570 4,651 EBITDA $ (21,582) $ (260,885) $ 30,794 $ 27,777 Debt extinguishment and warrant liability 41,603 305,855 (21,633) (9,147) Tax receivable agreement expense (income) 501 34,155 122 (174) Stock-based compensation expense 10,063 2,185 250 479 Vendor Impairment 1,660 Legal fees 809 1,544 231 1,112 New Production Facility Start-up Costs 1,237 2,062 Previous period sales tax liability 200 1,011 Product reserve 500 808 COVID-19 related expenses 311 38 Showroom Opening costs 222 80 Executive Search Costs & Severance 730 329 43 553 Intangible asset adjustment 404 Interim CFO costs 706 Merger transaction costs Adjusted EBITDA % Net Revenue $ 33,434 7.8% $ 88,124 13.6% $ 10,615 8.7% $ 22,780 12.2% NOTE: Restatements are a result of reclassifying certain warrants as expenses instead of equity due to the SEC's recent statement regarding how warrants issued in or after a SPAC company IPOs should be viewed for purposes of classification.

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