The Lovesac Company (NASDAQ: LOVE) shares surged more than 5% today after the company reported better-than-expected Q4 revenues and strong guidance.

Revenue was $238.8 million, compared to the Street estimate of $217.6 million. EPS came in at $1.74, compared to the Street estimate of $1.96.

For 2023, the company expects adjusted EBITDA to track in the range of $55–$66 million, upon sales of $700–$740 million, representing growth of 11% at the midpoint (vs. Street estimate of 6% growth).

For Q1, the company expects an adjusted EBITDA loss of $4–$5 million (vs. Street expectations for positive $3 million), upon total net revenue of $133–$136 million (vs. Street estimate of $134 million).

Senior leadership was clear to indicate that gross margin trends should improve throughout the year, beginning in Q2 as the company laps meaningfully higher freight expenses in 2022.