Allbirds Inc

Previous wording

Allbirds is a global lifestyle brand that innovates with sustainable materials to make better footwear and apparel products in a better way, while treading lighter on our planet.

Current wording

Allbirds is a purpose-driven lifestyle brand that innovates with sustainable materials to make better footwear and apparel products in a better way, while treading lighter on our planet.

Previous wording

We generate our revenue via sales of footwear and apparel products, primarily through our direct business, a digitally-led vertical retail distribution strategy. We generally market directly to consumers via our localized multilingual digital platform and our physical footprint of 60 stores as of December 31, 2023. In addition to our direct business, we selectively partner with third-parties, including retailers and distributors, to sell our products through their channels, which helps us reach more consumers and increase brand awareness.

Current wording

We generate our revenue via sales of footwear and apparel products, primarily through our direct business, a digitally-led vertical retail distribution strategy. We generally market directly to consumers via our localized digital platform and our physical footprint of 33 stores as of December 31, 2024. In addition to our direct business, we selectively partner with third parties, including distributors and retailers, to sell our products through their channels, which helps us reach more consumers and increase brand awareness.

Previous wording

•We generated net revenues of $254.1 million and $297.8 million, respectively.

Current wording

•We generated net revenues of $189.8 million and $254.1 million, respectively.

Previous wording

•Our gross margin was 41.0% and 43.5%, respectively.

Current wording

•Our gross margin was 42.7% and 41.0%, respectively.

Previous wording

•We generated net losses of $152.5 million and $101.4 million, respectively.

Current wording

•We generated net losses of $93.3 million and $152.5 million, respectively.

Previous wording

•We generated adjusted EBITDA losses of $78.5 million and $60.4 million, respectively.

Current wording

•We generated adjusted EBITDA losses of $70.0 million and $78.5 million, respectively.

Previous wording

Our product and brand initiatives include increasing focus on our core franchises, through a concentration on comfort and quality and better commercialization of our innovative materials, as well as a highly focused brand strategy that reconnects with core consumers. We expect these initiatives to begin to impact the business in 2024.

Current wording

Our product and brand initiatives include increasing focus on our core franchises, through a concentration on comfort and quality and better commercialization of our innovative materials, as well as a highly focused brand strategy that reconnects with core consumers.

Previous wording

Our store-based distribution initiatives in the United States include optimizing our existing store fleet and selectively expanding our third party distribution channels. Store optimization will include slowing the pace of new store openings, closing certain stores that do not meet our profitability targets, and investing in corporate and retail store talent and store marketing. As of December 31, 2023, we had completed all planned new store openings and we continue to evaluate ways to optimize our existing store fleet, which includes the planned closure of 10-15 stores in 2024.

Current wording

Our store-based distribution initiatives in the United States include optimizing our existing store fleet and selectively expanding our third-party distribution channels. Store optimization will include slowing the pace of new store openings, closing certain stores that do not meet our profitability targets, and investing in corporate and retail store talent and store marketing. As of December 31, 2023, we had completed all planned new store openings and we continue to evaluate ways to optimize our existing store fleet. In 2024, we closed 15 stores in the United States.

Previous wording

Our international go-to-market strategy initiative encompasses evaluating ways to reduce complexity and grow internationally in a cost- and capital-efficient manner. In the third quarter of 2023, we signed distribution agreements with independent third-party distributors in South Korea and Canada, and completed the transition of these businesses. Subsequently, we signed distribution agreements with independent third-party distributors in Australasia and Japan, with transitions expected in mid-year 2024. Distributors oversee the distribution of our products, purchased from us, across eCommerce, brick and mortar, and wholesale channels in their respective territories and are required to allocate dedicated brand and marketing resources to their operations for us. We may continue to enter into similar distribution arrangements with third parties in other international markets, which we expect to impact both our short and long term results of operations. The distributor model will result in a reduction to net revenue and gross profit in the near term, because the selling price to distributors will be below the full price we have historically sold to our direct consumers. Because we expect lower operating expenses as compared to the direct model, we also expect these transitions to improve adjusted EBITDA profitability and inventory efficiency, while also helping to reduce overall complexity in our business.

Current wording

Our international go-to-market strategy initiative encompasses evaluating ways to reduce complexity and grow internationally in a cost- and capital-efficient manner. In the third quarter of 2023, we signed distribution agreements with independent third-party distributors in South Korea and Canada, and completed the transition of these businesses. In 2024, we signed distribution agreements with independent third-party distributors in Australasia, Japan, and China and completed the transition of these businesses. In addition, we signed various distribution agreements in new geographies, where no existing business was transitioned. Distributors oversee the distribution of our products, purchased from us, across eCommerce, brick and mortar, and wholesale channels in their respective territories and are required to allocate dedicated brand and marketing resources to their operations for us. We may continue to enter into similar distribution arrangements with third parties in other international markets, which we expect to impact both our short and long term results of operations. The distributor model will result in a reduction to net revenue and gross profit in the near term, because the selling price to distributors will be below the full price we have historically sold to our direct consumers. Because we expect lower operating expenses as compared to the direct model, we also expect these transitions to improve adjusted EBITDA profitability and inventory efficiency, while also helping to reduce overall complexity in our business.

Previous wording

Our cost savings and capital efficiency initiatives build upon cost and cash optimization work that we began in 2022, including a further reduction in global corporate workforce of approximately 9% in May 2023. This also included plans to fully transition to a new footwear manufacturing partner, which we completed in 2023. We anticipate that these initiatives will potentially accelerate cost of revenue, selling, general, and administrative expense, and cash optimization savings over the next three years.

Current wording

Our cost savings and capital efficiency initiatives build upon cost and cash optimization work that we began in 2022, including a further reduction in global corporate workforce of approximately 9% in May 2023. This also included plans to fully transition to a new footwear manufacturing partner, which we completed in 2023. We anticipate that these initiatives will potentially accelerate cost of revenue, selling, general, and administrative expense, savings and improve cash optimization over the next few years.

Previous wording

Related to these initiatives, we recognized restructuring expenses of $6.8 million in the year ended December 31, 2023, which is recorded within restructuring expense on the consolidated statement of operations and comprehensive loss. These expenses primarily consist of third-party professional fees and other related charges.

Current wording

Related to these initiatives, we recognized restructuring expenses of $1.8 million and $6.8 million in the years ended December 31, 2024 and 2023, which is recorded within restructuring expense in the consolidated statement of operations and comprehensive loss. These expenses primarily consist of third-party professional fees and other related charges.

Previous wording

In addition to seeking to acquire new customers, we continuously seek ways to engage with our base of existing customers. We aim to grow our closet share within our existing customer base by focusing and developing on our core franchises. We believe we must continue to both innovate with new products and focus on core products in order to drive consumer engagement and increase our closet share. While we continue to do this, we must constantly evaluate and improve our strategy to anticipate current and future consumer preferences and demands. At the same time, it is critical that we maintain our commitment to offering comfortable and sustainable products. In connection with our strategic transformation plan announced in March 2023, we are refocusing our product strategy on our core franchise products. Our growth within our existing customer base will depend in part on our success focusing our product strategy to appeal to our existing customers.

Current wording

In addition to seeking to acquire new customers, we continuously seek ways to engage with our base of existing customers. We aim to grow our closet share within our existing customer base by focusing and developing on our core franchises. We believe we must continue to both innovate with new products and focus on core products in order to drive consumer engagement and increase our closet share. While we continue to do this, we must constantly evaluate and improve our strategy to anticipate current and future consumer preferences and demands. At the same time, it is critical that we maintain our commitment to offering comfortable and sustainable products. Our product strategy is focused on our core franchise products. Our growth within our existing customer base will depend in part on our success focusing our product strategy to appeal to our existing customers.

Previous wording

Our long-term growth strategy relies on our ability to grow across our digital and retail channels, while still maintaining our goal of long-term profitability. We believe an omni-channel buying experience is important to meeting the needs of our customer base. Although we continue to view retail stores as key to reaching new customers and increasing penetration of omni-channel customers, we plan to try to optimize our store fleet and focus on ensuring that our retail stores are efficiently driving customer acquisition. These optimization efforts include a combination of efforts, including evaluating new store openings, slowing the pace of new retail store openings, closing existing stores, investing in store marketing, expanding our third-party partnerships, and exploring the use of third-party distributors in certain international markets, such as the distribution agreements entered into in September 2023 with distributors in Canada and South Korea, and the additional distribution agreements we expect to enter into in other international markets.

Current wording

Our long-term growth strategy relies on our ability to grow across our digital and retail channels, while still maintaining our goal of long-term profitability. We believe an omni-channel buying experience is important to meeting the needs of our customer base. Although we continue to view retail stores as key to reaching new customers and increasing penetration of omni-channel customers, we plan to try to optimize our store fleet and focus on ensuring that our retail stores are efficiently driving customer acquisition. In 2024, we closed 15 stores in the United States and 3 stores in Europe. In 2023 and 2024, we transitioned the operations of international stores to distributor partners in South Korea, Canada, Australasia, Japan, and China. As of December 31, 2024, we do not operate any stores in those geographies. Our remaining stores are located in the United States and the United Kingdom.

Previous wording

However, we continue to monitor and respond to evolving developments regarding recent macroeconomic events including elevated inflation, rising interest rates, liquidity concerns at, and failures of, banks and other financial institutions, supply chain disruptions, fluctuations in currency exchange rates, and geopolitical conflicts, which have led to further economic uncertainty in the global economy. These macroeconomic conditions have had and are likely to continue

Current wording

However, we continue to monitor and respond to evolving developments regarding recent macroeconomic events including elevated inflation, tariffs, rising interest rates, liquidity concerns at, and failures of, banks and other financial institutions, supply chain disruptions, fluctuations in currency exchange rates, and geopolitical conflicts, which have led to further economic uncertainty in the global economy. These macroeconomic conditions have had and are likely to continue to have adverse consequences on consumer spending, including the buying patterns of our customers and prospective customers. See the section titled “Risk Factors—Risks Related to Our Business, Brand, Products, and Industry” in Part I, Item 1A. Risk Factors, for further details.

Previous wording

We generate net revenue primarily from sales of our footwear and apparel products. We sell products directly through our own digital channels (including our websites and mobile app), our leased retail stores, and third-party retailers and distributors. As of December 31, 2023, the majority of our sales are through our digital channels and leased retail stores. Revenue is recognized when we satisfy our performance obligation by transferring control of the promised goods to the customer, net of allowances for returns, discounts, and any taxes collected from customers. This occurs either upon shipment or upon receipt, depending on the terms of sale. We expect overall sales to decline in 2024, primarily driven by the planned closure of 10-15 stores in the United States and the international transitions as described above.

Current wording

We generate net revenue primarily from sales of our footwear and apparel products. We sell products directly through our own digital channels (including our websites, our discontinued mobile app, and marketplace platforms), our leased retail stores, and third-party retailers and distributors. As of December 31, 2024, the majority of our sales are through our direct channels. Revenue is recognized when we satisfy our performance obligation by transferring control of the promised goods to the customer, net of allowances for returns, discounts, and any taxes collected from customers. This occurs either upon shipment or upon receipt, depending on the terms of sale. We expect overall sales in 2025 to be in line with 2024, primarily driven by demand for new products in the fourth quarter of the year, offset by the impacts of our international distributor transitions, retail store closures, and sales trends in our direct business in the first three quarters of the year.

Previous wording

Gross profit represents net revenue less the cost of revenue. Gross margin is gross profit expressed as a percentage of net revenue. Our gross margin may fluctuate from period to period based on a number of factors, including business outcomes, the mix of products we sell in different geographies and channels, price increases, promotional activities, the innovation initiatives we undertake in each product category, cost drivers (including commodity prices, transportation rates, manufacturing costs), and inventory write-downs or write-offs, among other factors. We expect that these factors will result in a stronger gross margin profile in 2024 and beyond.

Current wording

Gross profit represents net revenue less the cost of revenue. Gross margin is gross profit expressed as a percentage of net revenue. Our gross margin may fluctuate from period to period based on a number of factors, including business outcomes, the mix of products we sell in different geographies and channels, price increases, promotional activities, the innovation initiatives we undertake in each product category, cost drivers (including commodity prices, transportation rates, manufacturing costs), and inventory write-downs or write-offs, among other factors. We expect gross margin improvement in 2025.

Previous wording

During 2022 and 2023, we reduced our global corporate workforce by 8% and 9%, respectively, and subleased two of our corporate offices in the United States as part of an effort to streamline workflows and lower operating cost, as well as executing on certain other cost control actions, including reducing our hiring and cutting discretionary spending. We expect these actions, together with our strategic transformation plan on cost and cash optimization, as announced in March 2023, to reduce certain costs included in SG&A expense, however, the changing prices of goods and services caused by inflation and other macroeconomic factors may cause fluctuations in SG&A expense, notwithstanding our cost control actions.

Current wording

As part of the strategic transformation announced in March 2023, we have executed on cost control actions, including a reduction in workforce in May 2023, the sublease of office spaces, and certain other cost control actions, including reducing our hiring and cutting discretionary spending. We expect these actions, together with our strategic transformation plan on cost and cash optimization to reduce certain costs included in SG&A expense, however, the changing prices of goods and services caused by inflation and other macroeconomic factors may cause fluctuations in SG&A expense, notwithstanding our cost control actions.

Previous wording

Marketing expense consists of advertising costs incurred to acquire new customers, retain existing customers, and build our brand awareness. We expect marketing expense as a percentage of net revenue to continue to decrease as we manage our costs and respond to the promotional environment, and are prioritizing our marketing spend to align with our product strategy.

Current wording

Marketing expense consists of advertising costs incurred to acquire new customers, retain existing customers, and build our brand awareness. We expect marketing expense to increase in 2025 as we are prioritizing our marketing spend to align with our product strategy.

Previous wording

Impairment expense consists of non-cash impairment charges relating to long-lived assets, which include property and equipment and operating lease right-of-use assets. Impairments are determined using our judgment about our anticipated ability to continue to use long-lived assets, current market and economic conditions, and their effects based on information available as of the date of these consolidated financial statements.

Current wording

Impairment expense consists of non-cash impairment charges relating to equity investments and long-lived assets, which include property and equipment and operating lease right-of-use assets.

Previous wording

Restructuring expense consists of professional service fees, severance and other employee-related benefits, and other miscellaneous costs associated with exit and disposal activities. We expect restructuring expense to decrease in 2024 as compared to 2023, as a result of the execution of our March 2023 strategic transformation plan.

Current wording

Restructuring expense consists of professional service fees, severance and other employee-related benefits, and other miscellaneous costs associated with exit and disposal activities.

Previous wording

Loss from Sales of Businesses

Current wording

Net Loss from Sales of Businesses

Previous wording

Loss from sales of businesses consists of losses associated with the sale of certain net assets used in connection with the operations of our businesses in South Korea and Canada, in September 2023, based on the difference between the net book value of assets and liabilities sold against the consideration received.

Current wording

Net loss from sales of businesses consists of gains or losses associated with the sale of certain net assets used in connection with the operation of our businesses in certain geographical markets, based on the difference between the net book value of assets and liabilities sold against the consideration received.

Previous wording

Other (expense) income consists of gains or losses on foreign currency, gains or losses on sales of property and equipment, and changes in the fair value of our equity investments.

Current wording

Other income (expense) consists of gains or losses on lease terminations and modifications, gains or losses on foreign currency, gains or losses on sales of property and equipment, and changes in the fair value of our equity investments.

Previous wording

Our provision for income taxes consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We record deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities. The deferred tax assets and liabilities are calculated by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. Because we have a recent history of pre-tax book losses and are expected to be in a pre-tax book loss position in the near term, a valuation allowance was maintained against the deferred tax assets in the United States, Canada, Vietnam, and Hong Kong as of December 31, 2023.

Current wording

Our provision for income taxes consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We record deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities. The deferred tax assets and liabilities are calculated by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. Because we have a recent history of pre-tax book losses and are expected to be in a pre-tax book loss position in the near term, a valuation allowance was maintained against the deferred tax assets in the United States, China, Hong Kong, Canada, Germany and New Zealand as of December 31, 2024.

Previous wording

(1)Includes stock-based compensation expense of $19.3 million and $19.0 million for the years ended December 31, 2023 and 2022, respectively.

Current wording

(1)Includes stock-based compensation expense of $11.5 million and $19.3 million for the years ended December 31, 2024 and 2023, respectively.

Previous wording

(2)Includes depreciation and amortization expense of $21.1 million and $15.8 million for the years ended December 31, 2023 and 2022, respectively.

Current wording

(2)Includes depreciation and amortization expense of $12.4 million and $21.1 million for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Gross profit decreased by $25.4 million, or 19.6%, in the year ended December 31, 2023 as compared to the year ended December 31, 2022. The decrease in gross profit was primarily driven by the decrease in net revenue at a higher rate than cost of revenue, as reflected in the percent changes above and for each for the factors described above.

Current wording

Gross profit decreased by $23.2 million, or 22.2%, in the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease in gross profit was primarily driven by the decrease in net revenue and associated cost of revenue.

Previous wording

Gross margin declined from 43.5% to 41.0% for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to a lower average selling price in our direct business as a result of increased promotional activity.

Current wording

Gross margin improved to 42.7% from 41.0% for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to lower freight and duty costs, fewer inventory adjustments and a higher average selling price in our direct business.

Previous wording

Marketing expense decreased $10.1 million, or 17.0%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The decrease was primarily driven by decreased digital advertising spend for performance marketing.

Current wording

Marketing expense decreased by $7.4 million, or 15.1%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease was primarily driven by decreased digital advertising spend for performance marketing.

Previous wording

Impairment expense increased by $24.1 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, as a result of the non-cash impairment of property and equipment and operating lease right-of-use assets associated with certain of our retail stores.

Current wording

Impairment expense decreased by $25.6 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, as a result of prior year non-cash impairment of property and equipment and operating lease right-of-use assets associated with certain of our retail stores of $27.4 million, partially offset by the impairment an equity investment of $1.8 million.

Previous wording

Restructuring expense increased by $6.0 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, and consisted primarily of higher professional service fees, severance, and other employee-related benefits incurred as part of our March 2023 strategic transformation plan.

Current wording

Restructuring expense decreased by $5.0 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, and consisted primarily fewer costs incurred as part of our March 2023 strategic transformation plan.

Previous wording

Interest income increased by $4.1 million, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The increase was driven by an increase in interest income on our money market funds.

Current wording

Interest income decreased by $0.6 million, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease was driven by an decrease in interest income on our money market funds.

Previous wording

Other (expense) income decreased by $0.6 million, for the year ended December 31, 2023 resulting in expense in 2023 as compared to income in the year ended December 31, 2022. The decrease was primarily due to a fluctuations in foreign currency.

Current wording

Other (expense) income increased by $3.5 million, for the year ended December 31, 2024 resulting in income in 2024 as compared to expense in the year ended December 31, 2023. The increase was primarily due to fluctuations in foreign currency.

Previous wording

Income tax provision decreased by $0.9 million, or 72.8%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to a mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates.

Current wording

Income tax provision increased by $1.5 million, or 460.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates and a change in the valuation allowance.

Previous wording

Adjusted EBITDA is defined as net loss before stock-based compensation expense, including common stock warrant expense, depreciation and amortization expense, impairment expense, restructuring expense (consisting of professional fees, severance payments, and other related charges from our August 2022 and March 2023 initiatives), non-cash gains or losses on the sales of businesses relating to our March 2023 initiatives, other income or expense (consisting of non-cash changes in the fair value of our equity investments, non-cash gains or losses on foreign currency, and non-cash gains or losses on sales of property and equipment), interest income or expense, and income tax provision or benefit.

Current wording

Adjusted EBITDA is defined as net loss before stock-based compensation expense, depreciation and amortization expense, impairment expense, restructuring expense (consisting of professional fees, severance payments, and other related charges from our August 2022 and March 2023 initiatives), non-cash gains or losses on the sales of businesses relating to our March 2023 initiatives, other income or expense (consisting of non-cash changes in the fair value of our equity investments, non-cash gains or losses on foreign currency, non-cash gains or losses on sales of property and equipment, and non-cash gains or losses on modifications or terminations of leases), interest income or expense, and income tax provision or benefit.

Previous wording

•adjusted EBITDA and adjusted EBITDA margin do not reflect stock-based compensation expense, including common stock warrant expense, and therefore do not include all of our compensation costs;

Current wording

•adjusted EBITDA and adjusted EBITDA margin do not reflect stock-based compensation expense, and therefore do not include all of our compensation costs;

Previous wording

Adjusted EBITDA decreased by $18.0 million in the year ended December 31, 2023 as compared to the year ended December 31, 2022. The decrease in adjusted EBITDA was primarily due to the $25.4 million decrease in gross profit, driven by a lower average selling price, partially offset by decreases to marketing expense.

Current wording

Adjusted EBITDA improved by $8.4 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023. The improvement in adjusted EBITDA was primarily due to lower operating expenses, partially offset by lower gross profit.

Previous wording

We define adjusted EBITDA margin as adjusted EBITDA divided by net revenue. The following table presents net loss and adjusted EBITDA as percentages of net revenue:

Current wording

The following table presents net loss and adjusted EBITDA as percentages of net revenue:

Previous wording

Adjusted EBITDA margin declined from (20.3)% to (30.9)% in the year ended December 31, 2023 compared to the year ended December 31, 2022. The change was primarily driven by the same factors as noted in the adjusted EBITDA discussion above.

Current wording

Adjusted EBITDA margin declined from (30.9)% to (36.9)% in the year ended December 31, 2024 compared to the year ended December 31, 2023. The change was primarily driven by the decline in revenue year over year.

Previous wording

As of December 31, 2023, we had cash and cash equivalents of $130.0 million. Our operations have been funded primarily through net proceeds from sales of equity securities and cash flows from the sale of our products.

Current wording

As of December 31, 2024, we had cash and cash equivalents of $66.7 million. Our operations have been funded primarily through net proceeds from sales of equity securities and cash flows from the sale of our products.