Allbirds, Inc.
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 31, 2026
BIRD$1.31+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-12.
0001628280-25-012130
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-31.
0001628280-26-022192
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 154 previous paragraphs and 157 current paragraphs.
92 unchanged; 41 reworded; 24 added; 20 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
In 2025, we maintained three key focus areas: product, marketing, and customer experience. The product focus area included the design and development of a variety of new product styles that were brought to market in the second half of 2025. The marketing focus area included investments in upper funnel brand marketing, and campaigns under the Allbirds by Nature banner, with messaging reinforcing four key attributes: comfort, style, quality, and sustainability. The customer experience focus area included a redesigned website that launched during the year and optimization of our retail store fleet. This included the closure of 10 Allbirds stores in 2025.
Current report
In the second quarter of 2025, we entered into two financing agreements in order to optimize working capital and enhance financial flexibility. The first is a new asset-based revolving credit agreement, which replaced our prior revolving credit agreement. The second is a sales agreement, which may allow us to sell, from time to time, up to $50 million (subject to the “baby shelf” limitation in General Instruction I.B.6 of Form S-3) of shares of Class A common stock through an At-the-Market program.
Current report
Despite these focus areas, our performance in the fourth quarter of 2025 did not meet our net revenue expectations. Subsequent to year end, in the first quarter of 2026, we closed our remaining full-price stores in the United States, which also resulted in a reduction in force.
Current report
Our board of directors formally engaged advisors to conduct a strategic alternatives process that began during the fourth quarter of 2025 and culminated in the Company entering into a definitive agreement during the first quarter of 2026 with an affiliate of American Exchange Group to sell substantially all of the assets of the Company (the “Asset Sale”). In addition, in the first quarter of 2026, the Company entered into the Consent and First Amendment to Credit Agreement in connection with the Asset Sale. See Note 16, Subsequent Events, of our consolidated financial statements included in Part II, Item 8, for more information.
Current report
Recent financial performance, including a net loss of $77.3 million and net cash used in operating activities of $55.1 million in the year ended December 31, 2025, has raised substantial doubt about the Company’s ability to continue as a going concern. Refer to the section titled Liquidity and Capital Resources and Note 2 to the consolidated financial statements included in this Form 10-K for additional information.
Current report
Interest (Expense) Income
Current report
Other Income
Current report
Net revenue decreased by $37.3 million, or 19.7%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease was primarily driven by a decrease in our U.S. direct business of $23.1 million, driven by declines in our retail and e-commerce businesses resulting from store closures. Net revenue also declined in our international business by $11.9 million, primarily due to our transition to third-party distributors.
Current report
Cost of revenue decreased by $18.8 million, or 17.3%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease was primarily driven by decreases in product costs of approximately $12.5 million, freight costs of approximately $2.7 million, and distribution center expenses of $2.5 million, which were all driven by fewer unit sales in our U.S. direct business, the shift to international distributors, and U.S. retail store closures. The decreases were partially offset by approximately $1.0 million of increased duties costs.
Current report
Gross margin declined to 41.0% from 42.7% for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a higher mix of digital and international distributor sales, as well as increased duties and lower average selling prices in our U.S. business.
Current report
Marketing expense increased by $3.6 million, or 8.6%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The increase was primarily driven by an investment in upper funnel marketing initiatives in the first quarter of the year.
Current report
Restructuring expense decreased by $1.2 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily resulting from fewer costs incurred in 2025 as part of our strategic initiatives. In 2025, restructuring expenses related to severance and other employee-related benefits were incurred as a result of strategic actions taken in the fourth quarter. In the prior year, restructuring expenses related to severance and other employee-related benefits, and professional service fees.
Current report
Interest (Expense) Income
Current report
Other Income
Current report
Liquidity and Capital Resources
Current report
As of December 31, 2025, we had cash and cash equivalents of $26.7 million. Following our IPO in 2021, we have funded our operations primarily from the sale of our products and recently through borrowings under our Credit Agreement. Management’s evaluation of the Company’s ability to continue as a going concern for the twelve-month period following the date on which the financial statements are available for issuance indicated certain negative conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern, including a net loss of $77.3 million and net cash used in operating activities was $55.1 million in the year ended December 31, 2025. As of December 31, 2025, the Company had $26.7 million in cash and cash equivalents and $17.4 million outstanding on its Credit Agreement. The Company expects to continue to incur net losses and negative cash flows from operating activities, and the Company does not expect to continue its operations following the completion of the Asset Sale (as defined in Note 16 to our consolidated financial statements included in this Annual Report on Form 10-K). If the Asset Sale is not completed for any reason, we do not anticipate we would be able to meet our future liquidity needs without accessing additional capital or engaging in strategic transactions which are not within our control and are subject to various risks and uncertainties. See Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
Current report
Our material cash requirements are primarily for working capital, and may vary materially from those currently planned and will depend on many factors, including cash on hand and cash flows from operations, borrowings under our Credit Agreement, waivers or modifications concerning our existing debt obligations and the Asset Sale. We anticipate that following the closing of the Asset Sale, we will not have any remaining operations and will wind up our assets, liabilities and affairs under a plan of dissolution, after which proceeds will be distributed to common stockholders.
Current report
Our material capital resources include the following:
Current report
On February 20, 2019, we entered into a credit agreement with JPMorgan Chase Bank, N.A. (the “Prior Credit Agreement”), providing for a revolving line of credit of up to $40.0 million, subject to a borrowing base formula, and an optional accordion, which, if exercised, would have allowed us to increase the aggregate commitment by up to $35.0 million, subject to obtaining additional lender commitments and satisfying certain conditions. The Prior Credit Agreement was amended on April 17, 2023 to, among other things, (i) increase the committed amount from $40.0 million to $50.0 million, subject to a borrowing base formula, (ii) increase the uncommitted incremental borrowing capacity from $35.0 million to $50.0 million, (iii) increase the interest rate margin by 0.50%, (iv) extend the maturity date from February 20, 2024 to April 17, 2026 and (v) provide that a Dominion Event Date (as defined therein) would occur on any date on which Availability (as defined therein) was less than 25.0% of the Aggregate Revolving Commitments (as defined therein). In connection with entry into the Credit Agreement, we repaid and fully discharged our obligations under the Prior Credit Agreement.
Current report
On June 30, 2025, we entered into a secured $50.0 million revolving credit agreement with Second Avenue Capital Partners LLC (the “Credit Agreement”). The borrowing capacity is subject to a borrowing base formula relating to the value of our eligible assets, and under the revolving credit facility may be increased up to an additional $25.0 million, subject to obtaining additional lender commitments and satisfying certain conditions.
Current report
See Note 16, Subsequent Events, of our consolidated financial statements included in Part II, Item 8, for information on the Consent and First Amendment to Credit Agreement.
Current report
ATM Offering
Current report
In June 2025, we entered into an “at-the-market offering” (“ATM”) program with TD Securities (USA) LLC (“TD Cowen”), pursuant to which we may offer and sell, from time to time, through TD Cowen or its affiliates, acting as sales agents, shares of our common stock having an aggregate offering price of up to $50 million (subject to the “baby shelf” limitation in General Instruction I.B. 6 of Form S-3). Under the ATM, the sales agents may sell shares by any method deemed to be an “at-the-market offering.” During the year ended December 31, 2025, we sold 386,289 shares of Class A common stock under the ATM program for net proceeds of $1.7 million.
Current report
During 2025, net cash provided by financing activities was $16.1 million, which consisted primarily of proceeds from borrowings under our Credit Agreement of $19.2 million and proceeds from the issuance of shares under our ATM program of $1.7 million, partially offset by the payment of deferred financing and offering costs of $3.1 million and payments on our Credit Agreement of $1.9 million.
Removed paragraphs (20)
Previous report
March 2023 Strategic Transformation
Previous report
In March 2023, we announced the implementation of a strategic transformation plan designed to reignite growth in the coming years, as well as improve capital efficiency, and drive profitability. The plan focuses on four key areas.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
Interest Income
Previous report
Other Income (Expense)
Previous report
Net revenue decreased by $64.3 million, or 25.3%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. Our net revenue decrease was primarily driven by lower unit sales within our direct business, our international distributor transitions and retail store closures.
Previous report
Cost of revenue decreased by $41.1 million, or 27.5%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease was primarily driven by lower unit sales in our direct business and lower freight and duty costs per unit.
Previous report
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 report
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 report
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 report
Interest Income
Previous report
Other (Expense) Income
Previous report
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.
Previous report
We believe our existing cash and cash equivalent balances, cash flow from operations, and amounts available for borrowing under the Credit Agreement will be sufficient to meet our cash requirements over the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of our existing cash and cash equivalent balances, amounts available for borrowing under the Credit Agreement and issuances of equity securities or debt offerings.
Previous report
Our material cash requirements for future expenditures, including capital expenditures relating to systems implementations and our existing retail stores, may vary materially from those currently planned and will depend on many factors, including our revenue growth rate, the impact of our strategic transformation plan, our ability to scale across categories, geographies, and channels, our human capital costs, our ability to execute on new marketing initiatives, the timing and extent of spending to support investments in growth and technology initiatives, the market adoption of new products, initiatives to reduce our carbon emissions, and overall macroeconomic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital when needed or on terms acceptable to us. The inability to raise capital if needed would adversely affect our ability to achieve our business objectives.
Reworded paragraphs (41)
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 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.
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. 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 $189.8 million and $254.1 million, respectively.
Current wording
•We generated net revenues of $152.5 million and $189.8 million, respectively.
Previous wording
•Our gross margin was 42.7% and 41.0%, respectively.
Current wording
•Our gross margin was 41.0% and 42.7%, respectively.
Previous wording
•We generated net losses of $93.3 million and $152.5 million, respectively.
Current wording
•We generated net losses of $77.3 million and $93.3 million, respectively.
Previous wording
•We generated adjusted EBITDA losses of $70.0 million and $78.5 million, respectively.
Current wording
•We generated adjusted EBITDA losses of $59.4 million and $70.0 million, respectively.
Previous wording
The ability to communicate our mission of making better things in a better way is integral to our success in engaging new customers and introducing them to our products and brand. Allbirds is still relatively unknown to consumers worldwide, underscoring a large opportunity to scale our customer base and drive future growth. Our continued focus on elevating our product offerings combined with our differentiated brand approach and authenticity is critical to attracting new customers and increasing closet share. Further, we must continue to emphasize our commitment to people, the planet, and our stockholders in order to further increase our reach and highlight the integrity of our brand. We believe our brand strength will enable us to continue to grow brand awareness, allowing us to deepen relationships with consumers and expand our access to global markets.
Current wording
The ability to communicate our mission of making better things in a better way is integral to our success in engaging new customers and introducing them to our products and brand. Our continued focus on elevating our product offerings combined with our differentiated brand approach and authenticity is critical to attracting new customers and increasing closet share. Further, we must continue to emphasize our commitment to people, the planet, and our stockholders in order to further increase our reach and highlight the integrity of our brand. We believe our brand strength will enable us to continue to grow brand awareness, allowing us to deepen relationships with consumers and expand our access to global markets.
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. 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.
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 and introducing new products we believe will resonate with our customers. 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 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. 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.
Current wording
Our long-term growth strategy relies on our ability to grow across multiple channels, while still maintaining our goal of long-term profitability. In 2025, we closed nine stores in the United States and 1 store in the United Kingdom. In the first quarter of 2026, we closed our remaining full-price United States stores, in order to build a simpler and more profitable business, and continue to operate two outlet stores in the United States and two stores in the United Kingdom. We believe an omni-channel buying experience is important to meeting the needs of our customer base, and are focused on dedicating resources toward our e-commerce platform, our third-party marketplace platform, wholesale partnerships with other retailers, and international distributorships.
Previous wording
1 In the first quarter of 2024, we closed the operations of three stores in the US. In the second quarter of 2024, we closed the operations of ten stores in the US. In the third quarter of 2024, we closed the operations of one store in the US. In the fourth quarter of 2024, we closed the operations of one store in the US.
Current wording
1 In the first quarter of 2024, we closed the operations of three stores in the U.S. In the second quarter of 2024, we closed the operations of ten stores in the U.S. In the third quarter of 2024, we closed the operations of one store in the U.S. In the fourth quarter of 2024, we closed the operations of one store in the U.S. In the first quarter of 2025, we closed the operations of five stores in the U.S. In the second quarter of 2025, we closed the operations of four stores in the U.S.
Previous wording
2 In the third quarter of 2023, we transitioned the operations of three international stores to distributors. In the second quarter of 2024, we transitioned the operations of two stores in Japan and one store in New Zealand to unrelated third-party distributors and closed one store in Europe. In the third quarter of 2024, we transitioned the operations of six stores in China to an unrelated third-party distributor and closed two stores in Europe.
Current wording
2 In the third quarter of 2023, we transitioned the operations of three international stores to distributors. In the second quarter of 2024, we transitioned the operations of two stores in Japan and one store in New Zealand to unrelated third-party distributors and closed one store in Europe. In the third quarter of 2024, we transitioned the operations of six stores in China to an unrelated third-party distributor and closed two stores in Europe. In the third quarter of 2025, we closed the operations of one store in the U.K.
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, 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.
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, 2025, 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.
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 gross margin improvement in 2025.
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.
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 to increase in 2025 as we 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.
Previous 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.
Current wording
Impairment expense consists of non-cash impairment charges relating to long-lived assets (including property and equipment and operating lease right-of-use assets) and equity investments.
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.
Current wording
Restructuring expense consists of severance and other employee-related benefits, professional service fees, and other miscellaneous costs associated with exit and disposal activities.
Previous wording
Interest income primarily consists of interest income generated from our cash and cash equivalents, offset by interest expense associated with our credit agreement with JPMorgan Chase Bank, N.A, which we refer to as our Credit Agreement. We expect interest income and expense to fluctuate based on our future bank balances, credit line utilization, and the interest rate environment.
Current wording
Interest expense is primarily associated with our credit agreement with Second Avenue Capital Partners, which we refer to as our Credit Agreement. Interest income primarily consists of interest income generated from our cash and cash equivalents. We expect interest income and expense to fluctuate based on our future bank balances, credit line utilization, and the interest rate environment.
Previous 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.
Current wording
Other income 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
(1)Includes stock-based compensation expense of $11.5 million and $19.3 million for the years ended December 31, 2024 and 2023, respectively.
Current wording
(1)Includes stock-based compensation expense of $7.8 million and $11.5 million for the years ended December 31, 2025 and 2024, respectively.
Previous 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.
Current wording
(2)Includes depreciation and amortization expense of $8.0 million and $12.4 million for the years ended December 31, 2025 and 2024, respectively.
Previous 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.
Current wording
Gross profit decreased by $18.5 million, or 22.8%, in the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease in gross profit was primarily driven by the decreases in net revenue and cost of revenue.
Previous wording
Selling, general, and administrative expense decreased by $40.7 million, or 23.4%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease was primarily driven by a $11.4 million decrease in personnel and related expenses, an $8.6 million decrease in depreciation and amortization, a $7.9 million decrease in stock-based compensation, and a $6.2 million decrease in rent and utilities, as well as reductions in other types of operating expenses.
Current wording
Selling, general, and administrative expense decreased by $40.9 million, or 30.7%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease was primarily driven by a $18.3 million decrease in personnel and related expenses, a $10.0 million decrease in rent and utilities, a $4.4 million decrease in depreciation and amortization, and a $3.7 million decrease in stock-based compensation, as well as reductions in other types of operating expenses.
Previous 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.
Current wording
Impairment expense increased by $2.4 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily as a result of a non-cash impairment of property and equipment and operating lease right-of-use assets associated with certain of our retail stores of $3.5 million, partially offset by the prior year impairment of an equity investment of $1.8 million.
Previous 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.
Current wording
Interest (expense) income changed by $4.6 million, from income to expense, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The change was primarily driven by a decrease in interest income of approximately $3.5 million on our money market funds and an increase in interest expense relating to our Credit Agreement.
Previous 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.
Current wording
Other income increased by $1.1 million, for the year ended December 31, 2025 as compared to expense in the year ended December 31, 2024. The increase was primarily due to greater gains on the termination and modification of certain operating leases of approximately $0.4 million and fluctuations in foreign currency of approximately $0.3 million in the current period.
Previous 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.
Current wording
Income tax provision decreased by $1.5 million, or 79.0%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, 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, 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.
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, personnel and related expenses, and other related charges resulting from our strategic initiatives), non-cash gains or losses on the sales of businesses relating to our strategic 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 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.
Current wording
Adjusted EBITDA improved by $10.6 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024. The improvement in adjusted EBITDA was primarily due to lower operating expenses, partially offset by lower gross profit.
Previous 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.
Current wording
Adjusted EBITDA margin declined from (36.9)% to (39.0)% in the year ended December 31, 2025 compared to the year ended December 31, 2024. The change was primarily driven by the decline in revenue year over year, partially offset by the same factors as noted in the adjusted EBITDA discussion above.
Previous wording
In February 2019, we entered into the Credit Agreement, as subsequently amended in March 2023 pursuant to the First Amendment to Credit Agreement and in April 2023 pursuant to the Second Amendment to Credit Agreement. The Credit Agreement, as amended, is an asset-based loan with a revolving line of credit of up to $50.0 million and an optional accordion of up to $50.0 million. Interest on borrowings under the Credit Agreement accrue at a variable rate equal to (i) the Term Secured Overnight Financing Rate (“SOFR”), plus (ii) 0.10%, plus (iii) a specified spread of 1.75% or 2.00% dependent on the average quarterly revolver availability, calculated on the last day of each fiscal quarter being greater than 20% of the total revolver commitments or less than or equal to 20% of the total revolver commitments, respectively. The commitment fee under the Credit Agreement is 0.20% per annum on the average daily unused portion of each lender’s commitment. In addition, we are required to pay a fronting fee of 0.125% per annum on the average daily aggregate face amount of issued and outstanding letters of credit. Interest, commitment fees and fronting fees are payable monthly, in arrears.
Current wording
Interest on borrowings under the revolving credit facility accrues at a variable rate equal to (i) the sum of the Term Secured Overnight Financing Rate (“SOFR”), plus (ii) 0.15%, plus (ii) a margin of 5.75% per annum. The commitment fee under the Credit Agreement is 0.45% per annum on the average daily unused portion of each lender’s commitment.
Previous wording
The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to us and our subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, dividends and other distributions and a financial covenant that requires us to maintain a specified minimum fixed charge coverage ratio. In addition, the Credit Agreement contains certain customary events of default including, but not limited to, failure to pay interest, principal and fees or other amounts when due, material misrepresentations or misstatements in any representation or warranty, covenant defaults, certain cross defaults to other material indebtedness, certain judgment defaults and events of bankruptcy.
Current wording
The Credit Agreement contains customary representations and warranties, and affirmative covenants and negative covenants applicable to the Company and certain of its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions of assets, dividends and other distributions, minimum unrestricted cash, and minimum consolidated EBITDA. In addition, the Credit Agreement contains certain customary events of default including, but not limited to, failure to pay interest, principal and fees or other amounts when due, material misrepresentations or misstatements in any representation or warranty, covenant defaults, certain cross defaults to other material indebtedness, certain judgment defaults and events of bankruptcy or insolvency.
Previous wording
The Credit Agreement has a maturity date of April 17, 2026. As of December 31, 2024 and 2023, we had no outstanding balances under the Credit Agreement. See Note 6, Long-Term Debt, of our consolidated financial statements included in Part II, Item 8, for more information regarding the Credit Agreement.
Current wording
The Credit Agreement has a maturity date of June 30, 2028. As of December 31, 2025, there was $17.3 million outstanding under the Credit Agreement. As of December 31, 2024, there were no borrowings outstanding under the Prior Credit Agreement. See Note 6, Long-Term Debt, of our consolidated financial statements included in Part II, Item 8, for more information regarding the Credit Agreement.
Previous wording
Inventory purchase obligations relate to a supplier agreement that requires us, through our manufacturers, to purchase a minimum quantity of materials per year. As of December 31, 2024, we had inventory purchase obligations of $9.5 million, with $0.9 million payable within 12 months. See Note 12, Commitments and Contingencies, of our consolidated financial statements included in Part II, Item 8, for more information regarding our inventory purchase obligations.
Current wording
Inventory purchase obligations relate to a supplier agreement that requires us, through our manufacturers, to purchase a minimum quantity of materials per year. As of December 31, 2025, we had inventory purchase obligations of $1.8 million, with $0.9 million payable within 12 months. See Note 12, Commitments and Contingencies, of our consolidated financial statements included in Part II, Item 8, for more information regarding our inventory purchase obligations.
Previous wording
We lease various office and retail spaces for our operations with lease terms ranging from 1 year to 12 years, certain of which contain renewal provisions. As of December 31, 2024, we had undiscounted operating lease commitments of $63.3 million, with $13.1 million payable within 12 months. See Note 13, Leases, of our consolidated financial statements included in Part II, Item 8, for more information regarding our operating lease commitments.
Current wording
We lease various office and retail spaces for our operations with lease terms ranging from 1 year to 12 years, certain of which contain renewal provisions. As of December 31, 2025, we had undiscounted operating lease commitments of $24.6 million, with $7.2 million payable within 12 months. See Note 13, Leases, of our consolidated financial statements included in Part II, Item 8, for more information regarding our operating lease commitments. Subsequent to year end, in the first quarter of 2026, we closed our remaining full-price stores in the United States
Previous wording
Our largest sources of operating cash are cash payments received from customers for sales of our products. Our primary uses of cash from operating activities are for personnel and related expenses, selling and marketing expenses, and third-party professional fees. We have generated negative operating cash flows and have supplemented working capital through net proceeds from the sale of equity securities, including proceeds from our IPO in November 2021.
Current wording
Our largest sources of operating cash are cash payments received from customers for sales of our products. Our primary uses of cash from operating activities are for personnel and related expenses, selling and marketing expenses, and third-party professional fees. We have generated negative operating cash flows and have supplemented working capital through net proceeds from the sale of equity securities, including proceeds from our IPO in November 2021 and sales under the ATM program, and borrowings under our Credit Agreement.
Previous wording
Net cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization of property and equipment, impairment expense, inventory write-offs and write-downs, and changes in operating assets and liabilities during each year.
Current wording
Net cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including depreciation and amortization of property and equipment, stock-based compensation, impairment expense, inventory write-offs and write-downs, and changes in operating assets and liabilities during each year.
Previous wording
During 2023, net cash used in operating activities was$30.2 million, which consisted of a net loss of$152.5 million and a net decrease of$43.8 million in our operating assets and liabilities, partially offset by non-cash charges of$78.4 million added back to net loss. The change in operating assets and liabilities was primarily due to a decrease of$47.5 million in inventory due to lower inventory on hand.
Current wording
During 2025, net cash used in operating activities was $55.1 million, which consisted of a net loss of $77.3 million and a net decrease of $0.5 million in our operating assets and liabilities, partially offset by net non-cash items of $21.7 million added back to net loss. The change in operating assets and liabilities was primarily due to a decrease of $8.3 million for operating lease right of use assets and short-term and long-term lease liabilities as a result of retail store closures, partially offset by a decrease of $3.0 million in inventory as a result of lower on-hand inventory, a decrease of $4.1 million in prepaid expenses and other current assets due to a decrease in tax and other receivables, and an increase of $2.6 million in accounts payable due to timing of payments made.
Previous wording
Net cash used in investing activities in 2023 was$7.7 million, and consisted primarily of$10.9 million incash outflows for the purchases of property and equipment to support the ongoing operations of our corporate development and retail stores, offset by$2.2 millionof proceeds from the sales of certain of our international businesses.
Current wording
During 2025, net cash used in investing activities was $1.9 million, which consisted primarily $3.1 million of cash outflows for the purchases of property and equipment, including capitalized software, to support the ongoing operations of our business, partially offset by a decrease of $0.9 million in security deposits related to our closed retail stores and $0.4 million of proceeds from the sales of certain of our international businesses.
Previous wording
During 2024, net cash provided by investing activities was $2.1 million, which consisted primarily of$4.0 million of proceeds from the sales of certain of our international businesses and a decrease of$2.2 million in security deposits related to our closed retail stores, partially offset by$4.1 million cash outflows for the purchases of property and equipment to support the ongoing operations of our corporate development and retail stores.
Current wording
During 2024, net cash provided by investing activities was $2.1 million, which consisted primarily of $4.0 million of proceeds from the sales of certain of our international businesses and a decrease of $2.2 million in security deposits related to our closed retail stores, partially offset by $4.1 million cash outflows for the purchases of property and equipment to support the ongoing operations of our corporate development and retail stores.
Previous wording
Net cash provided by financing activities in 2024 and 2023 was $0.3 million and $0.6 million, respectively, primarily due to net proceeds from the exercise of stock options and the issuance of common stock under the employee stock purchase plan, offset by taxes withheld on employee stock awards.
Current wording
Net cash provided by financing activities in 2024 was $0.3 million, primarily due to net proceeds from the exercise of stock options and the issuance of common stock under the employee stock purchase plan, offset by taxes withheld on employee stock awards.
Previous wording
Our primary source of revenue is from sales of shoes and apparel products. We determine revenue recognition in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. Revenue is recognized when transfer of control to the customer has occurred, based on the terms of sale. A customer is considered to have control once they are able to direct the use and receive substantially all of the benefits of the product. Control is transferred to wholesale customers upon shipment. Control transfers to retail store customers at the time of sale and to digital customers upon shipment. The transaction price is determined based upon the invoiced sales price, less anticipated sales returns from and discounts to customers. As customers may return products, we record a reserve for estimated product returns in each reporting period as a reduction of net revenue. We record the expected customer refund liability as a reduction to revenue, and the expected inventory right of recovery as a reduction of cost of revenue. Returned assets related to the refund liability are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. We believe revenue recognition is subject to uncertainty as actual return costs can differ from previous estimates based on the amount of customer returns or exchanges, which would result in adjustments to the amount of liability and corresponding revenue in the period in which such differences occur. In making such estimates, we analyze historical returns, impact of seasonality, current economic and market trends, current business practices, and changes in customer demand and acceptance of our products.
Current wording
Our primary source of revenue is from sales of shoes and apparel products. We determine revenue recognition in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. Revenue is recognized when transfer of control to the customer has occurred, based on the terms of sale. A customer is considered to have control once they are able to direct the use and receive substantially all of the benefits of the product. Control is transferred to third-party customers upon shipment. Control transfers to retail store customers at the time of sale and to digital customers upon shipment. The transaction price is determined based upon the invoiced sales price, less anticipated sales returns from and discounts to customers. As customers may return products, we record a reserve for estimated product returns in each reporting period as a reduction of net revenue. We record the expected customer refund liability as a reduction to revenue, and the expected inventory right of recovery as a reduction of cost of revenue. Returned assets related to the refund liability are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. We believe revenue recognition is subject to uncertainty as actual return costs can differ from previous estimates based on the amount of customer returns or exchanges, which would result in adjustments to the amount of liability and corresponding revenue in the period in which such differences occur. In making such estimates, we analyze historical returns, impact of seasonality, current economic and market trends, current business practices, and changes in customer demand and acceptance of our products.
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Previous report — wording carried elsewhere
(3) the expected term of the award, (4) the risk-free interest rate and (5) expected dividends. During the years ended December 31, 2024 and 2023, the number of stock options granted was immaterial.