Allbirds, Inc.
For the period ended Mar 31, 2026. Filed May 15, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 15, 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-Q
Period ended 2025-09-30; filed 2025-11-07.
0001628280-25-050327
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001628280-26-035302
Item 2. 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 136 previous paragraphs and 124 current paragraphs.
59 unchanged; 32 reworded; 33 added; 43 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 20 previous and 11 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 (33)
Current report
•Our gross margin was 27.8% and 44.8% for the three months ended March 31, 2026 and 2025, respectively.
Current report
Recent Developments
Current report
Our performance in the fourth quarter of 2025 did not meet our net revenue expectations. We have been operating the footwear and apparel business at a material loss and do not believe that continuing to operate this business is sustainable or beneficial to our stockholders. 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. As of March 31, 2026, we operated two factory outlet stores in the United States and two stores in the United Kingdom.
Current report
On March 29, 2026, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Allbirds IP LLC, an affiliate of American Exchange Group (the “Buyer” and the transactions contemplated by the Asset Purchase Agreement, the “Asset Sale”), pursuant to which the Buyer will acquire substantially all of the Company’s assets related to its existing footwear business (the “Purchased Assets”). The Purchased Assets represent a all revenue generating assets of the Company. We have been operating these footwear assets at a material loss and do not believe that continuing to operate these footwear assets is sustainable or beneficial to our stockholders. Following the closing of the Asset Sale, the Buyer in the Asset Sale will own the “Allbirds” tradename and all related intellectual property, and the brand and footwear business will continue under the stewardship of the Purchaser.
Current report
We intend to continue operating Allbirds, Inc. after the Asset Sale. In continuing to operate after the Asset Sale, we intend to rename Allbirds, Inc., and operate under a new corporate name. Our Board of Directors has not yet made a final decision on a new name for the company. With respect to the renamed corporate entity, we are investigating potential opportunities in the computing infrastructure market, including (either directly or through its subsidiaries) the acquisition and monetization of graphics processing units, related high-performance computing infrastructure capable of supporting high workloads (whether from artificial intelligence and machine learning or other needs of potential future customers) and other related assets (which we refer to collectively, as “Electronics Assets,” and such anticipated business, the “Electronics Infrastructure Business”). In support of such business, we have entered into an agreement to sell up to $50 million in senior secured convertible notes (the “Convertible Notes,” and the facility governing such notes, the “Facility”), the proceeds of which would permit the Company to purchase Electronics Assets and develop and expand the anticipated Electronics Infrastructure Business. Using proceeds from the initial tranche of the Convertible Notes, the Company, through its wholly owned subsidiary (the “Lessor”), has purchased server equipment utilizing current-generation NVIDIA Blackwell GPUs (the “Purchased GPU Assets”). Simultaneously, the Lessor entered into an approximately $2.75 million, three-year lease agreement with a subsidiary of QumulusAI, Inc. (the “Lessee”) for the Purchased GPU Assets, with an end-of-term purchase option provided to the Lessee.
Current report
See Note 1, Description of Business and Note 13, Subsequent Events, of our condensed consolidated financial statements included in Part I, Item 1, for more information.
Current report
Recent financial performance, including a net loss of $20.7 million and net cash used in operating activities of $12.1 million in the three months ended March 31, 2026, 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 condensed consolidated financial statements included in Part I, Item 1, for additional information.
Current report
Net Revenue
Current report
Operating Expense
Current report
Selling, General, and Administrative Expense
Current report
Marketing Expense
Current report
Impairment expense consists of charges when the carrying value of our assets exceed their fair market value, primarily related to right of use assets and fixed assets.
Current report
Restructuring Expense
Current report
Other Income
Current report
Income Tax Provision
Current report
Net Revenue
Current report
Operating Expense
Current report
Selling, General, and Administrative Expense
Current report
Marketing Expense
Current report
Restructuring Expense
Current report
Restructuring expense increased by $1.3 million for the three months ended March 31, 2026, as compared to $0.0 million in the same period in 2025. The increase was driven by the closure of our U.S. full price retail stores during the quarter.
Current report
Other Income
Current report
Income Tax Provision
Current report
Liquidity and Capital Resources
Current report
As of March 31, 2026, we had cash and cash equivalents of $14.4 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 $20.7 million and net cash used in operating activities of $12.1 million in the three months ended March 31, 2026. As of March 31, 2026, the Company had $14.4 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 following the Asset Sale as defined in the Recent Developments section above. Additionally, the cash flows for the Company’s Asset Infrastructure Business are uncertain. If the
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. If the stockholders approve the Asset Sale, the Company intends to make a distribution, in the form of a special dividend, to the stockholders of record as of the date of the closing of the Asset Sale of a portion of the proceeds from the Asset Sale (such special dividend, the “Asset Sale Dividend”). The amount and timing of the Asset Sale Dividend and any other distributions to stockholders will be determined by the Board in its discretion. The Board currently anticipates that the Asset Sale Dividend will be made in the third quarter of 2026, following the closing of the Asset Sale and the release of funds from the Escrow Fund, if any. The amount and timing of the Asset Sale Dividend and any other distributions to stockholders will be determined by the Board in its discretion.
Current report
As discussed in the Recent Developments section above, we intend to continue operating Allbirds, Inc. after the Asset Sale. In continuing to operate after the Asset Sale, we intend to rename Allbirds, Inc., and operate under a new corporate name. Our Board of Directors has not yet made a final decision on a new name for the company. With respect to the renamed corporate entity, we are investigating potential opportunities in our anticipated Electronics Infrastructure Business. Our anticipated Electronics Infrastructure Business is at a very early stage of development. We are investigating potential opportunities in the computing infrastructure market, but our plans remain preliminary and may change materially. The anticipated Electronics Infrastructure Business is uncertain, unproven, and subject to significant risks. Because our strategy is evolving, we are required to make significant assumptions regarding market conditions, customer demand, competition, asset pricing, financing availability, utilization, operating costs, monetization opportunities, technological developments and other factors. Further, the Asset Sale involves the sale of the assets relating to our existing footwear business and a significant amount of our historical operating assets. As a result, following the closing of the Asset Sale, we will no longer operate the business with which investors have historically associated the Company. Instead, we will be operating new assets in a different business. We will need to expand or build substantial parts of our business, including strategy, personnel, processes, controls, systems, counterparties, customer relationships, vendor relationships, branding and market positioning. We may not be successful in doing so. If our continuing business does not develop successfully, we may fail to generate meaningful revenue, incur substantial losses, need to raise additional capital on unfavorable terms, need to declare bankruptcy, or pursue additional strategic alternatives.
Current report
Our material capital resources include the following:
Current report
Debt
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 March 29, 2026, the Company and Second Avenue Capital Partners LLC entered into a Consent and First Amendment to Credit Agreement (the “First Amendment to Credit Agreement”). The First Amendment to Credit Agreement provides consent to the Company’s entry into the Asset Sale and amends the Credit Agreement dated as of June 30, 2025.
Current report
The First Amendment to Credit Agreement among other things, (i) lowers the minimum amount of Unrestricted Cash required to be held by the Company and its Subsidiaries to avoid the commencement of a Cash Dominion Period from $10,000,000 to $7,500,000, (ii) increases the basket for Indebtedness consisting of reimbursement obligations in respect of the Existing Cash Collateralized Letter of Credit from $855,000 to $1,206,905, (iii) increases the unsecured Indebtedness basket from $2,500,000 to $11,000,000, (iv) extends the delivery date for the Consolidated Statements for the Fiscal Year ended December 31, 2025 from March 31, 2026 to April 15, 2026, (v) requires delivery by Borrower of certain financial and other information with respect to the Asset Sale, and (vi) replaces the Minimum Consolidated EBITDA financial covenant, and corresponding equity cure right, with a minimum Consolidated Liquidity financial covenant.
Removed paragraphs (43)
Previous report
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 report
Designing and creating products using innovative, sustainable materials is a challenging process for both us and our supply chain partners. We have invested time and resources to train our manufacturers to use our natural materials, which we believe makes it difficult to replicate our novel manufacturing processes at our product quality.
Previous report
•Our gross margin was 43.2% and 42.7% for the three and nine months ended September 30, 2025, respectively, as compared to 44.4% and 47.5% for the same periods in 2024.
Previous report
Ability to Grow Brand Awareness and Drive Efficient Customer Acquisition
Previous report
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.
Previous report
Our goal is to acquire new customers in a cost-effective way. We will continue to evaluate our go-to-market strategy, both in the U.S. and internationally, and invest in customer acquisition while the underlying customer unit economics indicate the return on investment is strong. The continued execution of our customer acquisition strategy is key to acquiring more customers and driving growth and profitability for our business. Our ability to acquire more customers depends significantly on a number of factors, including the level and pattern of consumer spending in the product categories in which we operate and our ability to expand our brand awareness. We also partner with select third-party retailers and distributors to sell our products in our effort to reach more consumers and build brand awareness.
Previous report
Growth Within Existing Customer Base and Increasing Closet Share
Previous report
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 report
Execution of Our Vertical Retail Distribution and Omni-Channel Strategy and Optimization of Our Store Fleet
Previous report
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, while also selectively partnering with third-party retailers. In 2024, we closed 15 stores in the United States and 3 stores in Europe. In the first three quarters of 2025 we closed 9 stores in the United States and 1 store in the United Kingdom. In 2023, 2024, and 2025 we transitioned the operations of our international businesses, including international stores, to distributor partners in South Korea, Canada, Australasia, Japan, China, and Europe. 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 report
Our store count by primary geographical market is presented in the table below, as of the dates presented:
Previous report
Growing Our Product Innovation Platform
Previous report
Innovation has been core to the Allbirds brand since our inception in 2015. Our future innovation and product pipeline will depend, in part, on our ability to apply our expertise in materials science to source and commercialize materials that are sustainable, durable, and comfortable. Our success in leveraging these materials in our products is partially reliant on the ability of our manufacturing and supply chain partners to produce and distribute these materials at scale. It also takes months of testing before we commercialize new materials and products, which could cause delays in our existing growth plans. In addition, these initiatives may require ongoing investments that could delay our ability to achieve medium to long-term profitability.
Previous report
Ability to Scale Infrastructure for Profitable Growth
Previous report
To grow our business, we intend to continue to improve our operational and capital efficiencies and thoughtfully optimize our infrastructure. Our ability to scale relies upon our supply chain infrastructure. We believe our investments in direct and meaningful relationships with all of our partners, from raw materials suppliers to Tier 1 manufacturers and logistics providers, helps put us on a path of achieving profitable growth in the future. We will continue to make similar investments in developing relationships across the full supply chain. Most importantly, we are firmly committed to reducing our carbon footprint and our environmental impact. This commitment may require current and future investments, which may result in higher expenses.
Previous report
Current Macroeconomic Conditions and Trends
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Consumers are increasingly becoming more conscious of the products they purchase and are seeking brands that are responsible and purpose-driven. Consumers’ increasing care in the products and brands they trust has contributed to continued demand for our products. Our status as a PBC and a B Corp highlight our commitment to sustainability and our purpose while providing an objective reference point for consumers. As a purpose-native company, we believe we are well-positioned at the intersection of key macro trends impacting our industry.
Previous report
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—Economic uncertainty in our key markets may affect consumer purchases of discretionary items, which has affected and may continue to adversely affect demand for our products” in Part II, Item 1A. Risk Factors, for further details.
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Seasonality
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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 report
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 report
Our business is affected by general seasonal trends common to the retail footwear and apparel industry, with sales typically lower in the first quarter of the year and typically higher during the end-of-year holiday period that falls within our fourth quarter.
Previous report
Through strategic initiatives, we expect 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
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 Japan and Australasia in the second quarter of 2024, and China in the third quarter of 2024, based on the difference between the net book value of assets and liabilities sold against the consideration received.
Previous report
Cost of Revenue, Gross Profit, and Gross Margin
Previous report
Marketing expense increased by $1.9 million, or 18.9%, for the three months ended September 30, 2025 as compared to the same period in 2024. The increase was primarily driven by increased digital advertising costs in support of new product launches.
Previous report
Restructuring expense decreased by $35 thousand, or 100.0%, for the three months ended September 30, 2025 as compared to the same period in 2024. The decrease was driven by completion of the strategic transformation plan in 2024.
Previous report
Net loss from sales of businesses decreased by $0.2 million, or 100.0%, for the three months ended September 30, 2025 as compared to the same period in 2024. The decrease was driven by the sale of our Chinese business to an unrelated third-party distributor in the third quarter of 2024.
Previous report
Comparison of the Nine Months Ended September 30, 2025 and 2024
Previous report
Net revenue decreased by $29.1 million, or 21.7%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily driven by a decrease in our U.S. direct business of $16.6 million, primarily driven by declines in our retail business, primarily due to store closures. Net revenue also declined in our international business by $15.5 million, primarily due to our transition to third-party distributors, partially offset by increased distributor net revenue of $4.3 million.
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Cost of Revenue, Gross Profit, and Gross Margin
Previous report
Cost of revenue decreased by $10.3 million, or 14.7%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily attributable to decreases in product costs of approximately $10.0 million, primarily driven by fewer unit sales in our U.S. direct business. partially due to U.S. retail store closures.
Previous report
Our gross margin declined to 42.7% for the nine months ended September 30, 2025 from 47.5% for the same period in 2024, primarily due to mix, with a lower percentage of sales coming from our retail business and a higher percentage coming from our digital and distributor channels, as well as increased promotional activities and higher inventory adjustments.
Previous report
NM = Not meaningful
Previous report
Selling, general, and administrative expense decreased by $33.2 million, or 31.8%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily driven by decreases in personnel and related expenses of $12.3 million, occupancy costs of $8.2 million, depreciation and amortization expense of $4.5 million, and stock-based compensation expense of $3.0 million.
Previous report
Impairment expense increased by $0.7 million for the nine months ended September 30, 2025 as compared to $0.0 million in the same period in 2024. The increase was driven by impairments of an internal-use software asset and the impairment of an equity investment in the current period, compared to no impairment in the prior period.
Previous report
Restructuring expense decreased by $1.8 million, or 100.0%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease was driven by completion of the strategic transformation plan in 2024.
Previous report
Net loss from sales of businesses decreased by $0.4 million, or 100.0%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease was driven by the sales of our Japanese, Australasian, and Chinese businesses to unrelated third-party distributors in the same period of 2024.
Previous report
Interest Income
Previous report
Interest income decreased by $3.0 million, or 99.7%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily driven by a decrease in our short-term investments in money market funds and increased interest expense related to our Credit Agreement.
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Reworded paragraphs (32)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included under Part II, Item 1A below.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors, risks and uncertainties that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the sections titled “Risk Factors” included under Part II, Item 1A below and“Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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 23 stores as of September 30, 2025. 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
Allbirds has historically been a lifestyle footwear and apparel brand. As of March 31, 2026, we generated 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. During the quarter ended March 31, 2026, we closed our remaining full-price retail stores in the United States, and as of March 31, 2026, continued to operate two outlet stores in the United States and two full-price stores in London. 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
For the three and nine months ended September 30, 2025 and 2024:
Current wording
For the three months ended March 31, 2026 and 2025:
Previous wording
•We generated net revenue of $33.0 million and $104.8 million for the three and nine months ended September 30, 2025, respectively, as compared to $43.0 million and $133.9 million for the same periods in 2024.
Current wording
•We generated net revenue of $22.3 million and $32.1 million for the three months ended March 31, 2026 and 2025, respectively.
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•We generated net loss of $20.3 million and $57.7 million for the three and nine months ended September 30, 2025, respectively, as compared to a net loss of $21.2 million and $67.6 million for the same periods in 2024.
Current wording
•We generated net loss of $20.7 million and $21.9 million for the three months ended March 31, 2026 and 2025, respectively.
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•We generated adjusted EBITDA loss of $15.7 million and $46.9 million for the three and nine months ended September 30, 2025, respectively, as compared to adjusted EBITDA loss of $16.2 million and $50.9 million for the same periods in 2024.
Current wording
•We generated adjusted EBITDA loss of $17.2 million and $18.6 million for the three months ended March 31, 2026 and 2025, respectively.
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 September 30, 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.
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 and marketplace platforms), our leased retail stores, and third-party retailers and distributors. As of March 31, 2026, 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
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, New Zealand, Germany, and South Korea as of September 30, 2025.
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 all jurisdictions other than in the United Kingdom as of March 31, 2026.
Previous wording
(1)Includes stock-based compensation expense of $1.5 million and $5.9 million for the three and nine months ended September 30, 2025, respectively and $2.6 million and $8.9 million for the same periods in 2024.
Current wording
(1)Includes stock-based compensation expense of $1.2 million and $2.3 million for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
(2)Includes depreciation and amortization expense of $1.9 million and $5.7 million for the three and nine months ended September 30, 2025, respectively, and $2.9 million and $10.2 million for the for the same periods in 2024.
Current wording
(2)Includes depreciation and amortization expense of $1.4 million and $1.9 million for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
Net revenue decreased by $10.0 million, or 23.3%, for the three months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily driven by a decrease in our U.S. direct business of $6.3 million, primarily driven by declines in our e-commerce and retail businesses, primarily due to store closures. Net revenue also declined in our international business by $3.5 million, primarily due to our transition to third-party distributors and timing of distributor net revenue.
Current wording
Net revenue decreased by $9.8 million, or 30.5%, for the three months ended March 31, 2026 as compared to the same period in 2025. The decrease was primarily driven by a decrease in our U.S. direct business of $7.6 million, primarily driven by declines in our e-commerce and retail channels, due to lower unit sales at lower average selling prices, and retail store closures. Net revenue also declined in our international business by $2.3 million, primarily due to lower distributor net revenue and international distributor transitions.
Previous wording
Cost of revenue decreased by $5.2 million, or 21.6%, for the three months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily attributable to decreases in product costs of approximately $4.3 million and freight costs of approximately $0.6 million, driven by fewer unit sales in our U.S. direct business, partially resulting from the U.S. retail store closures.
Current wording
Cost of revenue decreased by $1.6 million, or 9.0%, for the three months ended March 31, 2026 as compared to the same period in 2025. The decrease was primarily attributable to fewer unit sales in our U.S. direct business, partially offset by the net impact of inventory adjustments and higher duty costs.
Previous wording
Gross profit decreased by $4.8 million, or 25.3%, for the three months ended September 30, 2025 as compared to the same period in 2024. The decrease in gross profit was driven by the decreases in net revenue and cost of revenue.
Current wording
Gross profit decreased by $8.2 million, or 56.9%, for the three months ended March 31, 2026 as compared to the same period in 2025. The decrease in gross profit was driven by the decreases in net revenue and cost of revenue.
Previous wording
Our gross margin decreased to 43.2% for the three months ended September 30, 2025 from 44.4% in the same period in 2024, primarily reflects a higher mix of digital and international distributor sales, as well as increased duties in our U.S. business, which offset higher average selling price.
Current wording
Our gross margin decreased to 27.8% for the three months ended March 31, 2026 from 44.8% in the same period in 2025, primarily reflecting the impact of lower average selling prices, driven by promotional activity, inventory adjustment costs, and increased duties in our U.S. business.
Previous wording
Selling, general, and administrative expense decreased by $9.3 million, or 30.0%, for the three months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily driven by decreases in personnel and related expenses of $4.0 million, occupancy costs of $2.4 million, stock-based compensation expense of $1.1 million, and depreciation and amortization expense of $1.0 million.
Current wording
Selling, general, and administrative expense decreased by $6.4 million, or 25.5%, for the three months ended March 31, 2026 as compared to the same period in 2025. The decrease was primarily driven by decreases in personnel and related expenses of $3.8 million, occupancy costs of $1.7 million, stock-based compensation expense of $1.1 million, and depreciation and amortization expense of $0.5 million.
Previous wording
Marketing expense increased by $2.9 million, or 9.9%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The increase was primarily driven by an investment in upper funnel marketing initiatives.
Current wording
Marketing expense decreased by $4.9 million, or 40.7%, for the three months ended March 31, 2026 as compared to the same period in 2025. The decrease was primarily driven by a decrease in upper funnel marketing initiatives.
Previous wording
Impairment expense increased by $0.7 million for the three months ended September 30, 2025 as compared to $0.0 million the same period in 2024. The increase was driven by impairments of an internal-use software asset and the impairment of an equity investment in the current period, compared to no impairment in the prior period.
Current wording
Impairment expense increased by $1.0 million for the three months ended March 31, 2026 as compared to $0.0 million in the same period in 2025. The increase was driven by non-cash impairments of operating lease right-of-use assets and property and equipment associated with our retail stores closures.
Previous wording
Interest (expense) income changed by $1.1 million, or 149.7%, from income to expense, for the three months ended September 30, 2025 as compared to the same period in 2024. The change was primarily driven by increased interest expense relating to our Credit Agreement, partially offset by interest income.
Current wording
Interest expense changed by $1.1 million, or 387.4%, from income to expense, for the three months ended March 31, 2026 as compared to the same period in 2025. The change was primarily driven by increased interest expense relating to our Credit Agreement.
Previous wording
Other income decreased by $0.2 million, or 98.4%, for the three months ended September 30, 2025, primarily due to lower gains on the termination and modification of certain operating leases.
Current wording
Other income increased by $1.5 million, or 203.2%, for the three months ended March 31, 2026, primarily due to higher gains on the termination and modification of certain operating leases.
Previous wording
Income tax provision decreased by $14 thousand, or 16.3%, for the three months ended September 30, 2025 as compared to the same period in 2024, primarily due to a change in the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates for the comparative period.
Current wording
Income tax provision increased by $13 thousand, or 19.7%, for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to a change in the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates for the comparative period.
Previous wording
Adjusted EBITDA loss decreased by $0.5 million and $3.9 million for the three and nine months ended September 30, 2025, respectively, as compared to the same period in 2024. The decreases were primarily driven by decreased net loss in each period, which was driven primarily by the reduction in operating expenses during each period.
Current wording
Adjusted EBITDA loss decreased by $1.5 million for the three months ended March 31, 2026 as compared to the same period in 2025. The improvement was primarily driven by decreased net loss, which was driven primarily by the reduction in operating expenses during the period.
Previous wording
Adjusted EBITDA margin declined from (37.8)% to (47.7)% for the three months ended September 30, 2025 as compared to the same period in 2024 and declined from (38.0)% to (44.8)% for the nine months ended September 30, 2025 as compared to the same period in 2024. These changes were primarily driven by lower net sales, partially offset by the same factors as noted in the adjusted EBITDA discussion above.
Current wording
Adjusted EBITDA margin declined from (58.1)% to (76.9)% for the three months ended March 31, 2026 as compared to the same period in 2025. These changes were primarily driven by lower net sales, partially offset by the same factors as noted in the adjusted EBITDA discussion above.
Previous wording
Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
Current wording
Asset Sale is not completed for any reason and the Asset Infrastructure Business is not successful, 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 Quarterly Report on Form 10-Q for additional information on going concern.
Previous 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.
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 or Liquidity. 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 June 30, 2028. See Note 5 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the Credit Agreement.
Current wording
The Credit Agreement has a maturity date of June 30, 2028. See Note 5 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the Credit Agreement. See Note 15, Subsequent Events, of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information on the Second Amendment to Credit Agreement.
Previous wording
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. Under the ATM, the sales agents may sell shares by any method deemed to be an “at-the-market offering.” During the three months ended September 30, 2025, there was no activity pursuant to the ATM.
Current wording
In June 2025, we entered into an “at-the-market offering” (“TD ATM”) program with TD Securities (USA) LLC (“TD Cowen”), pursuant to which we could 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. Under the TD ATM, the sales agents could sell shares by any method deemed to be an “at-the-market offering.” During the three months ended March 31, 2026, there was no activity pursuant to the TD ATM. See Note 15, Subsequent Events, of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information on the termination of the TD ATM and entry into a new “at-the-market” program with Chardan Capital Markets LLC.
Previous wording
During thenine months ended September 30, 2025, net cash used in operating activities was $51.8 million, which consisted of a net loss of$57.7 million, in part driven by a net change of $(7.2) million in our operating assets and liabilities and partially offset by non-cash charges of $13.1 million. The change in operating assets and liabilities was primarily due to a decrease of $6.3 million in accounts payable and accrued expenses due to timing of payments made and a decrease of $5.6 million for operating lease right of use assets and short-term and long-term lease liabilities as a result of retail store closures, a decrease of $4.8 million in prepaid expenses and other current assets due to timing of prepaid expenses, a decrease of $1.3 million in accounts receivable due to timing of cash received, and a decrease of $1.0 million in inventory as a result of lower on-hand inventory.
Current wording
During the three months ended March 31, 2026, net cash used in operating activities was $12.1 million, which consisted of a net loss of $20.7 million, in part driven by a net change of $3.3 million in our operating assets and liabilities and partially offset by non-cash charges of $5.4 million. The change in operating assets and liabilities was primarily due to an increase of $1.3 million in accounts payable and accrued expenses due to timing of payments made and a decrease of $2.4 million for operating lease right of use assets and short-term and long-term lease liabilities as a result of retail store closures, a decrease of $2.0 million in prepaid expenses and other current assets due to timing of prepaid expenses, a decrease of $1.5 million in accounts receivable due to timing of cash received, and a decrease of $1.0 million in inventory as a result of lower on-hand inventory.
Previous wording
During the nine months ended September 30, 2024, net cash used in operating activities was $53.0 million, which consisted of a net loss of $67.6 million, offset by a net change of $(6.9) million in our operating assets and liabilities and non-cash charges of $21.5 million. The change in operating assets and liabilities was primarily due to a decrease of $10.6 million for operating lease right of use assets and short-term and long-term lease liabilities as a result of retail store closures and an increase of $4.5 million in inventory as a result of higher on-hand inventory, partially offset by an increase of $3.2 million in accounts payable due to timing of payments made and an increase of $2.2 million in accounts receivable due to timing of cash received.
Current wording
During the three months ended March 31, 2025, net cash used in operating activities was $27.9 million, which consisted of a net loss of $21.9 million, in part driven by a net change of $(9.0) million in our operating assets and liabilities and partially offset by non-cash charges of $3.0 million. The change in operating assets and liabilities was primarily due to a decrease of $10.4 million in accounts payable due to timing of payments made and a decrease of $2.8 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 $2.7 million in prepaid expenses and other current assets due to the amortization of prepaid expenses and a reduction in other receivables, a decrease of $1.1million in accounts receivable due to timing of cash received, and a decrease of $0.8 million in inventory as a result of lower on-hand inventory.
Previous wording
During the nine months ended September 30, 2025, net cash used in investing activities was $1.4 million, and consisted primarily of $2.3 million cash outflows for the purchases of property and equipment to support the ongoing operations of our corporate development and retail stores, partially offset by a decrease of $0.5 million in security deposits related to our closed retail stores and $0.4 million of proceeds from the sale of our businesses.
Current wording
During the three months ended March 31, 2026, net cash provided in investing activities was $65 thousand, and consisted primarily of a decrease of $137 thousand in security deposits related to our closed retail stores, partially offset by $72 thousand cash outflows for the purchases of property and equipment.
Previous wording
During the nine months ended September 30, 2024, net cash provided by investing activities was $1.5 million, and consisted primarily of $2.5 million of proceeds from the sale of our businesses and a decrease of $2.2 million in security deposits related to our closed retail stores, partially offset by $3.1 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 the three months ended March 31, 2025, net cash provided by investing activities was $0.2 million, and consisted primarily of $0.4 million of proceeds from the sale of our businesses and a decrease of $44.0 thousand in security deposits related to our closed retail stores, partially offset by $0.6 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 for the nine months ended September 30, 2025 was$9.3 million, primarily due to $12.3 million in borrowings on our line of credit facility, partially offset by $3.1 million in payments of deferred financing costs.
Current wording
Net cash provided by financing activities for the three months ended March 31, 2026 was $0.1 million, primarily due to the net impact of borrowings and repayments on our Credit Agreement facility.
Previous wording
Net cash provided by financing activities for the nine months ended September 30, 2024 was $0.2 million, primarily due to proceeds from the exercise of stock options and proceeds from the issuance of common stock under our employee stock purchase plan, offset by taxes withheld related to employee stock awards.
Current wording
Net cash provided by financing activities for the three months ended March 31, 2025 was $3 thousand, primarily due to proceeds from the exercise of stock options, offset by taxes withheld related to employee stock awards.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Gross profit decreased by $18.8 million, or 29.6%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease in gross profit was driven by the decreases in net revenue and cost of revenue.
Previous report — wording carried elsewhere
Income tax provision decreased by $0.7 million, or 75.0%, for the nine months ended September 30, 2025 as compared to the same period in 2024. The decrease was primarily due to a change in the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates for the comparative period.