Allbirds, Inc. (BIRD) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reveals mixed signals: positive product launches and strategic expansion plans, yet challenges with brand rebuilding, macroeconomic uncertainty, and lower-than-expected revenue. Management's optimistic guidance and cost control measures are countered by declining gross margins and financial constraints. The Q&A session highlights cautious optimism for future quarters but acknowledges current underperformance. Without a clear market cap, predicting a strong market reaction is difficult, thus a neutral sentiment is appropriate.

Key Financial Performance

Net Revenue $33 million in Q3 2025, at the low end of guidance range. Reflects strong customer response to new product introductions and mixed performance from original icons, against a challenging macro environment.

Gross Margin 43.2% in Q3 2025, compared to 44.4% in Q3 2024. Decline due to higher mix of digital and international distributor sales, and increased duties in U.S. business, partially offset by higher average selling prices.

SG&A Expenses $22 million in Q3 2025, down $9 million or 30% year-over-year. Improvement driven by lower personnel expenses, occupancy costs, stock-based compensation expenses, and depreciation and amortization.

Marketing Expense $12 million in Q3 2025, up 19% year-over-year. Increase due to investments in new product launches.

Adjusted EBITDA Loss $15.7 million in Q3 2025, compared to a loss of $16.2 million in Q3 2024. Improvement due to strong gross margin profile and strict cost control.

Cash and Cash Equivalents $24 million at the end of Q3 2025. Includes $12 million of outstanding borrowings under a $50 million asset-backed revolving credit facility.

Inventories $43 million at the end of Q3 2025, down 25% year-over-year. Reflects seasonal working capital needs and higher marketing spend.

Operating Cash Use $15.2 million in Q3 2025, up sequentially from Q2. Increase due to higher marketing spend and seasonal working capital needs.

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Operating Highlights

Wool Cruiser: Launched in September with 19 colors, including 5 exclusive shades in collaboration with Pantone. Vibrant colors like blossom and citron are leading sales, marking a shift from natural tones. Positioned as a key franchise for the future.

Waterproof Collection: Introduced in September with 3 silhouettes. Exceeding expectations in its first month, offering full waterproof functionality with comfort, style, and sustainability.

Relaxed Category: Launched a slipper collection and the Kiwi collection, including mules, clogs, and low boots. Designed for indoor/outdoor use, showcasing potential for growth in this category.

Wholesale Strategy: Renewed strategy to expand presence in approximately 150 specialty retail stores across the U.S. by Spring 2026. Positive reception from international distributors and U.S. sales agencies for the Fall 2026 collection.

Marketing Efforts: Shifted to mid- and lower-funnel marketing to drive traffic, conversion, and brand equity. Increased influencer activations, celebrity partnerships, and traditional media usage.

Customer Experience: Relaunched website in July to improve shopping and purchasing journey. Enhanced storytelling, utility, and post-purchase communication.

Cost Management: Reduced Q3 SG&A expenses by 30% year-over-year through lower personnel, occupancy, and stock-based compensation costs.

Liquidity Enhancement: Exploring options to improve liquidity, including potential capital raising. Focused on cost management and incremental expense savings.

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Risk or Challenges

Brand Perception Rebuilding: Rebuilding brand perception is a process requiring sustained execution across multiple product cycles, indicating challenges in regaining consumer trust and market position.

Mixed Product Performance: While new products are performing well, foundational franchises like the original runner are slower to rebuild, posing risks to consistent revenue generation.

Macroeconomic Uncertainty: The company acknowledges an uncertain macroeconomic backdrop, which could impact consumer spending and overall business performance.

Competitive Holiday Shopping Period: Expectations for a highly competitive holiday shopping season could pressure sales and margins.

Cost Management and Liquidity: The company is taking steps to reduce costs and enhance liquidity, including potential capital raising, highlighting financial constraints.

Gross Margin Decline: Year-over-year gross margin decline due to higher mix of digital and international distributor sales and increased duties in the U.S. business.

Inventory Management: Inventories are down 25% year-over-year, but seasonal working capital needs and higher marketing spend are increasing cash use.

International Distributor Transitions: Impact of $23 million to $25 million associated with international distributor transitions and retail store closures, affecting revenue.

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Guidance & Outlook

Revenue Expectations: Full year net revenue is expected to be between $161 million and $166 million, revised from the prior guidance range of $165 million to $180 million. Fourth quarter net revenue guidance is set at $56 million to $61 million, flat to up 9% versus a year ago.

Margin Projections: Full year gross margin is anticipated to remain in the low 40% range, consistent with Q3 results.

Capital Expenditures and Liquidity: The company is exploring options to improve its liquidity position in the coming quarters, including potential capital raising measures.

Market Trends and Competitive Environment: The outlook considers an uncertain macroeconomic backdrop and expectations for a highly competitive holiday shopping period.

Business Segment Performance: The company expects improved top-line trends in Q4, driven by new product launches such as the Wool Cruiser and waterproof collections, as well as expanded presence in approximately 150 specialty retail stores in the U.S. by Spring 2026.

Strategic Plans: Plans to execute a renewed wholesale strategy starting Spring 2026, with the brand available in 150 specialty retail stores across the U.S. The company also aims to expand its international and domestic channels for growth in 2026.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What led to the third quarter sales results being on the low end of expectations, and what are the expectations for the fourth quarter and 2026?

A:The third quarter sales results were influenced by three factors: the introduction of new products, which are performing well but are still new to the market; underperformance in core franchises like the runner; and macroeconomic distractions affecting consumer behavior. For the fourth quarter, the company expects improvement due to the continued introduction of new products and reduced structural impacts from international distributor transitions and retail door closures. For 2026, optimism is based on product momentum and diminishing structural impacts.

Q:Can you provide details about the inventory composition and strategy for the Black Friday period and holiday season?

A:The inventory ended the quarter at $43 million, down 25% year-over-year, due to international transitions and strong inventory management. The company has focused on cleaning up inventory to prepare for new product launches. For Black Friday and the holiday season, the strategy includes competitive promotions, rhythm in product offerings, and a focus on maintaining market share through rigorous planning.

Q:Review of Unclear Management Responses

A:No questions were avoided or lacked clarity in the responses provided by management.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

BIRD Transcript

Allbirds, Inc. (BIRD) Q3 2025 Earnings Call Transcript

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Allbirds, Inc. (BIRD) Q2 2025 Earnings Call Transcript

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The earnings call highlights several negative factors: declining gross margins, store closures, increased marketing expenses, and an adjusted EBITDA loss. Despite some positive elements like effective inventory management and a profitable distributor model, the overall sentiment is weighed down by reduced sales guidance and ongoing financial losses. The Q&A section confirms challenges with store closures and macroeconomic uncertainties, further reinforcing a negative outlook for the stock price over the next two weeks.

Allbirds, Inc. (NASDAQ:BIRD) Q4 2024 Earnings Call Transcript

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The earnings call reveals several challenges: declining revenues, weak gross margins, and significant adjusted EBITDA losses. The transition to a distributor model and store closures have negatively impacted financials. Despite optimistic guidance, the market strategy faces risks, including reduced marketing spend and competitive pressures. The Q&A section highlights vague management responses and unclear growth drivers. The lack of a share repurchase program further detracts from shareholder confidence. Overall, the negative factors outweigh the positives, suggesting a likely stock price decline in the short term.

Allbirds, Inc. (BIRD) Q4 2024 Earnings Call Transcript

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The earnings call reveals weak financial performance, with declining revenues and margins, and no shareholder return plans. Despite optimistic guidance and marketing plans, the Q&A highlights a challenging macro environment and vague management responses, raising concerns. The lack of new partnerships or significant positive catalysts further supports a negative sentiment.

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