Allbirds Inc. reported sales grew 26 percent in the first quarter year over year and gained 49 percent over the first quarter of 2019. The footwear brand posted a loss in the period tied to investments to open stores.
- First-quarter 2022 net revenue increased 26 percent to $62.8 million compared to the first quarter of 2021 and increased 49 percent compared to the first quarter of 2020;
- First-quarter 2022 gross profit increased 26 percent to $32.6 million compared to the first quarter of 2021, and the first-quarter 2022 gross margin was 51.9 percent compared to 52.0 percent in the first quarter of 2021;
- First-quarter 2022 GAAP net loss of $21.9 million, or $0.15 per basic and diluted share;
- First-quarter 2022 adjusted EBITDA loss of $12.2 million;
- First-quarter 2022 net revenue in the U.S. increased 35 percent to $48.9 million compared to the first quarter of 2021; and
- Physical retail channel sales grew 129 percent in the first quarter of 2022 compared to the first quarter of 2021. The company opened four stores during the quarter and 17 since the first quarter of 2021, ending the period with 39 locations worldwide.
“We are pleased to deliver strong first-quarter performance across our key financial metrics, particularly against the backdrop of a volatile operating environment,” said Joey Zwillinger, co-founder and co-CEO. “Tumult around the world since our last earnings report, including Russia’s invasion of Ukraine and China’s COVID-19 restrictions, impacted the performance of our international business in Q1 and is expected to persist for the remainder of 2022. These factors were more than offset by excellent performance in our U.S. business, which delivered net revenue growth of 35 percent in the first quarter. Net revenue growth for the total business again accelerated on both a one- and two-year basis in the quarter, up 26 percent and 49 percent, respectively.
“We believe our teams are continuing to execute well amidst the external headwinds and we remain focused on driving the topline through our core growth pillars of delivering product innovation, growing our store portfolio and expanding internationally, with those growth pillars highlighted in 2022 by what we believe is the most exciting new product roadmap in the history of the company. While we are adopting a more conservative near-term outlook in light of the transitory external headwinds affecting our international business, we expect to deliver strong full-year revenue growth of 21 percent to 24 percent in 2022. Importantly, we remain confident that our digital-savvy, omni-channel operating model will support continued growth and enable us to create meaningful value for our shareholders in the years ahead.”
First Quarter Operating Results
Net revenue in the first quarter of 2022 increased 26 percent to $62.8 million compared to $49.6 million in the first quarter of 2021 and increased 49 percent compared to the first quarter of 2020. The increase is primarily attributable to consumer demand in the U.S. where net revenue increased 35 percent to $48.9 million, reflecting growth in its digital and physical retail channels, new product launches and refreshes and improved pricing. International net revenue increased 3 percent to $13.8 million compared to the first quarter of 2021, and growth was negatively impacted by external headwinds, including COVID-19 restrictions in China, Russia’s invasion of Ukraine in Europe, and a strengthening of the U.S. dollar in some international markets.
Gross profit in the first quarter of 2022 totaled $32.6 million compared to $25.8 million in the first quarter of 2021, and gross margin declined 10 basis points to 51.9 percent compared to 52.0 percent in the first quarter of 2021. The decrease in gross margin primarily reflects higher distribution center and logistics costs, a lower mix of international sales and unfavorable foreign exchange rates partially offset by a favorable mix shift to physical retail and higher-margin products, as well as improved pricing.
Selling, general and administrative expense in the first quarter of 2022 was $38.8 million, or 61.7 percent of revenue, compared to $23.5 million, or 47.4 percent of revenue, in the first quarter of 2021. The year-over-year increase is primarily attributable to expenses for the opening of four new stores during the period and operational expenses for 17 additional stores opened since the first quarter of 2021, as well as public company operating costs.
Marketing expenses in the first quarter of 2022 totaled $13.8 million compared to $12.7 million in the first quarter of 2021 and improved as a percentage of revenue to 22.0 percent from 25.6 percent a year ago. The decrease in marketing expense as a percentage of revenue is primarily due to increased marketing efficiency in its digital channels.
GAAP net loss in the first quarter of 2022 was $21.9 million compared to a net loss of $13.5 million in the first quarter of 2021 and the net loss margin was 34.9 percent compared to 27.2 percent in the first quarter of 2021.
Adjusted EBITDA in the first quarter of 2022 was a loss of $12.2 million compared to a loss of $6.9 million in the first quarter of 2021, and adjusted EBITDA margin decreased by approximately 560 basis points to (19.5) percent versus (13.8) percent a year ago.
Balance Sheet Highlights
Allbirds ended the quarter with $240 million of cash and cash equivalents and $40 million available under its revolving credit agreement. Inventories totaled $118 million, an increase of 11 percent compared to $107 million at the end of 2021. The year-over-year increase is attributable to a combination of higher in-transit inventory as a result of extended lead times from ongoing supply chain disruptions, as well as the impact of higher inbound freight costs.
2022 Financial and Carbon Footprint Reduction Guidance Targets
Allbirds is providing the following updated guidance targets for full-year 2022 to reflect its current estimate of the impact on its international business of Russia’s invasion of Ukraine and COVID-19-related restrictions in China:
- Net revenue of $335 million to $345 million, representing growth in the range of 21 percent to 24 percent, including an estimated FX impact of 150-to-200 bps, versus fiscal 2021. Compared to fiscal 2020, this range represents a growth of 53 percent to 57 percent;
- Gross profit of $170.0 million to $177.5 million, which is at the midpoint of its net revenue and gross profit targets represents a gross margin of 51.1 percent;
- Adjusted EBITDA of negative $25 million to negative $21 million, including an estimated $8 million of public company costs; and
- Carbon footprint reduction target of 6 percent for its Top 10 products, aligned with its Allbirds Flight Plan, to reduce by 50 percent by the end of 2025 and 95 percent by 2030.
Allbirds is providing the following financial guidance targets for the second quarter of 2022, which reflects its expectation that the majority of the estimated impact noted above will occur during this quarter:
- Net revenue of $75 million to $79 million, representing growth in the range of 10 percent to 16 percent versus the second quarter of fiscal 2021 and 48 percent to 56 percent versus the second quarter of fiscal 2020; and
- Adjusted EBITDA of negative $14 million to negative $11 million, including an estimated $2 million of public company costs.
Full Year 2022 Guidance
(updates guidance targets to reflect external headwinds in international markets)
Mike Bufano, CFO, said, “We delivered a strong first-quarter performance with net revenue growth of 26 percent exceeding our guidance targets, gross profit increasing 26 percent year-over-year despite higher supply chain costs, and adjusted EBITDA coming in within our guidance target range. Looking at the second quarter and remainder of 2022, we anticipate that external headwinds will continue to impact our international business and as such, we are reflecting a more cautious outlook in our updated 2022 guidance targets. Our expectation that these external headwinds are transitory, coupled with the underlying strength of our model and strong execution by our teams, makes us confident in our ability to achieve our medium-term financial targets, including 20 percent to 30 percent net revenue growth, gross margin of 60 percent+ and mid-to high-teens adjusted EBITDA margin.”
Photo courtesy Allbirds