Allbirds, Inc. reported a loss in the first quarter ended March 31 as sales were down 13.4 percent, although results topped company guidance.

Sales of $54.4 million topped company guidance in the range of $45 million to $50 million. Adjusted EBITDA loss of $21.7 million topped guidance calling for an adjusted EBITDA loss between $29 million to $26 million.

Q1 2023 Overview

  • Net revenue decreased 13.4 percent to $54.4 million compared to 2022 and increased 9.5 percent compared to 2021;
  • Net loss of $35.2 million, or $0.23 per basic and diluted share;
  • Adjusted EBITDA loss of $21.7 million;
  • Announced M0.0NSHOT, a project to create the  first net zero carbon shoe;
  • Significant improvement in Q1 cash usage, down 50.6 percent compared to Q1 2022; and
  • In April 2023, extended and upsized the undrawn revolver with JP Morgan.

“Our teams are executing well against our strategic transformation plan designed to reignite growth, improve capital efficiency and drive profitability,” said Joey Zwillinger, co-founder and CEO. “The dedication and hard work of our flock resulted in a quarter that demonstrated good progress on our strategic initiatives while exceeding our expectations.”

“Our mission to create better things in a better way, guided by our Super Natural Comfort Northstar, remains at the forefront of everything we do at Allbirds as we advance our vision to build a 100-year brand.”

First Quarter Operating Results
Net revenue decreased 13.4 percent to $54.4 million compared to the first quarter of 2022 and increased 9.5 percent compared to the first quarter of 2021. This decrease is primarily attributable to a decrease in average selling price, driven by promotional activity and a higher mix of third-party sales, and an estimated $1.2 million negative impact from foreign exchange (FX).

Gross profit totaled $21.8 million compared to $32.6 million in the first quarter of 2022, and gross margin declined to 40.1 percent compared to 51.9 percent in the first quarter of 2022. The decrease in gross margin is primarily due to the decrease in average selling price, driven by an increase in promotional activity and a higher mix of third-party sales, write-downs related to prior-generation products, and costs relating to our manufacturing transitions.

SG&A was $42.8 million, or 78.7 percent of net revenue, compared to $38.8 million, or 61.7 percent of net revenue in the first quarter of 2022, which represented a year-over-year increase of 10.3 percent. The increase is primarily attributable to an increase in stock-based compensation and operational expenses for 20 additional stores opened since the first quarter of 2022, including depreciation expense, and rent and utility expense.

Marketing expense totaled $11.5 million, or 21.1 percent of net revenue, compared to $13.8 million, or 22.0 percent of net revenue in the first quarter of 2022, due to a reduction in marketing spend compared to the same period in 2022, driven by decreased digital advertising spend.

Restructuring expenses totaled $3.2 million, or 6.0 percent of net revenue, compared to $0.0 million in the first quarter of 2022, as a result of executing the strategic transformation plan announced in March 2023.

Net loss was $35.2 million compared to $21.9 million in the first quarter of 2022, and net loss margin was 64.7 percent compared to 34.9 percent in the first quarter of 2022.

Adjusted EBITDA was a loss of $21.7 million, compared to a loss of $12.2 million in the first quarter of 2022, and adjusted EBITDA margin1 declined to (39.8) percent compared to (19.5) percent in the first quarter of 2022.

Strategic Transformation Designed To Drive Sustained And Profitable Growth
Allbirds is executing its strategic transformation plan designed to reignite growth in the coming years, improve capital efficiency and drive profitability. The plan, announced in March 2023, focuses on four key areas:

  • Reignite product and brand: Executing a highly-focused brand strategy that reconnects with core consumers.
  • Optimize U.S. stores and slow pace of openings: Driving traffic and conversion to our U.S. fleet and selectively expanding our third-party wholesale channel.
  • Evaluate the transition of international go-to-market strategy: Evaluating potential distributor partners in certain international markets to grow internationally in a cost- and capital-efficient manner.
  • Improve cost savings and capital efficiency: Building upon and further accelerating 2022 cost and cash optimization initiatives to accelerate the cost of revenue savings and SG&A savings, and improve cash optimization.

Balance Sheet Highlights
Allbirds ended the quarter with $143.3 million of cash and cash equivalents, reflecting a 50.6 percent improvement in cash usage compared to the first quarter of 2022.

In April 2023, we amended our credit agreement to extend and upsize our undrawn revolver, which extended the maturity through 2026, increased the committed amount to $50 million, and increased the uncommitted incremental borrowing capacity to $50 million.

Inventories totaled $109.5 million, a decrease of 6.3 percent compared to $116.8 million at the end of 2022, and a decrease of 7.5 percent compared to $118.5 million at the end of the first quarter of 2022. The decrease from the end of 2022 is attributable to less on-hand inventory.

Q2 2023 Financial Guidance Targets
Allbirds provided the following financial guidance targets for the 2nd quarter of 2023:

  • Net revenue of $64 million to $69 million, a decrease of 18 percent to 12 percent versus the 2nd quarter of fiscal 2022.
  • Adjusted EBITDA loss of $20 million to $23 million.

Photo courtesy Allbirds