Allbirds Inc. logged a loss of $67.6 million in the third quarter as sales fell 25 percent, in line with guidance. The footwear maker slightly improved its earnings guidance for the year while lowering its sales targets.

Third Quarter 2024 Overview

  • Third quarter net revenue decreased 24.9 percent to $43.0 million versus a year ago, within the company’s guidance range calling for sales in the range of $40 million to $43 million
  • Third quarter gross margin improved approximately 90 basis points to 44.4 percent versus a year ago.
  • Third quarter net loss of $21.2 million, or $2.68 per basic and diluted share.
  • Third quarter adjusted EBITDA loss of $16.2 million, within the company’s guidance range calling for a loss in the range of $19 million to $16 million.
  • Inventory at quarter end of $57.5 million, representing a decrease of 28.1 percent versus a year ago.
  • As of September 30, 2024, the company had $78.6 million of cash and cash equivalents and no outstanding borrowings under its $50.0 million revolving credit facility.
  • The company completed its transition to a distributor model in China and entered into a new distributor agreement covering six countries across mainland Europe.
  • Subsequent to quarter end, the company entered into a new distributor agreement covering six countries in Latin America.
  • The company’s latest sustainability report, the Allbirds 2023 Flight Status, reported a 22 percent reduction of its per unit carbon footprint2 in 2023 compared to 2022.

“We are pleased to deliver Q3 results within our expectations as we continue to advance our three strategic focus areas,” said Joe Vernachio, chief executive officer. “Our teams are delivering strong execution across the board and we are energized by the opportunity ahead as we prepare to bring our reignited product to market in 2025.”

Third Quarter Operating Results
In the third quarter of 2024, net revenue decreased 24.9 percent to $43.0 million compared to $57.2 million in the third quarter of 2023. The year-over-year decrease is primarily attributable to lower unit sales, partially offset by higher average selling prices within our direct business. Revenue was also impacted by its international distributor transitions and planned retail store closures.

Gross profit totaled $19.1 million compared to $24.9 million in the third quarter of 2023, and gross margin improved approximately 90 basis points to 44.4 percent compared to 43.5 percent in the third quarter of 2023. The improvement in gross margin is primarily due to lower freight, duty, and warehouse costs per unit, and a decrease in inventory write-downs resulting from a healthier inventory composition versus a year ago.

Selling, general, and administrative expense (SG&A) was $31.0 million, or 72.0 percent of net revenue, compared to $43.5 million, or 76.1 percent of net revenue in the third quarter of 2023. The decrease is primarily attributable to decreases in personnel expenses, depreciation and amortization expense, stock-based compensation expense, and occupancy costs.

Marketing expense totaled $9.9 million, or 22.9 percent of net revenue, compared to $10.2 million, or 17.8 percent of net revenue in the third quarter of 2023. The lower spend was primarily driven by decreased digital advertising.

In the third quarter of 2024, net loss was $21.2 million compared to $31.6 million in the third quarter of 2023, and net loss margin was 49.3 percent compared to 55.2 percent in the third quarter of 2023.

In the third quarter of 2024, adjusted EBITDA was a loss of $16.2 million compared to a loss of $19.0 million in the third quarter of 2023, and adjusted EBITDA margin declined to (37.8) percent compared to (33.1) percent in the third quarter of 2023.

Nine Month Operating Results
Net revenue in the first nine months of 2024 decreased 26.5 percent to $133.9 million compared to $182.1 million in the first nine months of 2023. The year-over-year decrease is primarily attributable to lower unit sales, partially offset by higher average selling prices within our direct business. Revenue was also impacted by our international distributor transitions and planned retail store closures.

Gross profit in the first nine months of 2024 totaled $63.6 million compared to $76.9 million in the first nine months of 2023, while gross margin improved approximately 530 basis points to 47.5 percent in the first nine months of 2024 versus 42.2 percent in the same period a year ago. The improvement in gross margin is primarily due to lower freight and duty costs per unit, and a decrease in inventory write-downs resulting from a healthier inventory composition versus a year ago.

SG&A in the first nine months of 2024 was $104.2 million, or 77.8 percent of net revenue, compared to $132.5 million, or 72.8 percent of net revenue, in the first nine months of 2023, with the decrease primarily attributable to decreases in personnel expenses, stock-based compensation expense, depreciation and amortization expense, and occupancy costs.

Marketing expense in the first nine months of 2024 totaled $29.4 million, or 21.9 percent of net revenue, compared to $34.2 million, or 18.8 percent of net revenue, in the first nine months of 2023. The decrease was primarily driven by decreased digital advertising spend.

Restructuring expense in the first nine months of 2024 totaled $1.8 million, or 1.3 percent of net revenue, compared to $5.5 million, or 3.0 percent of net revenue in the same period in 2023. The decrease was primarily due to lower fees incurred related to the execution of our strategic transformation plan announced in March 2023.

Net loss in the first nine months of 2024 was $67.6 million compared to $95.7 million in the first nine months of 2023, and net loss margin was 50.5 percent compared to 52.5 percent in the first nine months of 2023.

Adjusted EBITDA loss in the first nine months of 2024 was $50.9 million compared to a loss of $58.9 million in the first nine months of 2023, and adjusted EBITDA margin declined to (38.0) percent compared to (32.4) percent for the first nine months of 2023.

Balance Sheet Highlights
Allbirds ended the quarter with $78.6 million of cash and cash equivalents and no outstanding borrowings under its $50.0 million revolving credit facility. Inventories totaled $57.5 million, a decrease of 28.1 percent versus a year ago.

2024 Financial Outlook
The company is updating its full year 2024 revenue guidance and narrowing its Adjusted EBITDA guidance range as follows:

  • Net revenue of $187 million to $193 million, compared to prior guidance of $190 million to $210 million.
  • US net revenue of $143 million to $147 million, including a $10 million to $12 million impact resulting from anticipated store closures
  • International net revenue of $44 million to $46 million, including $13 million to $16 million of impact resulting from transitions to a distributor model in certain international markets
  • Adjusted EBITDA loss of $75 million to $71 million compared to prior guidance for a loss of $75 million to $63 million.

The company is maintaining its full year 2024 gross margin guidance:

  • Gross margin of 43 percent to 46 percent

The company is providing the following guidance for the fourth quarter of 2024:

  • Net revenue of $53 million to $59 million
  • US net revenue of $45 million to $49 million
  • International net revenue of $8 million to $10 million
  • Adjusted EBITDA loss of $25 million to $21 million

Image courtesy Allbirds