Allbirds, Inc., in its first quarterly report since going public, widened its loss in the quarter ended September 30 as sales rose 33 percent. Results were slightly above forecasts.

Third Quarter Highlights

  • Net revenue rose 33 percent to $62.7 million compared to the third quarter of 2020 and increased 40 percent versus the third quarter of 2019;
  • Gross profit increased 36 percent to $33.9 million compared to the third quarter of 2020; gross margin expanded 120 basis points from the third quarter of 2020 to 54.1 percent;
  • GAAP net loss of $13.8 million, or $0.25 per basic and diluted share; net loss margin of (22.0) percent;
  • Adjusted EBITDA loss of $6.3 million; Adjusted EBITDA margin of (10.1) percent; and
  • Opened four stores, ending the third quarter with 31 locations.

Allbirds had forecasted a loss between $15 million and $18 million. Sales were forecasted to range between $61 million and $62.5 million.

“We are pleased to deliver strong third-quarter performance, which reflects solid execution by our teams and robust global demand for the Allbirds brand,” said Joey Zwillinger, co-founder and co-CEO. “Revenue was strong across channels and geographies, growing 33 percent year over year, with notable strength in U.S. physical retail. Importantly, we saw strong consumer response in the quarter to our new product innovation, including our new Perform Apparel line.”

“We’re at the forefront of a generational change in consumer values and purchase behaviors, led by our mission to make better things in a better way—which means we’re aligning our purpose of reversing climate change with our product quality and financial outcomes. Looking ahead, we believe Allbirds is uniquely positioned in an exceptionally large and growing market. As we continue to execute our strategic plan, we are focused on accelerating growth, creating value for our shareholders and building for a multi-decade journey.”

Third Quarter Operating Results
Net revenue in the third quarter of 2021 increased 33 percent to $62.7 million compared to $47.2 million in the third quarter of 2020 and increased 40 percent compared to the third quarter of 2019. The increase is primarily attributable to robust consumer demand in the United States and a strong response to new footwear and performance apparel product launches. Net revenue in the United States increased 42 percent to $47.7 million and international net revenue increased 10 percent to $15.0 million compared to the third quarter of 2020.

Gross profit totaled $33.9 million compared to $25.0 million in the third quarter of 2020 and gross margin expanded 120 basis points to 54.1 percent versus 52.9 percent compared to the same period in the prior year. The increase in gross margin primarily reflects favorable product mix, sales of higher gross margin products such as apparel, and a decrease in product costs, partially offset by higher warehouse and logistics costs.

Selling, general and administrative expenses (SG&A) were $33.0 million, or 52.6 percent of revenue, compared to $20.1 million, or 42.5 percent of revenue, in the third quarter of 2020, with the increase primarily driven by expenses for the opening of four new stores during the period and operational expenses for 10 additional stores opened since the third quarter of 2020, increased headcount, and public company preparation costs. Marketing expenses totaled $12.8 million versus $12.1 million compared to the third quarter of 2020 and improved as a percentage of revenue to 20.4 percent from 25.7 percent a year ago.

Third-quarter GAAP net loss was $13.8 million compared to net loss of $7.0 million in the third quarter of 2020, and net loss margin was (22.0) percent compared to (14.8) percent in the third quarter of 2020.

Adjusted EBITDA loss in the third quarter of 2021 was $6.3 million compared to $3.8 million in the third quarter of 2020, and Adjusted EBITDA margin decreased by 200 basis points to (10.1) percent versus (8.1) percent a year ago.

Nine-Month Operating Results
Year-to-date net revenue in the third quarter of 2021 increased 29 percent to $180.3 million compared to $140.0 million in the nine months ended September 30, 2020 and increased 43 percent compared to the nine months ended September 30, 2019. The increase is primarily attributable to robust consumer demand in the United States and a strong response to new footwear launches. Year-to-date net revenue in the United States increased 26 percent to $132.9 million and international net revenue increased 37 percent to $47.4 million compared to the nine months ended September 30, 2020.

Year-to-date gross profit in the third quarter of 2021 totaled $97.9 million compared to $73.3 million in the nine months ended September 30, 2020, while gross margin expanded 190 basis points to 54.3 percent versus 52.4 percent compared to the same period in the prior year. The increase in gross margin primarily reflects favorable product mix, sales of higher gross margin products such as apparel, and a decrease in product costs, partially offset by higher warehouse and logistics costs.

Year-to-date selling, general and administrative expenses (SG&A) in the third quarter of 2021 were $85.5 million, or 47.5 percent of revenue, compared to $61.2 million, or 43.7 percent of revenue, in the nine months ended September 30, 2020, with the increase primarily driven by expenses for the opening of nine new stores during the period and continued operational expenses for stores opened during 2020, increased headcount, and public company preparation costs. Year-to-date marketing expenses in the third quarter of 2021 totaled $38.8 million versus $31.7 million compared to the nine months ended September 30, 2020 and improved as a percentage of revenue to 21.5 percent from 22.6 percent a year ago.

Year-to-date GAAP net loss in the third quarter of 2021 was $34.9 million compared to a net loss of $16.5 million in the nine months ended September 30, 2020, and net loss margin was (19.4) percent compared to (11.8) percent in the nine months ended September 30, 2020. Year-to-date adjusted EBITDA loss in the nine months ended September 30, 2021 was $12.1 million compared to $10.1 million in the nine months ended September 30, 2020, and Adjusted EBITDA margin improved by 50 basis points to (6.7) percent versus (7.2) percent a year ago.

Balance Sheet Highlights
Allbirds ended the third quarter of 2021 with $65 million of cash and cash equivalents and $40 million available under its revolving credit agreement. Inventories totaled $99 million, an increase of 55 percent compared to $64 million as of the third quarter of 2020, which reflects longer ocean shipping lead times and the company’s strategic decision to build inventories in response to strong consumer demand ahead of the holiday selling season. In November 2021, Allbirds received offering proceeds from its IPO of approximately $252.8 million, before deducting underwriting discounts and offering costs.

2021 Financial Outlook

  • Allbirds provided the following outlook for fiscal year 2021:
  • Net revenue of $270 million to $272 million, representing growth in the range of 23 percent to 24 percent versus fiscal 2020 and 39 percent to 40 percent versus fiscal 2019
  • Adjusted EBITDA of negative $17 million to $15 million, including an estimated $5 million of public company costs

“We achieved strong top-line growth, gross margin expansion, and improved marketing efficiency in the quarter,” said Mike Bufano, Chief Financial Officer. “We feel confident about how the business is positioned and our ability to navigate what continues to be a dynamic macro environment. Through careful investments, we have built a solid infrastructure across people, supply chain and technology that we believe positions us to profitably grow the business and create shareholder value.”