Core Insights - Three apparel stocks have shown significant deterioration in momentum this week, indicating a shift in investor sentiment and market trends [1][3]. Company Summaries - **Allbirds Inc. (NASDAQ:BIRD)**: The momentum percentile dropped from 50.12 to 34.19, a decline of 15.93 points. Despite a year-to-date increase of 92.37% and an 82.61% rise over the past year, the stock exhibits a weaker price trend across all time frames and holds a poor growth ranking [6]. - **Neo-Concept International Group Holdings Ltd. (NASDAQ:NCI)**: The momentum percentile fell from 14.63 to 10.34, a decrease of 4.29 points. The stock is down 36.50% year-to-date and 28.11% over the past year, showing a stronger short-term price trend but weaker medium and long-term trends [7]. - **Shoe Carnival Inc. (NASDAQ:SCVL)**: The momentum score decreased from 11.62 to 11.07, a drop of 0.55 points. The stock has declined 36.95% year-to-date and 47.77% over the past year, with weaker price trends across all time frames and a moderate growth ranking [7].

Three apparel stocks have exhibited marked deterioration in momentum this week, as reflected by their week-on-week momentum percentile changes.What Does Momentum Ranking Mean?The momentum percentile, as defined by Benzinga Stock Edge Rankings methodology, reflects a stock's relative strength based on price movement patterns and volatility compared to peers, offering an essential measure to track when evaluating shifts in investor sentiment and market trends.3 Apparel Stocks With Weakening MomentumAllbirds I ...

The rain-ready shoes deliver uncompromising comfort, style and performance–all without PFAS Allbirds Waterproof Collection Allbirds' first-ever assortment of fully waterproof shoes includes three styles: the Wool Runner NZ Waterproof, Wool Runner NZ Mid Waterproof and Wool Cruiser Waterproof. SAN FRANCISCO, Sept. 30, 2025 (GLOBE NEWSWIRE) -- Allbirds today unveiled its first-ever fully waterproof shoes, made with the brand’s hallmark material: wool. Whether you’re braving downpours during daily commutes, ...

Core Insights - Allbirds has launched a new collection of Wool Cruisers featuring 19 vibrant colors as part of its "Cruise in Color" campaign, reflecting a trend towards bold and expressive footwear choices among consumers [1][2][14] - The partnership with the Pantone Color Institute has resulted in five exclusive shades that emphasize individuality and self-expression, moving away from homogenized fashion trends [3][8] Product Details - The Wool Cruiser is designed with a simple court-style silhouette, incorporating thoughtful features such as a textured midsole and debossed detailing, which enhance its sophisticated aesthetic [4][5] - The shoes are made from recycled wool sourced from post-consumer knitwear, blended with recycled polyester, showcasing Allbirds' commitment to sustainability [3][5] Market Positioning - The launch aligns with a broader industry shift towards colorful and unique footwear, as consumers increasingly seek to express their individuality through fashion [2][3] - The retail price for the Wool Cruiser is set at $100 USD, making it accessible within the modern lifestyle footwear market [6] Brand Overview - Allbirds, founded in 2015, focuses on creating comfortable and sustainable footwear using natural materials, positioning itself as a leader in eco-friendly fashion [7] - The brand's commitment to innovation and sustainability is reflected in its product offerings, which include materials like Merino wool and tree fiber [7] Color Palette Highlights - The five exclusive shades curated by Pantone include Sapphire Blue, Zesty Citron, Golden Sunshine, Vibrant Blossom, and Granite Gray, each designed to inspire personal expression and creativity [3][9]

Core Insights - Allbirds has launched a new footwear line called Remix, created in partnership with Blumaka and Circ, aimed at repurposing manufacturing waste into new shoes [1][2][3] Industry Overview - The footwear industry produces billions of shoes annually, generating significant manufacturing waste, including 344,000 tons of midsole foam waste each year, which could create 2.5 billion midsoles [2] - Much of this waste is non-biodegradable and difficult to recycle, leading to environmental concerns as it ends up in landfills [2] Company Innovations - The Remix styles utilize Blumaka's midsoles made from reclaimed foam scraps, which use 99% less water and emit 65% fewer carbon emissions compared to traditional foam production [3] - Remix styles are the first footwear to incorporate textile-to-textile recycled materials from polycotton waste, utilizing Circ's hydrothermal recycling process [4] - The collaboration represents a significant advancement in sustainable practices within the footwear industry, showcasing the potential for textile recycling beyond apparel [8] Product Details - The Remix collection includes two styles: Runner NZ Remix and Cruiser Remix, available in various sizes at a retail price of $140 USD [7] - The shoes are designed to offer a balance of comfort, sustainability, and style, appealing to environmentally conscious consumers [5][6] Company Background - Allbirds, founded in 2015, focuses on creating sustainable footwear using natural materials and innovative processes [9] - Blumaka specializes in producing high-performance insoles from over 85% recycled materials, emphasizing durability and environmental responsibility [10] - Circ aims to create a circular economy in the fashion industry by recycling textiles into virgin-equivalent materials [11]

Core Insights - Allbirds, Inc. reported a revenue of $39.69 million for the quarter ended June 2025, reflecting a decline of 23.1% year-over-year and a surprise of -1.37% compared to the Zacks Consensus Estimate of $40.24 million [1] - The company's EPS was -$1.92, an improvement from -$2.40 in the same quarter last year, with a positive surprise of +30.94% against the consensus estimate of -$2.78 [1] Financial Performance - The net revenue from international markets was $11.04 million, exceeding the average estimate of $10.06 million, but still showing a year-over-year decline of -26.2% [4] - In the United States, net revenue was reported at $28.65 million, slightly below the average estimate of $29.92 million, with a year-over-year decrease of -21.8% [4] Stock Performance - Over the past month, Allbirds, Inc. shares have returned -7.1%, contrasting with the Zacks S&P 500 composite's increase of +1.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Group 1 - Allbirds, Inc. reported a quarterly loss of $1.92 per share, which was better than the Zacks Consensus Estimate of a loss of $2.78, representing an earnings surprise of +30.94% [1] - The company posted revenues of $39.69 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.37%, and down from $51.58 million a year ago [2] - Allbirds shares have increased by approximately 46.6% since the beginning of the year, outperforming the S&P 500's gain of 7.9% [3] Group 2 - The earnings outlook for Allbirds will be crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The trend of estimate revisions for Allbirds was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The current consensus EPS estimate for the upcoming quarter is -$2.31 on revenues of $42.04 million, and for the current fiscal year, it is -$9.91 on revenues of $175.97 million [7] Group 3 - The outlook for the Retail - Apparel and Shoes industry, which includes Allbirds, is currently in the bottom 22% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Foot Locker, another company in the same industry, is expected to report quarterly earnings of $0.05 per share, reflecting a year-over-year change of +200%, with revenues projected at $1.86 billion, down 2% from the previous year [9]

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) This Quarterly Report on Form 10-Q for Allbirds, Inc. covers the period ended June 30, 2025 - This is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by Allbirds, Inc. (BIRD) with the SEC[3](index=3&type=chunk)[4](index=4&type=chunk)[6](index=6&type=chunk) Condensed Consolidated Balance Sheets (in thousands) | Metric | Value | | :--- | :--- | | Commission File Number | 001-40963 | | Registrant | Allbirds, Inc. | | State of Incorporation | Delaware | | Principal Executive Offices | 30 Hotaling Place, San Francisco, CA 94111 | | Telephone Number | (628) 225-4848 | | Trading Symbol | BIRD | | Exchange | The Nasdaq Global Select Market | | Class A Common Stock Outstanding (as of Aug 1, 2025) | 5,604,113 | | Class B Common Stock Outstanding (as of Aug 1, 2025) | 2,542,365 | | Filer Status | Smaller reporting company, Emerging growth company | [TABLE OF CONTENTS](index=3&type=section&id=TABLE%20OF%20CONTENTS) The Table of Contents outlines the report's structure, including financial and other information sections - The Table of Contents provides an overview of the report's structure, including sections on Forward-Looking Statements, Risk Factors, Financial Information (Items 1-4), and Other Information (Items 1-6)[8](index=8&type=chunk)[9](index=9&type=chunk) [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that forward-looking statements are subject to risks and uncertainties, not guarantees - This section warns readers that the report contains forward-looking statements subject to substantial risks and uncertainties, and actual results may differ materially from projections[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) - Investors should not unduly rely on these statements, and the company undertakes no obligation to update them[12](index=12&type=chunk)[14](index=14&type=chunk) - Forward-looking statements include those regarding future operations, financial condition, business strategy, transformation plans, sustainability efforts, market growth, and new product roll-outs[11](index=11&type=chunk) [RISK FACTORS SUMMARY](index=6&type=section&id=RISK%20FACTORS%20SUMMARY) Investing in Class A common stock involves high risk due to numerous business uncertainties and challenges - Investing in Class A common stock involves high risk due to numerous business uncertainties, including inability to execute growth strategy, failure to attract/retain customers, fluctuating operating results, and need for additional capital[20](index=20&type=chunk) - Other significant risks involve maintaining brand value, incurring net losses, increased costs from sustainable practices, climate change impact, and intellectual property protection[20](index=20&type=chunk)[22](index=22&type=chunk) [PART I—FINANCIAL INFORMATION](index=8&type=section&id=Part%20I%E2%80%94Financial%20Information) This part presents Allbirds' unaudited condensed consolidated financial statements and management's analysis [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=8&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section presents the unaudited condensed consolidated financial statements for Allbirds, Inc. [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance sheets show decreased total assets and stockholders' equity from December 2024 to June 2025 Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Cash and cash equivalents | $33,144 | $66,732 | $(33,588) | -50.3% | | Total current assets | $94,284 | $130,558 | $(36,274) | -27.8% | | Property and equipment—net | $15,386 | $17,825 | $(2,439) | -13.7% | | Operating lease right-of-use assets | $22,227 | $38,082 | $(15,855) | -41.6% | | Total assets | $136,818 | $188,879 | $(52,061) | -27.6% | | **Liabilities** | | | | | | Total current liabilities | $36,946 | $44,369 | $(7,423) | -16.7% | | Non-current lease liability | $23,482 | $42,796 | $(19,314) | -45.1% | | Long-term debt | $5,000 | — | $5,000 | N/A | | Total liabilities | $65,457 | $87,194 | $(21,737) | -24.9% | | **Stockholders' Equity** | | | | | | Total stockholders' equity | $71,361 | $101,685 | $(30,324) | -29.8% | | Total liabilities and stockholders' equity | $136,818 | $188,879 | $(52,061) | -27.6% | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net revenue and gross profit decreased, while net loss and comprehensive loss were reduced in 2025 Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $39,685 | $51,582 | $(11,897) | -23.1% | | Cost of revenue | $23,531 | $25,527 | $(1,996) | -7.8% | | Gross profit | $16,154 | $26,055 | $(9,901) | -38.0% | | Total operating expense | $32,681 | $46,245 | $(13,564) | -29.3% | | Loss from operations | $(16,527) | $(20,190) | $3,663 | -18.1% | | Net loss | $(15,501) | $(19,133) | $3,632 | -19.0% | | Total comprehensive loss | $(13,607) | $(19,445) | $5,838 | -30.0% | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $71,798 | $90,909 | $(19,111) | -21.0% | | Cost of revenue | $41,244 | $46,398 | $(5,154) | -11.1% | | Gross profit | $30,554 | $44,511 | $(13,957) | -31.4% | | Total operating expense | $69,911 | $94,510 | $(24,599) | -26.0% | | Loss from operations | $(39,357) | $(49,999) | $10,642 | -21.3% | | Net loss | $(37,376) | $(46,463) | $9,087 | -19.6% | | Total comprehensive loss | $(34,792) | $(47,988) | $13,196 | -27.5% | Net Loss Per Share Data | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net loss per share (basic and diluted) | $(1.92) | $(2.45) | $0.53 | -21.6% | | Weighted-average shares | 8,090,259 | 7,824,200 | 266,059 | 3.4% | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net loss per share (basic and diluted) | $(4.64) | $(5.96) | $1.32 | -22.1% | | Weighted-average shares | 8,055,136 | 7,796,614 | 258,522 | 3.3% | [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity decreased due to accumulated deficit, partially offset by additional paid-in capital Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $71,361 | $101,685 | $(30,324) | -29.8% | | Additional Paid-In Capital | $596,350 | $591,882 | $4,468 | 0.8% | | Accumulated Deficit | $(521,893) | $(484,517) | $(37,376) | 7.7% | | Accumulated Other Comprehensive Loss | $(3,097) | $(5,681) | $2,584 | -45.5% | - The company's Class A common stock shares issued and outstanding increased from **5,456,072** to **5,604,152** from December 31, 2024, to June 30, 2025, while Class B common stock remained constant at **2,542,365** shares[25](index=25&type=chunk)[34](index=34&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased due to operating activities, partially offset by financing activities for the period Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(36,575) | $(41,791) | $5,216 | -12.5% | | Net cash used in investing activities | $(894) | $95 | $(989) | -1041.1% | | Net cash provided by financing activities | $2,152 | $183 | $1,969 | 1076.0% | | Effect of foreign exchange rate changes | $1,734 | $(1,092) | $2,826 | -258.8% | | Net decrease in cash, cash equivalents, and restricted cash | $(33,583) | $(42,605) | $9,022 | -21.2% | | Cash, cash equivalents, and restricted cash—end of period | $34,001 | $88,068 | $(54,067) | -61.4% | - Operating cash outflow decreased by **$5.2 million**, driven by a lower net loss and changes in operating assets and liabilities[36](index=36&type=chunk)[209](index=209&type=chunk) - Investing activities shifted from a net inflow to a net outflow, primarily due to reduced proceeds from business sales and increased property and equipment purchases[36](index=36&type=chunk)[213](index=213&type=chunk) - Financing activities saw a significant increase in cash provided, mainly from a **$5.0 million** line of credit draw, partially offset by deferred financing costs[36](index=36&type=chunk)[214](index=214&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes explain accounting policies, financial components, and other relevant information [1. Description of Business](index=14&type=section&id=1.%20Description%20of%20Business) Allbirds is a global lifestyle brand focused on sustainable footwear and apparel, primarily through direct sales - Allbirds is a global lifestyle brand that innovates with naturally derived materials to make better footwear and apparel products in a better way, while treading lighter on our planet[39](index=39&type=chunk) - The majority of revenue comes from direct sales (digital and store channels) and third-party sales (distributor and wholesale partners)[39](index=39&type=chunk) [2. Significant Accounting Policies](index=14&type=section&id=2.%20Significant%20Accounting%20Policies) This section outlines key accounting policies, including basis of preparation, stock split, and estimates - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC rules, and should be read with the Annual Report on Form 10-K for December 31, 2024[40](index=40&type=chunk) - A **1-for-20 reverse stock split** was effective September 4, 2024, retroactively adjusting all share and per share data in the financial statements[43](index=43&type=chunk)[44](index=44&type=chunk) - The company operates as one operating segment, with the CEO as the chief operating decision maker evaluating performance based on consolidated financial data[49](index=49&type=chunk)[102](index=102&type=chunk) - In Q1 2025, the company updated its gift card breakage estimate, resulting in a cumulative adjustment that increased net revenues and gross profit and decreased net operating loss by approximately **$1.9 million**[58](index=58&type=chunk) - No restructuring charges were incurred for the three and six months ended June 30, 2025, compared to **$1.0 million** and **$1.8 million** for the same periods in 2024, due to the completion of the strategic transformation plan[67](index=67&type=chunk) [3. Balance Sheet Components](index=18&type=section&id=3.%20Balance%20Sheet%20Components) This note details changes in inventory, property, prepaid expenses, other assets, and accrued liabilities Inventory (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Finished goods | $46,291 | $47,739 | $(1,448) | -3.0% | | Reserve to reduce inventories to net realizable value | $(4,048) | $(3,618) | $(430) | 11.9% | | Total inventory | $42,243 | $44,121 | $(1,878) | -4.3% | Property and Equipment - Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total property and equipment - gross | $64,780 | $62,472 | $2,308 | 3.7% | | Less: accumulated depreciation and amortization | $(49,394) | $(44,647) | $(4,747) | 10.6% | | Total property and equipment - net | $15,386 | $17,825 | $(2,439) | -13.7% | | Depreciation and amortization expense (3 months) | $1,900 | $2,600 | $(700) | -26.9% | | Depreciation and amortization expense (6 months) | $3,800 | $7,400 | $(3,600) | -48.6% | Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total prepaid expenses and other current assets | $11,083 | $13,536 | $(2,453) | -18.1% | | Restricted cash | $857 | $851 | $6 | 0.7% | | Deferred offering costs | $229 | — | $229 | N/A | Other Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total other assets | $4,921 | $2,414 | $2,507 | 103.9% | | Debt issuance costs | $2,888 | — | $2,888 | N/A | Accrued Expenses and Other Current Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total accrued expenses and other current liabilities | $13,601 | $18,821 | $(5,220) | -27.7% | | Sales-refund reserve | $1,365 | $2,259 | $(894) | -39.6% | [4. Fair Value Measurements](index=19&type=section&id=4.%20Fair%20Value%20Measurements) Assets measured at fair value are categorized into a three-tier hierarchy, including money market funds Assets Measured at Fair Value (in thousands) | Item | June 30, 2025 (Level 1) | June 30, 2025 (Level 3) | June 30, 2025 (Total) | | :--- | :--- | :--- | :--- | | Money market funds | $1,500 | — | $1,500 | | NFW investment | — | $200 | $200 | | **Total** | **$1,500** | **$200** | **$1,700** | | Item | December 31, 2024 (Level 1) | December 31, 2024 (Level 3) | December 31, 2024 (Total) | | :--- | :--- | :--- | :--- | | Money market funds | $37,000 | — | $37,000 | | NFW investment | — | $200 | $200 | | **Total** | **$37,000** | **$200** | **$37,200** | - Money market funds decreased significantly from **$37.0 million** at December 31, 2024, to **$1.5 million** at June 30, 2025[84](index=84&type=chunk) [5. Long-Term Debt](index=20&type=section&id=5.%20Long-Term%20Debt) The company secured a new $50.0 million revolving credit agreement, drawing $5.0 million on June 30, 2025 - On June 30, 2025, Allbirds entered into a secured **$50.0 million** revolving credit agreement with Second Avenue Capital Partners LLC, maturing on June 30, 2028[86](index=86&type=chunk) - Interest accrues at a variable rate of Term SOFR + 0.15% + 5.75% per annum, with a commitment fee of **0.45%** on the unused portion[87](index=87&type=chunk) - The company drew **$5.0 million** on the facility and incurred **$2.9 million** in debt issuance costs concurrently with the agreement[89](index=89&type=chunk) [6. Stockholders' Equity](index=21&type=section&id=6.%20Stockholders%27%20Equity) This note details capital structure, including Class A and B common stock, and the reverse stock split impact - A **1-for-20 reverse stock split** was effective September 4, 2024, retroactively adjusting all share and per share data[90](index=90&type=chunk)[91](index=91&type=chunk) - Class A common stock holders have one vote per share, while Class B common stock holders have **10 votes per share**, generally voting together as a single class[94](index=94&type=chunk) - Each Class B share is convertible into one Class A share at the holder's option or automatically upon certain transfers or the final conversion date (later of 10th anniversary of IPO or when Class B represents <10% of total common stock)[98](index=98&type=chunk) Common Stock Reserved for Future Issuance | Plan | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 2015 Equity Incentive Plan (Options outstanding) | 280,727 | 316,542 | | 2021 Equity Incentive Plan (Options outstanding) | 230,026 | 240,819 | | 2021 Equity Incentive Plan (RSUs outstanding) | 662,896 | 464,165 | | 2021 Equity Incentive Plan (PSUs outstanding) | 93,780 | 45,870 | | 2021 Equity Incentive Plan (Shares available for future grants) | 729,378 | 822,815 | | 2021 Employee Stock Purchase Plan (Shares available for future grants) | 381,101 | 316,554 | | **Total shares of common stock reserved** | **2,377,908** | **2,206,765** | [7. Segments and Geographic Information](index=22&type=section&id=7.%20Segments%20and%20Geographic%20Information) The company operates as a single segment, with net revenue disaggregated by declining geographic sales - Allbirds operates as one operating and reportable segment, with the CEO as the chief operating decision maker[102](index=102&type=chunk) Net Revenue by Geographic Area (in thousands) | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | United States | $28,649 | $36,627 | $(7,978) | -21.8% | | International | $11,036 | $14,955 | $(3,919) | -26.2% | | **Total net revenue** | **$39,685** | **$51,582** | **$(11,897)** | **-23.1%** | | Region | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | United States | $54,274 | $65,859 | $(11,585) | -17.6% | | International | $17,524 | $25,050 | $(7,526) | -30.0% | | **Total net revenue** | **$71,798** | **$90,909** | **$(19,111)** | **-21.0%** | [8. Stock Transactions](index=23&type=section&id=8.%20Stock%20Transactions) This note discloses an employee promissory note for stock options, amended to extend maturity to October 2025 - A promissory note from an employee for early stock option exercise, originally from November 2018, was amended in June 2023 to extend maturity to October 1, 2025, and ceased accruing interest after March 31, 2023[105](index=105&type=chunk)[106](index=106&type=chunk) - The limited recourse nature of the promissory note means it is not reflected in the condensed consolidated balance sheets[106](index=106&type=chunk) [9. Stock-Based Compensation](index=24&type=section&id=9.%20Stock-Based%20Compensation) This note details stock-based compensation plans, activity summaries, and total expense recognized - The 2015 Equity Incentive Plan was terminated for new grants upon the adoption of the 2021 Equity Incentive Plan in November 2021[107](index=107&type=chunk) - The 2021 Equity Incentive Plan automatically increases shares reserved by **4%** of total common stock outstanding annually for 10 years, starting January 1, 2022[108](index=108&type=chunk) - The 2021 ESPP allows employees to purchase Class A common stock at **85%** of the fair market value, with shares reserved increasing annually by the lesser of **1%** of total common stock or **142,500** shares[109](index=109&type=chunk) Stock-Based Compensation Expense (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Stock-based compensation, net of capitalized amounts | $2,048 | $2,929 | $(881) | -30.1% | | Capitalized stock-based compensation | $32 | $87 | $(55) | -63.2% | | **Total stock-based compensation** | **$2,080** | **$3,016** | **$(936)** | **-31.0%** | | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Stock-based compensation, net of capitalized amounts | $4,332 | $6,273 | $(1,941) | -30.9% | | Capitalized stock-based compensation | $67 | $173 | $(106) | -61.3% | | **Total stock-based compensation** | **$4,399** | **$6,446** | **$(2,047)** | **-31.8%** | - As of June 30, 2025, total unrecognized compensation cost was approximately **$1.9 million** for stock options, **$8.1 million** for RSUs, and **$0.1 million** for PSUs, with weighted-average vesting periods of **1.69**, **2.36**, and **1.68** years, respectively[119](index=119&type=chunk) [10. Income Taxes](index=27&type=section&id=10.%20Income%20Taxes) Income tax provision decreased due to changes in foreign taxable income mix, with the 2025 Tax Act under evaluation Income Tax Provision (in thousands) | Period | Income Tax Provision | Effective Tax Rate | | :--- | :--- | :--- | | 3 Months Ended June 30, 2025 | $(81) | 0.6% | | 3 Months Ended June 30, 2024 | $(552) | 3.0% | | 6 Months Ended June 30, 2025 | $(147) | 0.4% | | 6 Months Ended June 30, 2024 | $(791) | 1.7% | - The decrease in income tax provision is primarily due to a change in the mix of taxable income in foreign jurisdictions[120](index=120&type=chunk) - The company is evaluating the impact of the One Big Beautiful Bill Act (2025 Tax Act), enacted July 4, 2025, which reinstates **100%** accelerated depreciation and immediate expensing of domestic R&D costs retroactively[123](index=123&type=chunk) [11. Commitments and Contingencies](index=27&type=section&id=11.%20Commitments%20and%20Contingencies) This note addresses legal proceedings, including securities class action and shareholder derivative lawsuits - The company is subject to various claims and legal proceedings in the ordinary course of business, with ultimate liability not expected to materially affect financial position or operations as of June 30, 2025[124](index=124&type=chunk) - Two securities class action lawsuits (Shnayder v. Allbirds, Inc. and Delgado v. Allbirds, Inc.) allege violations of Sections 10(b) and 20(a) of the Exchange Act and Sections 11 and 15 of the Securities Act, claiming materially false/misleading statements[125](index=125&type=chunk)[126](index=126&type=chunk) - Two shareholder derivative suits (Park v. Zwillinger, et al. and Junker v. Zwillinger, et al.) allege similar claims, including breach of fiduciary duties, and are stayed pending the outcome of the securities class actions[127](index=127&type=chunk) [12. Leases](index=28&type=section&id=12.%20Leases) The company leases office and retail spaces, with decreasing total lease costs and a 4.97-year average term Total Lease Costs (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | 3 Months Ended June 30, | $2,086 | $3,953 | $(1,867) | -47.2% | | 6 Months Ended June 30, | $4,716 | $8,070 | $(3,354) | -41.6% | Operating Lease Metrics | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Weighted-average remaining lease term (years) | 4.97 | 6.47 | | Weighted-average discount rate | 5.22% | 5.59% | Future Minimum Lease Payments (in thousands) | Fiscal Year Ended December 31, | Operating Lease Payments | | :--- | :--- | | Remainder of 2025 | $5,409 | | 2026 | $8,886 | | 2027 | $5,760 | | 2028 | $4,702 | | 2029 | $4,049 | | Thereafter | $7,466 | | **Total undiscounted operating lease payments** | **$36,272** | | Less: imputed discount | $3,134 | | **Total operating lease liabilities** | **$33,138** | [13. Net Loss Per Share](index=29&type=section&id=13.%20Net%20Loss%20Per%20Share) Net loss per share is computed using the two-class method, retroactively adjusted for the reverse stock split - Net loss per share is computed using the two-class method, with identical results for Class A and Class B common stock due to identical liquidation and dividend rights[131](index=131&type=chunk) - All share and per share data have been retroactively adjusted to reflect the **1-for-20 reverse stock split**[131](index=131&type=chunk) Net Loss Per Share Attributable to Common Stockholders | Period | Net Loss Per Share (Basic & Diluted) | Weighted-Average Shares | | :--- | :--- | :--- | | 3 Months Ended June 30, 2025 | $(1.92) | 8,090,259 | | 3 Months Ended June 30, 2024 | $(2.45) | 7,824,200 | | 6 Months Ended June 30, 2025 | $(4.64) | 8,055,136 | | 6 Months Ended June 30, 2024 | $(5.96) | 7,796,614 | Anti-Dilutive Securities Excluded from EPS Calculation | Security Type | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Outstanding stock options | 510,753 | 613,430 | | 2021 ESPP | 484 | 7,436 | | RSUs | 662,896 | 442,618 | | PSUs | 93,780 | 45,871 | | **Total anti-dilutive securities** | **1,267,913** | **1,109,354** | [14. Benefit Plan](index=30&type=section&id=14.%20Benefit%20Plan) The company sponsors a 401(k) plan for employees, making matching contributions but no profit-sharing - The company sponsors a 401(k) defined contribution plan for eligible employees[133](index=133&type=chunk) 401(k) Matching Contributions (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | 3 Months Ended June 30, | $0.2 | $0.3 | | 6 Months Ended June 30, | $0.5 | $0.7 | - No discretionary profit-sharing contributions were made for the three and six months ended June 30, 2025 and 2024[133](index=133&type=chunk) [15. Subsequent Events](index=30&type=section&id=15.%20Subsequent%20Events) No subsequent events requiring disclosure were identified through August 7, 2025, the issuance date - No subsequent events requiring disclosure were identified through August 7, 2025, the date the financial statements were available for issuance[134](index=134&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=31&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes Allbirds' financial condition and operations, highlighting revenue decline and reduced net loss [Overview](index=31&type=section&id=Overview) Allbirds, a sustainable lifestyle brand, reported decreased net revenue and gross margin but improved net loss - Allbirds is a purpose-driven lifestyle brand innovating with sustainable materials for footwear and apparel, primarily through direct digital and retail channels, and third-party partnerships[136](index=136&type=chunk)[137](index=137&type=chunk) Financial Highlights (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $39.7 | $51.6 | $(11.9) | -23.1% | | Gross margin | 40.7% | 50.5% | -9.8 pp | -19.4% | | Net loss | $(15.5) | $(19.1) | $3.6 | -19.0% | | Adjusted EBITDA loss | $(12.6) | $(13.7) | $1.1 | -8.0% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $71.8 | $90.9 | $(19.1) | -21.0% | | Gross margin | 42.6% | 49.0% | -6.4 pp | -13.1% | | Net loss | $(37.4) | $(46.5) | $9.1 | -19.6% | | Adjusted EBITDA loss | $(31.2) | $(34.6) | $3.4 | -9.8% | [Key Factors Affecting Our Performance](index=31&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) Performance is influenced by brand awareness, customer retention, retail strategy, product innovation, and macroeconomic conditions - The company aims to grow brand awareness and acquire new customers cost-effectively by emphasizing its mission, differentiated brand, and product offerings[140](index=140&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - Growth within the existing customer base is sought through innovation and focus on core franchise products, while maintaining commitment to comfort and sustainability[144](index=144&type=chunk) - The retail strategy involves optimizing the store fleet for efficient customer acquisition; **9 U.S. stores** were closed in H1 2025, and international operations transitioned to distributor partners in several regions[145](index=145&type=chunk)[146](index=146&type=chunk) Store Count by Primary Geographical Market | Region | June 30, 2023 | June 30, 2024 | June 30, 2025 | | :--- | :--- | :--- | :--- | | United States | 44 | 32 | 21 | | International | 18 | 11 | 3 | | **Total stores** | **62** | **43** | **24** | - Innovation relies on applying materials science expertise to source and commercialize sustainable, durable, and comfortable materials, which can be a lengthy and costly process[147](index=147&type=chunk) - Macroeconomic conditions, including inflation, rising interest rates, and supply chain disruptions, continue to create economic uncertainty and may adversely affect consumer spending and demand for products[150](index=150&type=chunk) [Seasonality](index=33&type=section&id=Seasonality) Allbirds' business experiences seasonal trends, with lower sales in Q1 and higher sales during the Q4 holiday period - Sales are typically lower in the first quarter and higher during the end-of-year holiday period (fourth quarter)[152](index=152&type=chunk) [Components of Results of Operations](index=34&type=section&id=Components%20of%20Results%20of%20Operations) This section defines key financial components and outlines expectations for net revenue, costs, and expenses in 2025 - Net revenue is primarily from footwear and apparel sales through direct and third-party channels, expected to decrease in 2025 due to international distributor transitions, store closures, and direct business trends, partially offset by new product demand in Q4[153](index=153&type=chunk) - Cost of revenue includes inventory costs, shipping, duties, and distribution center expenses; inventory write-downs are recognized here[154](index=154&type=chunk) - Gross margin is expected to improve in fiscal year 2025 compared to 2024, despite potential fluctuations from product mix, pricing, promotions, and cost drivers[155](index=155&type=chunk) - SG&A expenses are expected to decrease through strategic initiatives, but macroeconomic factors may cause fluctuations[156](index=156&type=chunk)[157](index=157&type=chunk) - Marketing expense is expected to increase in 2025 due to prioritization aligned with product strategy[158](index=158&type=chunk) - Restructuring expense consists of professional fees, severance, and other costs related to strategic transformation plans[159](index=159&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section compares financial performance for the three and six months ended June 30, 2025 and 2024 [Comparison of the Three Months Ended June 30, 2025 and 2024](index=38&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net revenue and gross profit decreased, but operating expenses were reduced, leading to a lower loss from operations Key Financials (3 Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $39,685 | $51,582 | $(11,897) | -23.1% | | Cost of revenue | $23,531 | $25,527 | $(1,996) | -7.8% | | Gross profit | $16,154 | $26,055 | $(9,901) | -38.0% | | Gross margin | 40.7% | 50.5% | -9.8 pp | -19.4% | | Selling, general, and administrative expense | $24,156 | $33,552 | $(9,396) | -28.0% | | Marketing expense | $8,525 | $11,739 | $(3,214) | -27.4% | | Restructuring expense | — | $954 | $(954) | -100.0% | | Loss from operations | $(16,527) | $(20,190) | $3,663 | -18.1% | | Net loss | $(15,501) | $(19,133) | $3,632 | -19.0% | - Net revenue decrease was primarily due to a **$9.1 million** decline in direct business (retail store closures) and a **$2.4 million** impact from international distributor transitions[167](index=167&type=chunk) - Gross margin decline was attributed to increased promotional activity, inventory adjustments for the European market transition, a higher mix of international distributor business, and increased per-unit freight and duty costs[170](index=170&type=chunk) - Other income increased by **$0.4 million (77.6%)** due to higher gains on lease terminations and modifications, while interest income decreased by **$1.1 million (93.0%)** due to lower money market fund investments and interest expense[176](index=176&type=chunk)[177](index=177&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=40&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net revenue and gross profit decreased, while operating expenses significantly reduced, leading to a lower net loss Key Financials (6 Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $71,798 | $90,909 | $(19,111) | -21.0% | | Cost of revenue | $41,244 | $46,398 | $(5,154) | -11.1% | | Gross profit | $30,554 | $44,511 | $(13,957) | -31.4% | | Gross margin | 42.6% | 49.0% | -6.4 pp | -13.1% | | Selling, general, and administrative expense | $49,368 | $73,258 | $(23,890) | -32.6% | | Marketing expense | $20,543 | $19,499 | $1,044 | 5.4% | | Restructuring expense | — | $1,753 | $(1,753) | -100.0% | | Loss from operations | $(39,357) | $(49,999) | $10,642 | -21.3% | | Net loss | $(37,376) | $(46,463) | $9,087 | -19.6% | - Net revenue decrease was primarily driven by a **$12.7 million** decline in direct business (retail store closures) and a **$5.2 million** impact from international distributor transitions, partially offset by **$2.0 million** in gift card breakage revenue[179](index=179&type=chunk) - SG&A expense decreased by **$23.9 million (32.6%)** due to lower personnel, occupancy, depreciation, and stock-based compensation costs[184](index=184&type=chunk)[185](index=185&type=chunk) - Marketing expense increased by **$1.0 million (5.4%)** due to investment in upper funnel marketing initiatives, partially offset by reduced digital advertising costs[186](index=186&type=chunk) - Interest income decreased by **$1.9 million (83.1%)** due to lower money market fund investments and interest expense, while other income decreased by **$0.5 million (23.1%)** due to lower gains on lease terminations[189](index=189&type=chunk)[190](index=190&type=chunk) [Non-GAAP Financial Measures](index=43&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA and margin are presented as non-GAAP measures, showing reduced loss but declining margin - Adjusted EBITDA is defined as net loss before stock-based compensation, depreciation and amortization, impairment, restructuring, non-cash gains/losses from business sales, other income/expense, interest income/expense, and income tax provision/benefit[195](index=195&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(15,501) | $(19,133) | $3,632 | -19.0% | | Adjusted EBITDA | $(12,572) | $(13,733) | $1,161 | -8.4% | | Adjusted EBITDA margin | (31.7)% | (26.6)% | -5.1 pp | 19.2% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(37,376) | $(46,463) | $9,087 | -19.6% | | Adjusted EBITDA | $(31,217) | $(34,619) | $3,402 | -9.8% | | Adjusted EBITDA margin | (43.5)% | (38.1)% | -5.4 pp | 14.2% | - Adjusted EBITDA loss decreased by **$1.2 million** and **$3.4 million** for the three and six months ended June 30, 2025, respectively, primarily due to reduced operating expenses[199](index=199&type=chunk) - Adjusted EBITDA margin declined due to lower net sales, partially offset by the same factors that improved Adjusted EBITDA[199](index=199&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is sufficient for 12 months, but long-term needs require further funding and profitability - As of June 30, 2025, cash and cash equivalents totaled **$33.1 million**[200](index=200&type=chunk) - The company's liquidity is expected to be sufficient for the next 12 months, supported by existing cash, operating cash flow, and a new **$50.0 million** secured revolving credit agreement with Second Avenue Capital Partners LLC[201](index=201&type=chunk)[202](index=202&type=chunk) - Longer-term cash requirements will necessitate continued funding from equity/debt offerings and achieving positive operating results[201](index=201&type=chunk) [Cash Flows](index=45&type=section&id=Cash%20Flows) Operating cash outflow decreased, investing activities shifted to outflow, and financing activities increased significantly [Operating Activities](index=45&type=section&id=Operating%20Activities) Net cash used in operating activities decreased due to lower net loss and changes in operating assets/liabilities Net Cash Used in Operating Activities (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | 6 Months Ended June 30, | $(36,575) | $(41,791) | $5,216 | -12.5% | - The decrease in cash used was due to a net loss of **$37.4 million**, partially offset by non-cash charges of **$8.2 million** and a net change of **$(7.4) million** in operating assets and liabilities[209](index=209&type=chunk) - Key changes in operating assets and liabilities included decreases in accounts payable and accrued expenses (**$3.9 million**), operating lease ROU assets and liabilities (**$4.7 million**), and prepaid expenses (**$2.7 million**)[209](index=209&type=chunk) [Investing Activities](index=46&type=section&id=Investing%20Activities) Net cash used in investing activities increased due to property and equipment purchases and reduced business sales Net Cash Used in Investing Activities (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | 6 Months Ended June 30, | $(894) | $95 | $(989) | -1041.1% | - Cash used in investing activities primarily consisted of **$1.4 million** for property and equipment purchases, partially offset by **$0.4 million** from business sales and **$0.1 million** decrease in security deposits[213](index=213&type=chunk) [Financing Activities](index=46&type=section&id=Financing%20Activities) Net cash provided by financing activities increased significantly due to new line of credit borrowings Net Cash Provided by Financing Activities (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | 6 Months Ended June 30, | $2,152 | $183 | $1,969 | 1076.0% | - The increase was primarily due to **$5.0 million** in borrowings on the line of credit facility, partially offset by **$2.9 million** in payments of deferred financing costs[214](index=214&type=chunk) [Critical Accounting Estimates](index=46&type=section&id=Critical%20Accounting%20Estimates) No changes to critical accounting estimates as of June 30, 2025, as discussed in the Form 10-K - No changes to critical accounting estimates as of June 30, 2025, which include revenue recognition, stock-based compensation, and fair value of common stock[217](index=217&type=chunk)[440](index=440&type=chunk) [Recent Accounting Pronouncements](index=46&type=section&id=Recent%20Accounting%20Pronouncements) No new accounting pronouncements adopted in Q2 2025, but new FASB ASUs are under evaluation - No accounting pronouncements were adopted during the three months ended June 30, 2025[70](index=70&type=chunk) - The company is evaluating the potential impact of ASU No. 2023-06 (Disclosure Improvements) and ASU No. 2023-09 (Income Tax Disclosures), effective for annual periods after December 15, 2024[72](index=72&type=chunk)[73](index=73&type=chunk) - ASU No. 2024-03 (Expense Disaggregation Disclosures) will be effective for annual periods beginning after December 15, 2026, and is currently being evaluated for potential impact[74](index=74&type=chunk) [Emerging Growth Company Status](index=47&type=section&id=Emerging%20Growth%20Company%20Status) Allbirds is an 'emerging growth company,' using an extended transition period for new accounting standards - Allbirds is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised accounting standards[68](index=68&type=chunk)[219](index=219&type=chunk) - This status allows for reduced reporting and disclosure requirements, but may make financial statements not comparable to other public companies[219](index=219&type=chunk)[433](index=433&type=chunk) - The company will remain an emerging growth company until the earliest of December 31, 2026, or reaching **$1.235 billion** in annual gross revenue, **$700 million** in non-affiliate market value, or **$1.0 billion** in non-convertible debt over three years[219](index=219&type=chunk)[434](index=434&type=chunk) [Smaller Reporting Company Status](index=47&type=section&id=Smaller%20Reporting%20Company%20Status) Allbirds is a 'smaller reporting company,' qualifying for reduced disclosure requirements - Allbirds is a 'smaller reporting company' and qualifies for reduced disclosure requirements[69](index=69&type=chunk)[220](index=220&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=47&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No quantitative and qualitative disclosures about market risk are applicable for this reporting period - Not applicable for this reporting period[221](index=221&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=47&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were effective, with no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=47&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of June 30, 2025 - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June 30, 2025[223](index=223&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=47&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) Control systems provide only reasonable assurance due to inherent limitations, not absolute guarantees - Controls and procedures provide only reasonable assurance due to inherent limitations; absolute assurance is not possible[224](index=224&type=chunk) [Changes in Internal Control over Financial Reporting](index=48&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[225](index=225&type=chunk) [PART II—OTHER INFORMATION](index=49&type=section&id=Part%20II%E2%80%94Other%20Information) This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other disclosures [ITEM 1. LEGAL PROCEEDINGS](index=49&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company faces securities class action and shareholder derivative lawsuits, with uncertain outcomes - The company is subject to various legal proceedings, including securities class action and shareholder derivative lawsuits, alleging materially false and/or misleading statements[228](index=228&type=chunk)[229](index=229&type=chunk) - The outcomes of these legal proceedings cannot be predicted with certainty, and litigation can have an adverse impact due to defense and settlement costs, diversion of management resources, and harm to brand/reputation[229](index=229&type=chunk) [ITEM 1A. RISK FACTORS](index=49&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section details numerous risks impacting business, financial condition, operations, and growth prospects [Risks Related to Our Business, Brand, Products, and Industry](index=49&type=section&id=Risks%20Related%20to%20Our%20Business%2C%20Brand%2C%20Products%2C%20and%20Industry) This category outlines risks from growth strategy, customer retention, competition, and macroeconomic conditions - Inability to successfully execute long-term growth strategy, including maintaining revenue/profit, reducing costs, or accurately forecasting demand/supply, could harm the business[231](index=231&type=chunk)[232](index=232&type=chunk) - Failure to attract new customers, retain existing ones, or increase sales to them would harm business, financial condition, and growth prospects[233](index=233&type=chunk)[236](index=236&type=chunk) - Operating results may fluctuate significantly, and past performance is not indicative of future results, especially given limited operating history and evolving business strategies[237](index=237&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - The company may require additional capital for growth, which might be unavailable or dilute existing stockholders, and the new Credit Agreement imposes restrictive covenants[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Transitioning international go-to-market strategy to a distributor model may not be successful, potentially impacting operating results and brand value due to lack of direct control over distributors[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) - Economic uncertainty, inflation, and rising interest rates in key markets may adversely affect consumer purchases of discretionary items, impacting demand for products[248](index=248&type=chunk)[250](index=250&type=chunk) - Inability to maintain and enhance brand value/reputation, or counter negative publicity (including 'greenwashing' claims), could harm business and financial results[251](index=251&type=chunk)[253](index=253&type=chunk) - The company has incurred significant net losses since inception and anticipates continued losses, making profitability uncertain due to ongoing investments in growth and operations[255](index=255&type=chunk)[256](index=256&type=chunk) - Operating in a highly competitive market with larger, more resourced competitors could lead to loss of market share, reduced profit margins, and decreased net revenue[257](index=257&type=chunk)[259](index=259&type=chunk) - Reliance on technical and materials innovation for high-quality products means failure to introduce new innovations or quality problems could harm brand and business[260](index=260&type=chunk) - Focus on sustainable, high-quality materials and environmentally friendly processes may increase cost of revenue and hinder revenue growth due to sourcing challenges and higher expenses[261](index=261&type=chunk) - Climate change and increased focus on ESG issues may adversely affect reputation, business, and financial results, including potential failure to meet public sustainability targets[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - Failure to anticipate product trends and consumer preferences, or to successfully develop and introduce new products, could prevent revenue and profit growth[265](index=265&type=chunk) - Ineffective or increasingly costly marketing and advertising initiatives could hinder profitable business growth and customer acquisition[266](index=266&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) - Manufacturer concentration risk exists, with reliance on a limited number of third-party contract manufacturers, particularly one footwear manufacturer in Vietnam, making the company vulnerable to disruptions[271](index=271&type=chunk) - Significant long-lived assets are assessed for impairment, and failure to realize their full value could lead to material impairment charges, as seen in 2023 (**$27.4 million**)[272](index=272&type=chunk)[273](index=273&type=chunk) - Failure to accurately forecast consumer demand could lead to excess inventories (write-offs, discounts) or inventory shortages (lost sales, negative customer experience), harming operating margins and cash flows[274](index=274&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) - Operating retail stores exposes the company to commercial real estate, labor, and employment risks, including challenges in securing/renewing leases and managing store profitability/closures[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) - Inability to successfully open new store locations or expand retail partnerships in a timely manner could harm results of operations and brand perception[284](index=284&type=chunk)[286](index=286&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) - Maintaining a strong community of engaged customers, especially through social media, is critical; negative publicity or failure to meet customer expectations could harm brand and business[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) - Substantial investments in businesses and operations, including retail stores, may fail to produce expected returns, adversely affecting financial results and diverting management attention[293](index=293&type=chunk) - Merchandise returns could harm the business if actual returns exceed estimates, or if return policies are abused, leading to increased costs and reduced revenue[304](index=304&type=chunk)[306](index=306&type=chunk) - Counterfeit or 'knock-off' products, or 'inspired-by-Allbirds' products, may siphon demand, cause customer confusion, harm the brand, and lead to loss of market share[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) - Key operating metrics are subject to measurement challenges; inaccuracies or changes in methodologies could cause loss of investor confidence[311](index=311&type=chunk) - Seasonality, with lower sales in Q1 and higher in Q4, affects business and causes operating results to fluctuate[312](index=312&type=chunk)[313](index=313&type=chunk) [Risks Related to Our Supply Chain](index=65&type=section&id=Risks%20Related%20to%20Our%20Supply%20Chain) This section details risks from reliance on third-party suppliers, raw material costs, and international operations - Reliance on a limited number of third-party suppliers and manufacturers for raw materials and products creates risks of supply disruption, inability to find alternatives, and increased costs, especially due to sustainability commitments[314](index=314&type=chunk)[315](index=315&type=chunk) - Failure of contractors or licensees' contractors to comply with the supplier code of conduct, contractual obligations, or local laws could harm reputation, lead to product recalls, litigation, and increased expenses[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) - Inconsistent provision of high-quality materials and products by suppliers/manufacturers could adversely affect brand, reputation, customer satisfaction, and growth prospects, potentially leading to product recalls and substantial costs[319](index=319&type=chunk)[320](index=320&type=chunk) - Fluctuating costs of raw materials (e.g., tree fiber, merino wool, sugarcane) due to weather, demand, inflation, and geopolitical factors could increase cost of revenue and impact profitability, potentially leading to price increases that affect demand[321](index=321&type=chunk) - Operations of foreign suppliers are subject to risks like political unrest, trade restrictions, currency fluctuations, public health crises, and intellectual property protection issues, which could disrupt production and harm business[322](index=322&type=chunk)[323](index=323&type=chunk)[326](index=326&type=chunk) - Changes or disruptions to shipping and delivery arrangements (ocean, air parcel, truckload carriers) could negatively impact results, financial condition, and customer experience due to pricing, performance problems, or external factors like natural disasters or labor disputes[324](index=324&type=chunk) - Failure to successfully optimize, operate, and manage the global network of third-party logistics and distribution centers could harm business, financial condition, and results of operations, impacting customer expectations and inventory management[325](index=325&type=chunk)[327](index=327&type=chunk) [Risks Related to Intellectual Property, Information Technology, and Data Security and Privacy](index=68&type=section&id=Risks%20Related%20to%20Intellectual%20Property%2C%20Information%20Technology%2C%20and%20Data%20Security%20and%20Privacy) This section addresses IP protection, IT system dependencies, cyberattack vulnerabilities, and data privacy compliance - Failure to protect or enforce intellectual property rights (trademarks, patents) could diminish brand value and weaken competitive position, especially against 'knock-off' products and in foreign countries with weaker IP laws[328](index=328&type=chunk)[329](index=329&type=chunk) - Trademarks and proprietary rights could conflict with others, leading to expensive litigation, redesigns, or inability to sell products[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - Inability to acquire, use, or maintain marks and domain names in all jurisdictions could harm business, requiring significant marketing expenses or limiting market access[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - Any material disruption of IT systems, website, or third-party services (including Shopify) due to failures, cyberattacks, or technical errors could disrupt business, reduce sales, and impact financial reporting[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk) - Risks related to online payment methods include increased fees, compliance with PCI DSS, and potential liability for fraudulent transactions[346](index=346&type=chunk) - Security breaches, cyberattacks, or misuse of sensitive customer information could lead to customer distrust, liability, reputational damage, and financial losses not fully covered by insurance[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) - Compliance with evolving privacy and data protection laws (e.g., CCPA, CPRA, GDPR, PRC DSL, PIPL) is complex and costly, with potential for enforcement actions, fines, litigation, and business practice changes if non-compliant[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) - Use of social media, emails, and text messages in non-compliant ways or leading to IP loss/disclosure could harm reputation or result in fines/penalties[369](index=369&type=chunk)[370](index=370&type=chunk) [Risks Related to Other Legal, Regulatory, and Taxation Matters](index=76&type=section&id=Risks%20Related%20to%20Other%20Legal%2C%20Regulatory%2C%20and%20Taxation%20Matters) This section covers risks from internet regulation, currency fluctuations, tariffs, tax laws, and litigation - Evolving government regulation of the internet and eCommerce, including taxes, privacy, and consumer protection, could harm business if changes are unfavorable or compliance fails[371](index=371&type=chunk) - Exposure to foreign currency exchange rate fluctuations can affect net revenue and results of operations, making underlying trends difficult to detect and potentially impacting stock price[372](index=372&type=chunk) - Existing and potential tariffs, trade restrictions, or global trade wars could increase product costs, reduce supply, increase shipping times, or require supply chain modifications, adversely affecting business and profitability[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk) - Failure to comply with trade, anti-corruption (e.g., FCPA, U.K. Bribery Act), and other regulations could lead to investigations, significant penalties, negative publicity, and diversion of management resources[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) - Uncertainties in tax laws and regulations, including intercompany transactions and sales taxes, could materially affect tax obligations and effective tax rate, potentially leading to additional taxes, interest, and penalties[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk)[386](index=386&type=chunk) - The ability to use net operating loss carryforwards may be limited by Section 382 of the Code or state tax laws, potentially reducing future tax benefits[387](index=387&type=chunk) - The company is currently and may in the future be subject to claims and litigation, including product liability and stockholder class action claims, which could result in unexpected expenses and adverse outcomes[388](index=388&type=chunk)[389](index=389&type=chunk) [Risks Related to Our Status as a Public Benefit Corporation and Certified B Corporation](index=80&type=section&id=Risks%20Related%20to%20Our%20Status%20as%20a%20Public%20Benefit%20Corporation%20and%20Certified%20B%20Corporation) Risks include balancing stockholder and public benefit interests, reputational harm, and potential litigation - As a Public Benefit Corporation (PBC), the company is required to balance stockholders' pecuniary interests, stakeholder interests, and its specific public benefit of environmental conservation, which may not always maximize stockholder returns[390](index=390&type=chunk)[393](index=393&type=chunk)[395](index=395&type=chunk) - Failure to provide biennial public benefit reports or if reports are unfavorably viewed could harm reputation and PBC status[391](index=391&type=chunk) - A decline in the publicly reported certified B Corp score or loss of B Corp status could harm reputation and business, as it may be perceived as a reduced commitment to values[392](index=392&type=chunk) - PBC status may lead to increased derivative litigation if directors are perceived to fail in balancing stockholder and public benefit interests, incurring costs and diverting management attention[397](index=397&type=chunk) [Risks Related to Ownership of Our Class A Common Stock](index=82&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) Risks include market price volatility, potential delisting, dual-class voting control, and future stock dilution - The market price of Class A common stock has experienced and may continue to experience high volatility and significant fluctuations due to numerous factors, many beyond the company's control[399](index=399&type=chunk)[401](index=401&type=chunk) - Failure to satisfy Nasdaq listing requirements, such as the minimum bid price, could lead to delisting, adversely affecting liquidity and market price[403](index=403&type=chunk)[406](index=406&type=chunk) - The dual-class structure concentrates voting control with co-founders, directors, and principal stockholders, limiting other stockholders' influence on corporate matters, including director elections and change of control transactions[411](index=411&type=chunk)[412](index=412&type=chunk) - Sales of a substantial amount of Class A common stock by existing security holders could cause the stock price to decline[409](index=409&type=chunk) - The company does not intend to pay dividends for the foreseeable future, expecting to retain earnings for business development and growth[414](index=414&type=chunk) - Additional stock issuances for capital, acquisitions, or equity compensation could result in significant dilution to existing stockholders[415](index=415&type=chunk)[416](index=416&type=chunk) - Delaware law, PBC status, and provisions in corporate documents could make mergers, tender offers, or proxy contests more difficult, potentially depressing the market price of Class A common stock[417](index=417&type=chunk)[418](index=418&type=chunk)[419](index=419&type=chunk)[420](index=420&type=chunk) - The exclusive forum provision in the certificate of incorporation for certain litigation matters could limit stockholders' ability to choose a favorable judicial forum, potentially discouraging lawsuits[421](index=421&type=chunk)[423](index=423&type=chunk) [General Risk Factors](index=87&type=section&id=General%20Risk%20Factors) Broad risks include inaccurate market estimates, acquisition challenges, public company costs, and external events - Estimates of market opportunity and growth forecasts may be inaccurate, and business growth may not align with market growth, harming prospects[424](index=424&type=chunk) - Growth through acquisitions or strategic alliances carries numerous risks, including integration problems, unanticipated costs, diversion of management attention, and potential failure to realize anticipated returns[425](index=425&type=chunk)[426](index=426&type=chunk) - Being a public company increases costs, strains resources, diverts management's attention, and affects the ability to attract and retain executive management and qualified board members[427](index=427&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) - Failure to develop and maintain proper and effective internal control over financial reporting could adversely affect investor confidence and stock value[430](index=430&type=chunk)[431](index=431&type=chunk)[432](index=432&type=chunk) - Reliance on reduced reporting and disclosure requirements as an 'emerging growth company' may make Class A common stock less attractive to investors[433](index=433&type=chunk)[435](index=435&type=chunk) - Lack of or unfavorable research from securities/industry analysts could cause the Class A common stock price and trading volume to decline[436](index=436&type=chunk) - Losses from fraud or theft (e.g., credit card fraud, unauthorized reselling, product leakage) could damage reputation, result in litigation, and impact results of operations[437](index=437&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk) - Incorrect estimates or judgments related to critical accounting policies could adversely affect results of operations[440](index=440&type=chunk) - Extreme weather, natural disasters, public health crises, political crises, and other catastrophic events could negatively impact results of operations and financial condition by disrupting supply chains and customer spending[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=91&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered sales of equity securities, use of proceeds, or stock repurchases occurred during the period - No unregistered sales of equity securities, use of proceeds, or stock repurchases occurred[444](index=444&type=chunk)[445](index=445&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=91&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities were reported during this period - Not applicable for this reporting period[446](index=446&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=91&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) No mine safety disclosures are applicable to the company for this reporting period - Not applicable for this reporting period[447](index=447&type=chunk) [ITEM 5. OTHER INFORMATION](index=91&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or Section 16 officers adopted or terminated trading arrangements during the quarter - No directors or Section 16 officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[448](index=448&type=chunk) [ITEM 6. EXHIBITS](index=91&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance and certifications - The exhi

Financial Data and Key Metrics Changes - Net revenue for Q2 totaled $40 million, at the high end of guidance, with a gross margin of 40.7%, down from 50.5% a year ago [22][23] - Adjusted EBITDA loss improved to $13 million, exceeding guidance by over $3 million, reflecting cost control efforts [27][31] - Cash and cash equivalents at the end of the quarter were $33 million, with inventories down 21% year over year [28] Business Line Data and Key Metrics Changes - The company is focusing on new product launches, with 19 new styles expected this season, a significant increase from the previous year [10][50] - Marketing expenses for Q2 were $9 million, or 21% of revenue, down from last year due to prior investments in the TreeRunner GO launch [26] Market Data and Key Metrics Changes - The company is transitioning to a distributor model in international markets, which is expected to be immediately profitable despite impacting top-line revenue [34] - The impact of store closures and distributor transitions is estimated to be $20 million to $25 million, reflecting a more conservative view of the top line due to macroeconomic uncertainties [30][44] Company Strategy and Development Direction - The company is reintroducing its brand with a focus on product innovation, marketing, and customer experience, aiming to establish itself as a modern lifestyle footwear brand [5][20] - Plans include launching new products monthly and enhancing marketing content weekly to drive consumer engagement [6][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges uncertainty in consumer spending but remains confident in the brand's reintroduction and new product offerings [6][20] - The company expects to see year-over-year sales growth in Q4, driven by the convergence of new initiatives [46] Other Important Information - The company has completed a comprehensive financing package, including a new revolving credit facility to support growth plans [29] - The company is committed to sustainability with the launch of the REMIX initiative, focusing on circularity in product development [11] Q&A Session Summary Question: Impact of store closures and distributor model on profitability - Management indicated that the impact of store closures was estimated to be $20 million to $25 million, but these closures targeted unprofitable doors, which should improve bottom-line profitability [34][35] Question: Inventory strategy for new product launches - Management emphasized strong inventory management, expecting no significant increase in inventory despite new product launches, supported by operational improvements [37][39] Question: Clarification on sales guidance reduction - Management confirmed that the reduction in sales guidance was due to structural changes from store closures and macroeconomic factors, but core business expectations remain unchanged [44]

Core Insights - Allbirds reported Q2 2025 results that exceeded Wall Street expectations for both GAAP revenue and earnings per share, with GAAP net revenue of $39.7 million and a GAAP loss per share of $1.92, although revenue fell 23.1% year-over-year [1][2] - The company lowered its full-year 2025 net revenue outlook to $165–$180 million, citing ongoing business transformation and slower-than-expected sales recovery [1][10] Financial Performance - GAAP revenue for Q2 2025 was $39.7 million, down from $51.6 million in Q2 2024, representing a 23.1% decline [2] - Gross margin decreased to 40.7% from 50.5% year-over-year, attributed to increased promotional activity and inventory write-downs [2][6] - Adjusted EBITDA loss improved to $12.6 million from a loss of $13.7 million in Q2 2024 [2][8] - Inventory levels decreased by 21.3% to $42.2 million [2] Business Strategy - Allbirds focuses on sustainable materials for its footwear and apparel, with core products including lifestyle sneakers and casual footwear [3] - The company has shifted towards cost discipline, reducing underperforming retail locations and prioritizing e-commerce and distributor relationships [4] - The transition to a distributor model in over 40 countries aims to reduce fixed costs but has resulted in lower gross margins [5] Operational Highlights - Selling, general, and administrative (SG&A) costs decreased to $24.2 million, representing 60.9% of revenue, down from 65.0% [7] - Marketing expenses fell to $8.5 million, primarily due to reduced digital advertising spend [7] - The company ended the quarter with $33.1 million in cash and $5.0 million in borrowings on its revolving credit facility [8] Product Development - Allbirds is preparing to launch new products, including a Remix subcategory featuring upcycled materials and fully waterproof footwear [9] - Upcoming collections include Elevated (professional/dress styles) and Relaxed (for casual wear), aimed at renewing brand engagement [9] Future Outlook - Management updated its FY2025 net revenue guidance to $165–$180 million, down from a previous range of $175–$195 million [10] - Projected adjusted EBITDA losses for the full year remain at $65–$55 million, with Q3 2025 revenue forecasted between $33–$38 million [10] - The company anticipates a negative revenue impact of $20–$25 million due to the shift to international distributors and domestic store closures [10]