UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 001-40963 Allbirds, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organiza ...

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]

Allbirds Second Quarter 2025 Financial Performance [Second Quarter 2025 Overview](index=1&type=section&id=Second%20Quarter%202025%20Overview) The company met Q2 guidance despite declining revenue and prepares for growth with new financing and lower inventory - The company expects to return to **top-line growth in the fourth quarter of 2025**, fueled by a continuous flow of new modern lifestyle footwear[3](index=3&type=chunk) - Completed a comprehensive financing package, including a new **three-year $75 million revolving credit facility**, enhancing financial flexibility[8](index=8&type=chunk) Q2 2025 Key Financial Metrics | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Revenue | $39.7 million | -23.1% | | Gross Margin | 40.7% | -980 bps | | Net Loss | $15.5 million | N/A | | Adjusted EBITDA Loss | $12.6 million | Improved from $13.7M loss | | Inventory | $42.2 million | -21.3% | [Second Quarter Operating Results](index=1&type=section&id=Second%20Quarter%20Operating%20Results) Q2 revenue and gross margin declined due to strategic shifts, but reduced operating expenses improved the adjusted EBITDA loss - The year-over-year decrease in net revenue is primarily attributed to **planned retail store closures and international distributor transitions**[4](index=4&type=chunk) - Gross margin declined mainly due to **increased promotional activity**, inventory adjustments related to the European market transition, a higher mix of international distributor business, and increased freight costs[5](index=5&type=chunk) Q2 2025 vs Q2 2024 Operating Results (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $39.7 | $51.6 | -23.1% | | Gross Profit | $16.2 | $26.1 | -38.0% | | SG&A Expense | $24.2 | $33.6 | -28.0% | | Marketing Expense | $8.5 | $11.7 | -27.3% | | Net Loss | $15.5 | $19.1 | Improved | | Adjusted EBITDA Loss | $12.6 | $13.7 | Improved | [Six Month Operating Results](index=3&type=section&id=Six%20Month%20Operating%20Results) First-half revenue and gross margin fell, though net loss and adjusted EBITDA loss showed year-over-year improvement - Marketing expenses increased to **28.6% of net revenue in H1 2025** from 21.4% in H1 2024, driven by investments in a new brand marketing campaign during the first quarter[13](index=13&type=chunk) First Half 2025 vs First Half 2024 Operating Results (in millions) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $71.8 | $90.9 | -21.0% | | Gross Profit | $30.6 | $44.5 | -31.2% | | Gross Margin | 42.6% | 49.0% | -640 bps | | Net Loss | $37.4 | $46.5 | Improved | | Adjusted EBITDA Loss | $31.2 | $34.6 | Improved | [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) The balance sheet shows cash of $33.1 million, new borrowings of $5.0 million, and a 21.3% year-over-year inventory reduction - Inventory levels **decreased by 21.3%** compared to the same period last year, indicating successful inventory management[14](index=14&type=chunk) Balance Sheet Key Items (as of June 30, 2025) | Item | Value | | :--- | :--- | | Cash and cash equivalents | $33.1 million | | Outstanding borrowings | $5.0 million | | Inventories | $42.2 million | 2025 Financial Guidance [Full Year 2025 Guidance](index=3&type=section&id=Full%20Year%202025) The company lowered its full-year revenue guidance but reiterated its adjusted EBITDA loss forecast - The guidance includes an estimated **$20 million to $25 million negative revenue impact** from the transition to a distributor model in certain international markets and U.S. store closures, an increase from the prior estimate of $18 million to $23 million[15](index=15&type=chunk) Full Year 2025 Financial Guidance | Metric | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Net Revenue | $165M - $180M | $175M - $195M | | Adjusted EBITDA Loss | $65M - $55M | $65M - $55M (Reiterated) | [Third Quarter 2025 Guidance](index=4&type=section&id=Third%20Quarter%202025) The company projects Q3 net revenue between $33 million and $38 million and an adjusted EBITDA loss of $16 million to $20 million Third Quarter 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Net Revenue | $33M - $38M | | - U.S. Net Revenue | $27M - $31M | | - International Net Revenue | $6M - $7M | | Adjusted EBITDA Loss | $20M - $16M | Appendix: Financial Statements & Reconciliations [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Q2 statement of operations shows lower revenue but an improved net loss due to reduced operating expenses Q2 2025 vs Q2 2024 Statement of Operations (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net revenue | $39,685 | $51,582 | | Gross profit | $16,154 | $26,055 | | Total operating expense | $32,681 | $46,245 | | Loss from operations | $(16,527) | $(20,190) | | Net loss | $(15,501) | $(19,133) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects reduced total assets and liabilities, driven by lower cash and lease obligations Balance Sheet Comparison (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $33,144 | $66,732 | | Inventory | $42,243 | $44,121 | | Total current assets | $94,284 | $130,558 | | Total assets | $136,818 | $188,879 | | Total liabilities | $65,457 | $87,194 | | Total stockholders' equity | $71,361 | $101,685 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operations improved in H1 2025, with financing activities providing a net cash inflow Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(36,575) | $(41,791) | | Net cash used in investing activities | $(894) | $95 | | Net cash provided by financing activities | $2,152 | $183 | | Net decrease in cash | $(33,583) | $(42,605) | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section reconciles the Q2 GAAP net loss of $15.5 million to a non-GAAP adjusted EBITDA loss of $12.6 million Q2 2025 Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Net loss (GAAP) | $(15,501) | | Stock-based compensation | $2,048 | | Depreciation and amortization | $1,907 | | Other adjustments | $(1,021) | | Adjusted EBITDA (Non-GAAP) | $(12,572) | [Net Revenue and Store Count by Primary Geographical Market](index=12&type=section&id=Net%20Revenue%20and%20Store%20Count%20by%20Primary%20Geographical%20Market) Revenue declined across all geographic markets, accompanied by a significant reduction in the global store count - The reduction in store count is a result of **deliberate closures in the U.S.** and transitioning international stores to third-party distributors[43](index=43&type=chunk) Net Revenue by Geography (in thousands) | Region | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | United States | $28,649 | $36,627 | | International | $11,036 | $14,955 | | **Total** | **$39,685** | **$51,582** | Store Count Trend | Region | June 30, 2023 | June 30, 2024 | June 30, 2025 | | :--- | :--- | :--- | :--- | | United States | 44 | 32 | 21 | | International | 18 | 11 | 3 | | **Total** | **62** | **43** | **24** |

Core Concept - Allbirds is launching the Tree Runner NZ, an updated version of its original Tree Runner, focusing on enhanced comfort, sleek design, and sustainability [1][5] Product Features - The Tree Runner NZ features an updated SweetFoam™ midsole with a new underfoot contour, providing a stack height of 10.2mm at the forefoot and 20.0mm at the heel for a supportive stride [2] - It includes a wool-blend collar and tongue lining for a snug fit, enhancing comfort [2] - A new dual-density insole combines cushioned memory foam with a wool-blend sockliner for long-lasting comfort, validated through extensive testing of over 45 variations [3] Design Philosophy - The redesign emphasizes comfort, fit, and material quality, representing a new era of Allbirds design characterized by bold simplicity and modern sustainability [4] - The upper is made from a tree knit fiber blend, combining TENCEL™ Lyocell and recycled polyester, ensuring breathability and durability [4] Brand Heritage and Availability - The "NZ" in Tree Runner NZ reflects Allbirds' New Zealand heritage, with the product priced at $110 USD [5] - The Tree Runner NZ became available in stores on July 8, 2025, and online on July 15, 2025 [5] Company Overview - Allbirds, founded in 2015, is committed to creating footwear using natural and recycled materials, focusing on superior comfort and sustainability [6]

Core Insights - Allbirds, Inc. has signed three new distribution agreements in Eurasia, expanding its global distribution network to 16 companies [1][5] Group 1: Distribution Agreements - Beosport will serve as the exclusive distributor for Allbirds in the Balkans starting January 2026 [5] - 911 Fashion will become the exclusive distributor in Israel effective October 2025 [5] - Tradist Distribution will be the exclusive distributor in Turkiye and Central Asia from July 2025 [5] Group 2: Strategic Approach - The transition to a distributor model in international markets has been successful, enhancing brand reach and profitability [2] - The partnerships with distributors are aimed at aligning with companies that share a commitment to sustainability and innovation [2][3][4] Group 3: Distributor Profiles - Beosport, based in Serbia, specializes in premium sportswear and has a strong retail network in Southeast Europe [2] - 911 Fashion, based in Tel Aviv, focuses on ethical and sustainable fashion brands, operating 35 retail locations [3] - Tradist Distribution, headquartered in Istanbul, emphasizes brand-building and omni-channel growth across Turkiye and Central Asia [4] Group 4: Company Overview - Allbirds is a modern lifestyle footwear brand founded in 2015, known for its commitment to sustainability and innovative materials [6]

Core Viewpoint - Allbirds, Inc. has announced a comprehensive financing strategy aimed at optimizing working capital and enhancing financial flexibility to support long-term growth plans [1][2]. Financing Agreements - The company has established a new $75 million asset-based revolving credit facility, which includes a $50 million tranche and a $25 million accordion feature, replacing the previous $50 million facility [6]. - A sales agreement with TD Cowen allows the company to sell up to $50 million of Class A common stock through an At-the-Market (ATM) program [6]. - As of March 31, 2025, Allbirds reported $39.1 million in cash and cash equivalents, indicating a strong financial position [2]. Strategic Initiatives - The financing strategy supports Allbirds' initiatives to reignite product and marketing efforts, with new product launches expected in the coming weeks [2]. - The company plans to introduce over 15 new styles in its fall product lineup, focusing on modern design and unique materials [6]. - A new marketing strategy, under the "Allbirds by Nature" brand platform, aims to build long-term brand equity [6]. Operational Focus - Allbirds is committed to enhancing customer experience both online and in-store, with a store refresh program and a website redesign scheduled for July [6]. - The company emphasizes operational discipline and aims for long-term profitable growth while building durable value for shareholders [3].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Strategy - Investors are attracted to fast-moving stocks, but determining the right entry point can be challenging, as stocks may lose momentum if future growth does not justify their high valuations [2] - A safer strategy involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify promising candidates [3] Group 2: Allbirds, Inc. (BIRD) Analysis - Allbirds, Inc. (BIRD) has shown significant recent price momentum, with a four-week price change of 42.1%, indicating growing investor interest [4] - Over the past 12 weeks, BIRD's stock has gained 68.5%, and it has a beta of 1.69, suggesting it moves 69% more than the market [5] - BIRD has a Momentum Score of A, indicating a favorable time to invest, and it has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates [6][7] - The stock is trading at a Price-to-Sales ratio of 0.44, suggesting it is undervalued, as investors pay only 44 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides BIRD, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Company Performance - Allbirds, Inc. (BIRD) has returned approximately 69.6% year-to-date, significantly outperforming the average gain of 1.2% in the Retail-Wholesale sector [4] - The Zacks Consensus Estimate for BIRD's full-year earnings has increased by 11.3% over the past three months, indicating improved analyst sentiment and earnings outlook [4] - Allbirds, Inc. is currently ranked 2 (Buy) in the Zacks Rank system, which focuses on earnings estimates and revisions [3] Industry Comparison - Allbirds, Inc. belongs to the Retail - Apparel and Shoes industry, which consists of 39 companies and is currently ranked 168 in the Zacks Industry Rank [6] - The average performance of stocks in the Retail - Apparel and Shoes industry has declined by 13.6% this year, highlighting BIRD's superior performance [6] - In contrast, Herbalife Ltd (HLF), another outperforming stock in the Retail-Wholesale sector, has returned 23.5% year-to-date and is part of the Retail - Pharmacies and Drug Stores industry, which has gained 21.9% this year [5][7]

Group 1: Allbirds, Inc. (BIRD) - Allbirds, Inc. shares increased by 12.1% to close at $11.82, with a significant trading volume compared to normal sessions, and a total gain of 57.3% over the past four weeks [1] - The company is focusing on brand marketing, product innovation, and customer experience, which is expected to drive top-line momentum in the second half of the year [1] - The consensus EPS estimate for the upcoming quarter has been revised 5.2% higher, indicating a positive trend that may lead to price appreciation [3] Group 2: Levi Strauss (LEVI) - Levi Strauss' consensus EPS estimate for the upcoming report remains unchanged at $0.13, reflecting an 18.8% decrease compared to the previous year [4] - The stock closed at $17.10, with a 1.3% decline in the last trading session and a return of -1.1% over the past month [3][4] - Levi Strauss currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [4]