Allbirds(US:BIRD)2025-05-09 20:21Part I—Financial Information Item 1. Financial Statements (Unaudited) Unaudited Q1 2025 financials show decreased revenue, a net loss of $21.9 million, reduced assets, and negative operating cash flow, adjusted for a 1-for-20 reverse stock split - On August 30, 2024, the company executed a 1-for-20 reverse stock split of its Class A and Class B common stock, effective September 4, 2024 All share and per-share data in the financial statements have been retroactively adjusted to reflect this split378485 - In Q1 2025, the company updated its accounting estimate for gift card breakage based on more historical data, resulting in a one-time cumulative adjustment that increased net revenues and gross profit by approximately $1.9 million52 Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $147.3 million from $188.9 million, driven by reduced cash, while total liabilities and stockholders' equity also declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | $39,056 | $66,732 | | Inventory | $42,873 | $44,121 | | Total current assets | $97,788 | $130,558 | | Total Assets | $147,259 | $188,879 | | Liabilities & Equity | | | | Total current liabilities | $30,441 | $44,369 | | Total liabilities | $64,437 | $87,194 | | Total stockholders' equity | $82,822 | $101,685 | | Total Liabilities and Stockholders' Equity | $147,259 | $188,879 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2025 net revenue was $32.1 million (down from $39.3 million), with a gross profit of $14.4 million and a net loss of $21.9 million, an improvement from $27.3 million in Q1 2024 Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net revenue | $32,114 | $39,327 | | Gross profit | $14,400 | $18,456 | | Loss from operations | $(22,830) | $(29,810) | | Net loss | $(21,875) | $(27,331) | | Net loss per share, basic and diluted | $(2.73) | $(3.52) | Condensed Consolidated Statements of Cash Flows For Q1 2025, net cash used in operating activities was $27.9 million, leading to a net decrease in cash of $27.7 million, with an end-of-period balance of $39.9 million Cash Flow Highlights (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(27,883) | $(26,201) | | Net cash used in investing activities | $(214) | $(766) | | Net cash provided by financing activities | $3 | $33 | | Net decrease in cash, cash equivalents, and restricted cash | $(27,674) | $(27,748) | | Cash, cash equivalents, and restricted cash—end of period | $39,910 | $102,925 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, the 1-for-20 reverse stock split impact, a $1.9 million revenue increase from gift card breakage, and ongoing securities class action lawsuits - The company is involved in two substantially similar securities class action lawsuits filed in April and May 2023, alleging violations of the Securities Exchange Act The company is vigorously defending against these lawsuits120 - As of March 31, 2025, the company had no amounts outstanding under its $50.0 million revolving credit facility, which matures on April 17, 202683 - Total unrecognized compensation cost for unvested stock options, RSUs, and PSUs was approximately $11.4 million as of March 31, 2025, expected to be recognized over a weighted-average period of 1.88 to 2.34 years115 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 18.3% revenue decline to store closures and international distributor transition, with reduced operating expenses leading to an improved net loss of $21.9 million Q1 2025 vs. Q1 2024 Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $32,114 | $39,327 | $(7,213) | (18.3)% | | Gross Profit | $14,400 | $18,456 | $(4,056) | (22.0)% | | Gross Margin | 44.8% | 46.9% | - | - | | SG&A Expense | $25,212 | $39,706 | $(14,494) | (36.5)% | | Marketing Expense | $12,018 | $7,760 | $4,258 | 54.9% | | Net Loss | $(21,875) | $(27,331) | $5,456 | 20.0% | - The decrease in net revenue was primarily driven by a $6.9 million decline in the direct business, which includes a $4.1 million impact from store closures, and a $2.8 million impact from the transition to third-party distributors internationally164 - The company has significantly reduced its physical retail footprint, with the total number of stores decreasing from 57 at the end of Q1 2024 to 28 at the end of Q1 2025141143 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net loss | $(21,875) | $(27,331) | | Stock-based compensation | $2,284 | $3,344 | | Depreciation and amortization | $1,902 | $4,771 | | Restructuring expense | $— | $800 | | Other adjustments | $(1,025) | $(2,718) | | Adjusted EBITDA | $(18,644) | $(20,895) | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the reporting period Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025206 - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls208 Part II—Other Information Item 1. Legal Proceedings The company faces two consolidated securities class action lawsuits and two shareholder derivative suits, which it intends to vigorously defend - Allbirds and certain executives are defendants in two consolidated securities class action lawsuits filed in 2023, alleging violations of federal securities laws by making false or misleading statements The company's motion to dismiss was granted with leave to amend, and a motion to dismiss the amended complaint is pending120368 - The company is also a defendant in two shareholder derivative suits with allegations similar to the class actions These cases are currently stayed pending the outcome of the securities class action121 Item 1A. Risk Factors The company outlines numerous risks, including challenges in executing its strategic transformation, continued net losses, manufacturer concentration, and the unique duties as a Public Benefit Corporation - The company may be unable to successfully execute its strategic transformation plan, which aims to reignite the brand, optimize U.S stores, transition its international go-to-market strategy, and improve cost savings213 - The company has a history of significant net losses, including $93.3 million in 2024, and anticipates incurring losses for the foreseeable future due to ongoing investments and operational costs238 - The business is subject to manufacturer concentration risk, having transitioned all new footwear manufacturing to a single manufacturer in Vietnam during 2023, though efforts to add more manufacturers are underway252 - As a Public Benefit Corporation (PBC), the board has a fiduciary duty to balance stockholder interests with its public benefit purpose, which could lead to decisions that do not maximize short-term financial returns for stockholders372373 - The company's dual-class stock structure concentrates significant voting control with its co-founders and their affiliates, limiting the influence of other stockholders on corporate matters388 - The company faces risks from potential tariffs on imports from key manufacturing countries like Vietnam and China, which could increase product costs and harm financial results351354 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities, no use of proceeds from registered securities, and no stock repurchases during the quarter Item 3. Defaults Upon Senior Securities This section is not applicable Item 4. Mine Safety Disclosures This section is not applicable Item 5. Other Information On March 15, 2025, director Joey Zwillinger adopted a Rule 10b5-1 trading plan to sell up to 50,000 shares of common stock over a one-year period - On March 15, 2025, director Joey Zwillinger adopted a Rule 10b5-1 trading plan to sell up to 50,000 shares of the company's common stock The plan has a one-year duration starting June 13, 2025427 Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents and certifications