“Our third quarter results reflect another quarter of solid execution under our Strategic Transformation Plan. We made important progress on our key benchmarks of inventory reduction, operating cash use, and cost control, resulting in adjusted EBITDA ahead of our expectations. We also meaningfully advanced our strategy to transition from a direct distribution model to third-party distributors in key international markets. Nearing the end of our first year of transformation, our path remains clear, and we are operating with discipline to deliver profitable growth and build shareholder value over the long term”, commented Joey Zwillinger, Co-Founder and CEO of Allbirds.

Third Quarter Results

In the third quarter of 2023, the company’s net revenue amounted to 57.2 million US dollars, which reflects a decline of 21.2%, on a comparable basis to the same period of last year. This result was mainly attributed “to a decrease in average selling price, driven by promotional activity, and a decrease in units sold”, as well as to the impact of the transition from a direct selling model to a distributor model in South Korea and Canada in September 2023”.

In the three months to the 30^th of September, Allbirds’ gross profit totalled 24.9 million euros and the gross margin was 43.5%, as compared to the figures of 32.5 million US dollars and 44.8% recorded in the third quarter of 2022.

The company reported that selling, general, and administrative (SG&A) expenses declined to 43.5 million US dollars, or 76.1% of net revenue, on a comparable basis to 44.6 million US dollars in SG&A expenses, or 61.4% of net revenue, recorded in the same period of 2022, due to “decreases in stock-based compensation expense and personnel and related expenses”.

In addition, restructuring expenses related to its strategic transformation plan surged to 1.2 million US dollars, or 2.2% of net revenue, as compared to 0.7 million US dollars, or 1.0% of net revenue in the same period of the prior year. However, marketing expenses declined to 10.2 million US dollars, or 17.8% of net revenue, on a comparable basis to 12.7 million US dollars, or 17.4% of net revenue in the third quarter of 2022.

The footwear brand posted a loss in adjusted EBITDA of 19.0 million US dollars in the third quarter of the current year, as compared to a loss of 14.8 million US dollars in the analogous period a year ago, and an adjusted EBITDA margin decline to (33.1)% from (20.4%).

Allbirds’ net loss in the third quarter of 2023 was 31.6 million US dollars and the net loss margin stood at 55.2%, on a comparable basis to a net loss of 25.2 million US dollars and a net loss margin of 34.7% in the same period of 2022.

Fourth Quarter Guidance

Given the negative impact “associated with the transition from a direct selling model to a distributor model in Canada and South Korea”, as well as its “plans for heightened promotional activity during the holiday season”, Allbirds expects net revenue for the fourth quarter to fall by between 22% to 15%, as compared to the same period of 2022, to between 66 million and 72 million US dollars. The adjusted EBITDA loss is anticipated from 26 million US dollars to 23 million US dollars.