Allbirds' Q3 2025: Contradictions Emerge in Inventory Strategy, Macroeconomic Impact, and Sales Guidance

Date of Call: November 6, 2025

Financials Results

• Revenue: $33.0M in Q3, came in at the low end of guidance; full-year net revenue guidance $161M–$166M (prior $165M–$180M), includes ~$23M–$25M impact from international distributor transitions and retail store closures
• Gross Margin: 43.2% in Q3, compared to 44.4% in Q3 2024; full-year margin expected in the low 40s due to channel mix and increased duties

Guidance:

• Q4 net revenue expected $56M–$61M, flat to up 9% vs prior year
• Full-year net revenue expected $161M–$166M (prior $165M–$180M); includes ~$23M–$25M impact from international distributor transitions and store closures
• Full-year adjusted EBITDA tightened to negative $63M–$57M (prior range $65M–$55M); Q4 adjusted EBITDA loss expected $16M–$10M vs $19M a year ago
• Company may pursue capital-raising options to enhance liquidity

Business Commentary:

• Product Performance and Brand Revitalization:
• Allbirds reported a low end of its guidance range for Q3 net revenue at $33 million, although some new products like Wool Cruiser and waterproof collections showed strong performance.

• The slower sales of core franchises like the original runner are due to ongoing efforts to rebuild brand perception, which requires sustained product cycles.

• Cost Management and Efficiency:

• Q3 SG&A expenses were reduced by $9 million or 30% year-over-year, driven by lower personnel, occupancy, stock-based compensation, and depreciation expenses.

• The company also increased marketing spend by 19% for new product launches, indicating a strategic shift to support brand growth.

• Liquidity and Financial Outlook:

• Allbirds ended Q3 with $24 million in cash and cash equivalents and plans to explore options to improve liquidity in the coming quarters.

• The company expects fourth-quarter net revenue to range from $56 million to $61 million, flat to up 9% versus the prior year, reflecting ongoing product momentum and structural changes.

• International Distributor Transitions:

• The transition from direct control to international distributors caused a significant impact on Q3 results, particularly with EU transitions completed at the end of Q2.
• This structural change has improved inventory manageability and is expected to have a smaller impact going forward, contributing positively to future growth.
  

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized product momentum ("Wool Cruiser" selling out; waterproof collection "exceeding expectations"), strong cost control (SG&A down 30% YOY) and improved bottom-line trends (Q3 adjusted EBITDA loss $15.7M vs $16.2M prior year), while providing tightened guidance and noting potential liquidity actions.

Q&A:

• Question from Alexandra Straton (Morgan Stanley): Can we just focus on the third quarter sales results came in on the low end of what you were expecting. So maybe what kind of disappointed or came in lower than you thought? And then also just with the inflection in the fourth quarter that you're assuming, is that reflective of quarter-to-date trends? Or how do you get there? And then maybe even going forward, just initial thoughts on '26, -- like should we carry forward that sales growth into that year or any initial thoughts there?
  Response: New-product momentum is driving the expected Q4 inflection (many recent launches performing well), but legacy franchises (notably the runner) remain slow; the Q4 outlook assumes continued new-product cadence, promotional activity and declining distributor/store-transition headwinds, supporting optimism for 2026.

• Question from Francesco Marmo (Maxim Group): I was hoping you could add some color around your inventory composition. I mean, in absolute terms, it looks relatively lean. I was hoping you could give us some comments around what kind of products are in inventory, especially considering all the new product launches and as we head into the Black Friday period and the holiday season, especially because I was looking at your new website, and it feels very kind of new product focus and very brand story focused. So I was wondering what is your strategy for the Black Friday period.
  Response: Inventory is lean at $43M (down 25% YOY) driven by completed international distributor transitions and disciplined inventory management; company is prepared with a rigorous Black Friday/Cyber Monday promotion plan and will actively promote to maintain share.

Contradiction Point 1

Inventory Levels and Strategy

It involves changes in management's outlook on inventory levels and strategies, which are critical for sales and profitability.

Francesco Marmo from Maxim asks: Can you provide more details on your inventory composition, specifically the types of products in stock, especially with upcoming product launches and the Black Friday holiday season, given your new website’s focus on new products and brand storytelling? - Francesco Marmo (Maxim Group)

2025Q3: Our inventory ended at $43 million, down 25% year-over-year, driven by international transitions and strong inventory management. We're focused on supporting new product launches. - Annie Mitchell(CFO)

How will you adjust inventory strategy for the rest of the year with upcoming product launches? - Francesco Marmo (Maxim Group)

2025Q2: Our inventory management has been exceptional, with a 21% decrease year-over-year. Strong management and operational changes like 'ship from store' allow appropriate product levels without inventory increases. Investment in new products aligns with strong inventory management. - Annie Mitchell(CFO)

Contradiction Point 2

Macroeconomic Impact and Sales Guidance

It involves changes in management's assessment of macroeconomic conditions and their impact on sales guidance, which are crucial for investor expectations.

Did the third quarter sales fall below expectations? Did the assumed fourth quarter inflection reflect current quarter trends? Do you expect 2026 sales growth to continue? - Alexandra Straton (Morgan Stanley)

2025Q3: The reduction in sales guidance is due to structural changes including additional door closures and macroeconomic uncertainty. The core business expectations remain unchanged, and new product launches are anticipated to drive growth. - Annie Mitchell(CFO)

Is the sales guidance reduction due to structural changes (e.g., store closures, distributor dynamics) or has the core business outlook changed? - Alexandra Straton (Morgan Stanley)

2025Q2: We expect macro events to impinge on productivity in Q3. However, our growth expectations remain unchanged. - Annie Mitchell(CFO)

Contradiction Point 3

Inventory Management and Product Launches

It involves the company's strategy for managing inventory and new product launches, which are crucial for revenue and market positioning.

Can you provide more details on your inventory composition? It appears relatively lean in absolute terms. - Francesco Marmo (Maxim Group)

2025Q3: We anticipate a competitive Q4 with consumers looking for promotions. We're prepared for Black Friday and Cyber Monday with a plan to capture market share. We'll be strategic with promotions and adjust pricing to drive sales. - Joe Vernachio(CEO)

What are your key inventory management initiatives, and can you share details on initial purchases for upcoming product launches? - Dylan Carden (Bernstein)

2025Q1: We're maintaining a disciplined approach to inventory management, with initial buys being conservative. This allows flexibility to real-time consumer signals. We're optimizing our inventory position ahead of upcoming launches. - Joe Vernachio(CEO)

Contradiction Point 4

Impact of Macro Events on Consumer Behavior

It highlights varying perspectives on how macroeconomic factors affect consumer behavior and sales, which are critical for business planning and forecasting.

What caused Q3 sales to fall below expectations? Is the Q4 inflection point based on current quarter trends? Should Q4 sales growth continue into 2026? - Alexandra Straton (Morgan Stanley)

2025Q3: We've seen new products outperform expectations and macro events impact sales. We expect these trends to continue into Q4. - Joe Vernachio(CEO)

Can you explain the macroeconomic changes especially trade policies you're facing and their impact on your business? - Alexandra Straton (Wells Fargo)

2025Q1: We're navigating an evolving macro environment driven by shifting global trade policies. We continue to work with our suppliers to mitigate potential disruptions. While there may be short-term headwinds, we are focused on building long-term value for the business. - Joe Vernachio(CEO)

Contradiction Point 5

Sales Growth and Product Performance

It involves differing perspectives on the performance of new products and the impact of macroeconomic factors on sales, which are crucial for understanding the company's growth trajectory and strategic focus.

Did Q3 sales fall below expectations? Does the Q4 inflection reflect quarter-to-date trends? What are your initial thoughts on 2026 sales growth? - Alexandra Straton (Morgan Stanley)

2025Q3: It's really kind of a tale of 3 things. First, we've introduced a lot of new product this quarter, and we're delighted with how it's performing. Second, we have some core franchises like the runner that haven't yet inflected. Third, we see macro events distracting consumers. We've seen new products outperform expectations and macro events impact sales. We expect these trends to continue into Q4. - Joe Vernachio(CEO)

What factors are being most closely monitored in the first half of the year to drive Q4 growth? What differentiates Q4 that enables growth? - Alex Straton (Morgan Stanley)

2024Q4: We are confident in the return to growth in Q4 based on the strength of our new product offerings. The transition of our new product assortments to Q3 and Q4 ranks as a major differentiator from prior periods and should meaningfully contribute to our growth in Q4. - Joe Vernachio(CEO)