BIRD - Earnings call transcript Q3 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Allbirds Third Quarter 2024 Conference Call. [Operator Instructions] Now I would like to turn the call over to Christine Greany of the Blueshirt Group.

Christine Greany

Good afternoon, everyone, and thank you for joining us. With me on the call today are Joe Vernachio, CEO; and Annie Mitchell, CFO.

Before we start, I'd like to remind you that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about our financial outlook, including cash flow and adjusted EBITDA expectations; 2024 full year and Q4 guidance targets; impact and duration of external headwinds; strategic transformation plan and related planned efforts; go-to-market strategy; transitions to a distributor model in certain international markets; anticipated distributor model arrangements; expected profitability; cost savings targets; gross margin estimates; product planned time lines and expectations; marketing strategy and investment; product and brand strategy; and other matters referenced in our earnings release issued today.

a results risks to involve could uncertainties statements actual cause differ forward-looking number and of that These materially. and date Please statements also to this reflect the this occur any reflect forward-looking no call, of call. our opinions changes to note only as statements that revise we undertake these after obligation that of

that to Form for quarter factors the XX, XXXX, affect XX-Q a the our detailed may ended filings, of our including SEC refer results. for Please quarterly on description more report our June risk

Also call, adjust as These not in this of eliminate we during used financial will and items. measures our the a discuss substitute that non-GAAP certain to be to non-GAAP items for should GAAP any results addition results. impact GAAP

information reconciliation these and earnings their regarding measures the measures to measures today's additional of non-GAAP directly reasonably financial a comparable most GAAP release. extent to non-GAAP will You in these available find

the the to turn Joe I'll over begin to call Now Joe? remarks. formal

Joe Vernachio

thank a with was teams it with and for and confident change comes gearing advance our matched expectations. our the taking afternoon, joining. QX that when we're the sustained especially of for across business. quarter pleased progress steps quarters, We're another for with up in and execution results faster you to Good pace our marketing. us strong the in We're solid coming product to

share what's ahead. and on updates the quarter Today, I'll recap

New founder store. Glider, our the Wood these of on the Glider designed created us expert, the social helping SoHo for recently in audience. the shoe, of season. Wood-Tepperberg, highlights XXXX Lounger for products, Tree will growth. to top support reach launches, X a Tree in the strong product in-person performance-inspired To consumer reinforces content trend thrilled event a second Health, enlisted that launch, activation the with release Lounger highlighted Starting as was from Melissa set wellness positive pick our our an drive Today We coverage, a half confidence future upcoming women. Show's York QX. response report, and a Melissa must-buy which for holiday engaging This The new and the We're we Lift, for media slip-on Lift with wider launched the

our optimize for we brings This total completed to our in of store after to ended. ongoing one part quarter additional U.S. and As closures, efforts fleet another XXXX profitability, closures store X QX XX. in the shortly our

strategy, awareness will and covering mid-XXXX. early we As in Mainland and beginning distributor and additional countries expand QX across in in secured agreements, Latin part in help another us strategic reach of X distributors America in Europe, new both These the one countries markets, international X October. X

to lastly, manage this to us operational levels and strong and gross And financial inventory our achieve costs carefully reduce continue enable performance, quarter. margin rigor

We foundation an in resulting are journey. operating next phase structure and the strengthened improved We're our now our from cost a with transformation work. of

propelling positioning emphasis Our customers and achieve great providing an telling and stories brand engaging great renewed making forward and growth to shopping is experience us product, on the with profitability.

to tenets our modern brand, our lifestyle and on refocusing returning of roots We're product. as core have with that start Let's us. defined versatility a always comfort footwear

second hit of level modern half offering sophistication comfort pays product to new of brings origin market our sustainability. the Our in to begin that lineup will XXXX. homage future a of next-generation story This and the

with fresh positively gratifying we're keeping It's things new responding releases. materials see colors. meantime, and silhouettes, customers our the latest In to to

these the Lift from are that been Piper. ]. newness Lounger Tree Go, of Tree mentioned, the [ we demonstrating week, Runner also Canvas by introductions popular want back and Mule And Many As the brought next customers Toppers We've launching this strong Tree delivering Glider, demand. have includes Allbirds. Lounger performers, we're

runner best-selling franchise, Additionally, our we our will collections more this rolling corduroy rugged versions water-repellant season. of out be later introducing to

the cultural set to a to With by Turning time fresh on clear strong It campaigns. is we're us both positive a and into aspirational Nature rebuild the marketing reintroducing under position lineup relevance. to from begin our reinforce in launch to We're marketing. right audiences. and products our already Allbirds brand is mission by telling seeing now initiatives brand engagement to loyal great We're customers of our lean thoughtfully narrative. our mid-XXXX, beginning Allbirds that brand new to stories to

in We months. coming expect momentum to build the on this

be we awareness premium division, brand marketing some OBB creating to by as a will content great for and created digital well partnering branded example partnership in OBB build Balls, content top-of-funnel known a series. increase launching to Soon, Spice. Bolded, is A its strategy with Hart Kevin history, a they campaigns of series Cold Old successful recent the with in with most Media is

a believe Kristen's to us emerging producer, our build and will Our specifically, will is our messaging attention by content Disney. this act and which Chappelle More specials Nature as more through betterment inspirational meaningful shorts primary format strategy we be on focus breaking brought work enable To will Allbirds premium our Wong, Dave a while with storytelling. connections. values convey TV around on have video showrunner and and ideas as celebrate us people, we surrounding Kristen effort, in the today's brand series. lead help content, long-form our deeper roots, includes highly acclaimed We video for will for digital series, and be building economy. our the to effective

are start We production featured partners to with preparing soon.

of underway. to Uber eco-friendly brands will Allbirds which also have that it is curated the New a million Illinois inaugural October, of Uber our initiatives be selection a on will users there was the will tap for base This and it to and users stores. awareness, overlap announced locations, distance we are enable of us In was the Eats user collaboration for footwear We within available of XX their store people California, partner When already become planned, Eats Eats middle-funnel to This Climate discover Collection. series app. increase Uber alone, that making easier delivery to In activations delivery PR are into significant. our Allbirds. overlaid with York some

Bonvoy We up for This with paid us, are Marriott exposure our sweepstakes visible including on brand base. activations, e-mail, a a providing is with campaign influencers. to and with teaming cross-channel customer highly Marriott's

our Later event season. profitable products ahead this be of and month, New we'll the with most influencer celebrating York special comfortable a holiday media in

e-commerce it updated fresh begin end, To U.S. shopping is take mid-XXXX we're the amplify market half and in stores bring experience that our our that across in touch we our throughout As that improvements the second to with essential an points. next marketing, year. customers to planning provide we will all brand products and and engaging site both of shape

to our improve reimagined to and overall enhancements, experience and easier new seating Allbirds our Our shopping make we'll store e-commerce flooring and and to navigation through the from ensure marketing and experience are store, displays, aligned message. site architecture navigation storytelling everything product be that the new In other to will display product our storytelling shopping sharper tables.

believe planning Monday the be season. us initiatives the Looking throughout to position just marketing looking be recognize consumer Cyber we for shoppers ahead We Friday capture Black holiday significant. and for and will XXXX product launches we're to value, and our promotional will that attention. relevant the upcoming moments season, most

to an levels. overall promotional perspective be below our positioned and well from Importantly, inventory year's last we activity are expect

underway. they're and our We're Footwear in months, up a our revitalization game we're is We but plans are cycles with to taking passionate confident as going together. how is a where long well coming about product XX brand.

short the off our coming you about, fall This validation the was the We're just bring positive. sales product to coming new offerings a our receive to holiday was swiftly, period which of in at from time. making meeting, months. this we big external We're outside partners and feedback market we're to we've of great product in talking architecture was first moves believe look resounding working the the tremendously It's been success. XXXX to planning a

In been sharper. we've marketing standpoint, never product fact, from a and

these on our goods, the and cost areas, critical made on focus inventory of the We've of expenses, staying to significant we're Alongside also business. progress foundational aspects work committed cash.

expect to can these areas. continued see in You discipline

Since of day at has our brand. X, heart been the sustainability

our Our reduction footprint. carbon latest sustainability in report reveals a per-unit XX%

Zero, Magazine's as values, we core zero to a year, shoe Just earned on to carbon launch next the to carbon set MX.XNSHOT toward committed and we list the net of reduction. planet Time both best positive last a our world's True on first our remain inventions spot early week, profitability making further XXXX. in impact work

teams hard diligence gives the and long-term creating goal. focused work on our our direction. aligned, of is value our We stakeholders. shareholders the a dedication speed It's of our and staying appreciate in all core the working committed organization. confidence us continued to strategies unity This with our shared to while Everyone advancing across incredibly toward remain tremendous for see support and gratifying

the to I'll Now turn discuss financials. Annie call the over to

Annie Mitchell

Thank you, Joe, everyone. afternoon, good and

The third teams results marks confident expectations. execution, our path in quarter line Joe, another delivering XXXX successful quarter we our forward. of with are and in are echo To our impressive of

and reflects within lower for Net totaled unit prices $XX partially average by primarily business. offset direct revenue the our quarter third million sales, higher selling

retail identified first quarter distributor now impacted X under also of a which by for transitions distributor in direct are regions international revenue is anticipated, transition store Of As we note, and our the was the QX all operating closures. model.

attributable year expectations a to XX.X%. position. with The freight XX is communicated and as expanded as line duty in is basis mid-XXs margin the in full ago This well lower our gross we for Gross previously benefits year. for improvement primarily margin the versus costs to healthier inventory from points the

expenses. to Turning

year XX% see compensation by That's SG&A actions and occupancy pleased control to stock-based expenses dollars, our continuing a We down bear totaled and are personnel depreciation driven costs. million. amortization, versus $XX excluding to that cost lower fruit. and ago, are

X to we plan. closures That closure high the of end. quarter the we During end our brings million. by of closed connection followed with incurred us closures, at subsequent onetime store X $X.X year-to-date, U.S. In store, quarter, to charges additional cash XX

this the a with going to to year-over-year be evaluate pleased our SG&A We opportunistically basis. fleet fourth we quarter, In are on modestly we front, will expect and continue on progress down the forward.

quarter net Third totaled year. down X% revenue, expense of to dollar or prior marketing XX% million a $XX basis compared on

to up. dollars the U.S. the part made the to back in enable as ahead we of the investments our We strategic U.S. product marketing timing of quarter QX. be build spend top-of-funnel to We awareness decision down continue year-over-year brand the to expect us returns to hold greater spend starting strive be launches. of we've fourth believe adjusting XXXX total anticipated will these in on to latter generate Notably, until with our

ended We cash $XX and cash borrowings The XX% quarter no cash inventory the financial holiday with million. the versus our flow. heading healthy to $XX million of ago sheet Turning revolver. company outstanding now equivalents condition and a reflects season. down balance the selling and strong That's levels in remains million with $XX and into year totaling under

rigor financial $XX million us to ongoing operating in in cash used $XX QX, to improvement narrow our from enabled a Our second quarter. sequential the million

full to now year Moving guidance.

retail we outlook range, our margin million revenue inclusive about high million. of $XX range. is These were $XXX and expected to adjusted This be comprise year at We estimated our our guidance gross transition. at and million outlook, end line able full to of closures, the million to $XXX and our store top year year-over-year the narrowing XX% impact. $XX expected structural which are of impact is and our revenue revising maintaining net are EBITDA between from of Full decline changes execute international range

to between in including from markets, revenue Broken expected transitions markets. be $XX International $XX million revenue resulting between includes international net of $XX million, down to store million full to a be This to million certain million. and million distributor year XXXX $XXX a is closures. $XXX to expected $XX impact is $XX $XX from geographical resulting U.S. to million impact million by model

factory Ongoing year, activity We inbound to and and last range lower our initial anticipate to continue margin be promotional compared the from freight driven is XX% reduced innovation. to outbound savings and margins materials strength to shift of gross in Vietnam to by XX%. expected

fourth greater Partially our a quarter, international expect this come to the of distributor we sales, business are in from which lower margin. strength offsetting portion gross

is $XX to range our loss in be EBITDA of range million of to million. Full to to $XX compared adjusted the expected $XX million million prior year $XX now

now to guidance. fourth quarter Turning

be $XX to to be to $XX million of range million. of revenues the net million international in revenue expected the expect range of $XX $XX million. expected We and to be to U.S. million $XX range in in $X revenue the is to is million

the our lower promotional of market the the season, this highly store our spend competitive U.S. upper-funnel plans following in marketing the of our versus timing end a for for our that will activity range. ago, holiday reflects guidance expectation and QX factors: Our shift at the landscape high be closures year

below loss European well QX $XX to as primarily the is in distributor. outlook as gross to EBITDA due adjusted million expected to of related to range $XX year-ago a upcoming profit revenue to new our to impact the modest our be million, levels transition QX

Entering final we are now to the continuing afternoon, maintaining execute operational our the discipline. focus and time on stretch to We appreciate questions. your of while year, areas call we'll this financial strategic open the and

Operator

Instructions] from Stichter Janine the comes Our question first of of [Operator line BTIG.

Janine Hoffman Stichter

additional expected we Is now had out of closures? be line. in return -- is ago. start that potential else And QX marketing terms lines, how delta top change along expense about in the the us growth Or guide to the if to think us help revenue square are we maybe to to where I there 'XX. timing environment of guidance simply anything for ask of the just the could that decline, store where about quarter the wanted give versus some to the to then you about If a about think and those us timing would maybe guidance? happening you

Annie Mitchell

the range. guide much at of the so as timing our marketing closed doors questions. the high of retail being as QX for the is of the thanks part Janine, well contribution our Yes, end your spend to

probably done year. aggressively noticed like Additionally, feel QX way be that because have of inventory our we on you year-to-date, work we great to that last down in the we've end that was of inventory at XX% QX, the don't we the were promotional

look like is we recognizing going last But much the this expectations be always moments just be that Monday. Cyber value year, when Black into for is inventory year, consumer year, consumer leaning will different, our Friday, such a Of especially our at looking you time course, to position. the to in this for compared stronger of

to We going not are be promotional. as nearly

the recognize that on we impact unit have so sales. And will our overall

Joe Vernachio

maybe will the And when then come our just growth address business. the into I'll

stool in got place. we've So three-legged the well

holiday product X shopping All has of So and half as well has pipeline of And 'XX. developed in marketing next the is offering fall as rich maybe and the been are for product, origins. experience. since it a delivering the The had back those is of brand underway. its year product this

reconnect to is it we're the back so going of have out back brand through stores you the the and will in it's to start bear distribution experience through our to try website growth and And that And that year when the to and the give the see half to that the will start our starting to inflect. come to our and connection into will partners marketplace. cultural consumers marketing

growth. laser-focused to are on deliver we year of So the next half back

Janine Hoffman Stichter

Great. Okay. maybe then last And the just one.

you're It sounds planning interesting branded different. something you that content and If some elaborate next little for really more about a this bit of could year.

on can that. just maybe you So share

Joe Vernachio

Yes.

to a focusing by see of message down really consistency our starting of very all has in to early the from Allbirds Nature of around our pay starting direction the it's the of way And to dividends. the starting turn the to connect really leading our to been all able PDP. message. those because to metrics We're paramount us some funnel brand top So being of of first, communication

of everything by so And be wrapped Nature. will this in do we message Allbirds

that -- and plain effective We believe to. as just is create we need content it very as to doing of engaging it. popular top coming work the we at bring back the a advertising to is then that with doesn't And funnel, and a associated can connect create with it, entertaining trying culture. and to mechanism in so people people series We're keep has popular used

teasing we'll to able that up activations of will probably people the well back -- then and And there'll market. the and this most lots importantly And and our it, QX of get when the type into funnel lower-funnel it be mid-funnel arrive. of in it they're experts quarter, the to which start is the this and at in been for new is show underway OBB, building building we've of and really end content, to secure as hit starts the new be then top so the into beginning pump products product we priming QX, part we're of of

really with that we're on excited how people. work doing got But about we're proposition connect that that a really think unique and to we've

Operator

from comes of Alex Straton of the Morgan Our next question Stanley. line

Alexandra Straton

I've got both. X for you

First on SG&A. on inventory and then

But of on dig of much kind you out good. the that So planning versus just composition legacy about next plan it you how you like good aggregate, sounds is then Like you levels. into are look can In to And guys how that feel product they year? inventory, for like it? newness? phase the

on still done solid just work But rationalization have high there. It sales. like that's a your look super it's a it, strategy. then we And when at spot bright feels SG&A, of in percentage a you been guys lot of

So is SG&A sales how Or think there go more a about there? percentage do of room you as over to time?

Annie Mitchell

had product to have much of more styles time year, still or some that quite last I'll when where at levels and we very your XX% And around Alex. levels year, non-go-forward bringing overall start bit those year-over-year. overall where composition. legacy colors. a Thanks, look especially inventory feel clear in this for the that compared things start and are, we're inventory we with being need good the last to goods-in-transit, inventory XXXX. we Versus composition, of about down our so of question we in-season-appropriate We were through, that we

great composition quarter. we inventory in of for short, level we that need with the and are QX So opening a both up

as moment ago, we mentioned As will a needed. promote

Cyber priority ending have fantastic the buy the into for And we to Black are Friday opportunities that want new be value in XXXX. and to our around great clean with coming will in some consumers inventory of that back because Monday. the half year have the We do around open-to-buy, availability products

be year. feel near had in going that We're on what now, a So nowhere the we this that's for about really legacy year. the levels plan position focusing we're we rest of our good to last great right and

this a SG&A, yes, have progress quite we of bit Regarding made year.

-- have of will again little prior Some versus in But still forward. that is a year-over-year to you a this made, costs we've that go and you improvements of that believe in the done. do XX% down contributor. now QX made, fruit. that we've changes legacy in regions see are successfully not X X distributor the that or model. what to doing being from what XX% bear the That's really starting transitioned leftover we're targeted saw international regions bit generally, is model a the can we've quarter, we the are direct Those with We the

transitioning will the majority in We our be of XXXX. business Union, the as the well EU middle of European

small So well impact that will have a on beneficial as SG&A.

retail, doors, we've doors closing for look this that is business at needed. this that as we're end high our be do way at to this with opportunistic drive We of year. anticipate for continue the done rigor closed but up we've now XX we that retail built the which will And our And and range we and -- year.

Operator

Our of Carden of next comes from Blair. question William the Dylan line

Dylan Carden

for quarterly line? year? back see as you what's next top to half right to you in to glide the Is traction the as through cash the burn starting the of of to some And envision burn path start cash -- use $XX million sort

Annie Mitchell

$XX across fluctuations operating terms that flow the for the going still to especially quarters buy Thanks are looking question, coming as we each between of more do, X some for million with When of be the months. of seasonal moments seasonal the normally as expectation we there for at in cash for But used quarter, the year. the certain Dylan. much in line it's course we your the

and of done product go 'XX. year, will buying But into we the plans we as inventory be investment talk because much of of captured half it's inventory as cash overall and for to holiday how cash in that usage. the actual We we important rate operating our as fall is, first we've the run work next about -- that -- it will the be have the date great the largely our

year barely will a into there get So popping. notice even be it but of we as the for almost terms cash in you uptick half small back usage, enough next to of

Dylan Carden

is Or it. sort Got And to year? what level? that kind the the you've happens dependent top of of on next line of now through gross mid-XXs the that margins agreement, for also is the structural kind distribution

Annie Mitchell

for the the XX% the yes, of So about way to year, think mid-XXs is and guide it. remainder this XX% our to of

are products new line. As cost in side into our into of XXXX, year, fruit bear next we've goods on continue and improvements we there go we product that some as the that of will get that continued XXXX -- made to our

So expect in improvement I would to XXXX see level some XXXX. over of

Operator

questions this I time. am now remarks. to closing further back for Joe would Vernachio I turn like showing at no it to

Joe Vernachio

for really I'm believe we've achieved very special the very everybody. the we that what next has brand. for and of we'll and future happy us. management quarter. are starting Thank joining, that and everything it about season. quarter we're you bright the that excited you think this this brand, holiday We holds future is really, and you, work wish a really offer and to see it's all Thank the a for team realize proud to And you

Operator

conference. program. today's the you concludes This in for your Thank participation

You may now disconnect.

Allbirds (BIRD) 6 Nov 242024 Q3 Earnings call transcript