Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Allbirds Inc (BIRD, Financial) reported a strong execution across teams, with results matching expectations for Q3 2024.
- The company launched two new products, the Tree Glider and Lounger Lift, which received positive consumer responses and media coverage.
- Allbirds Inc (BIRD) achieved a gross margin expansion of 90 basis points to 44.4%, driven by lower freight and duty costs and healthier inventory positions.
- The company successfully transitioned five international regions to a distributor model, which is expected to enhance market reach and awareness.
- Allbirds Inc (BIRD) reported a 22% reduction in its per unit carbon footprint, aligning with its sustainability goals.
Negative Points
- Net revenue for Q3 2024 was $43 million, reflecting lower unit sales and the impact of international distributor transitions and retail store closures.
- The company closed 15 US stores in 2024, which contributed to a decline in revenue.
- Allbirds Inc (BIRD) anticipates a full-year adjusted EBITDA loss between $75 million to $71 million.
- The company expects a highly competitive landscape during the holiday season, which may impact sales.
- Allbirds Inc (BIRD) is delaying its top-of-funnel marketing spend in the US until late Q4, potentially affecting immediate brand awareness.
Q & A Highlights
Q: Can you explain the factors contributing to the Q4 revenue guidance and the timing of potential growth in 2025?
A: Annie Mitchell, CFO: The Q4 guidance reflects the timing of marketing spend and retail store closures. Our inventory is in a strong position, allowing us to be less promotional compared to last year. We expect growth to begin in the back half of 2025, driven by a rich product offering, enhanced marketing, and improved shopping experiences. - Joe Vernachio, CEO
Q: Could you elaborate on the branded content planned for next year?
A: Joe Vernachio, CEO: We're focusing on the "Allbirds by Nature" message to connect all communication. We're creating engaging content with OBB to connect with popular culture. This will be teased at the end of this quarter and fully launched in Q1 and Q2 of next year, priming for new product arrivals.
Q: How is the inventory composition, and what are the plans for SG&A as a percentage of sales?
A: Annie Mitchell, CFO: Inventory is down 28% year-over-year, with more in-season appropriate goods. We aim to end the year clean to prepare for new products in 2025. SG&A improvements are ongoing, with benefits from transitioning international regions to a distributor model and closing 15 retail doors.
Q: Is $11 million the right quarterly cash burn to expect moving forward?
A: Annie Mitchell, CFO: While there will be seasonal fluctuations, the $11 million cash burn is in line with expectations. We will see a small uptick in cash usage as we prepare for fall holiday 2025, but it will be minimal.
Q: Are mid-40s gross margins sustainable, and what are the expectations for 2025?
A: Annie Mitchell, CFO: For the remainder of this year, mid-40s gross margins are expected. In 2025, we anticipate improvements due to cost of goods savings and new product lines, leading to better margins compared to 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
