On November 8, 2023, Allbirds Inc (BIRD, Financial), the eco-conscious footwear and apparel brand, reported its financial results for the third quarter ended September 30, 2023. The company faced significant challenges, with net revenue falling 21.2% to $57.2 million compared to the same period last year and an 8.7% decrease compared to Q3 2021. The drop in revenue was primarily due to lower average selling prices from increased promotional activity and a decrease in units sold.
Financial Performance Overview
Allbirds' net loss for the quarter expanded to $31.6 million, or $0.21 per share, from a net loss of $25.2 million in Q3 2022. The company also reported an adjusted EBITDA loss of $19.0 million, a deterioration from the $14.8 million loss in the previous year. Gross profit stood at $24.9 million with a gross margin of 43.5%, a decrease from the 44.8% margin in Q3 2022. The decline in gross profit and margin was attributed to the lower average selling price and units sold, despite a decrease in inventory write-downs and lower per-unit costs for freight, logistics, and products.
Expense Management and Strategic Initiatives
Selling, general, and administrative expenses (SG&A) decreased slightly to $43.5 million, or 76.1% of net revenue, compared to $44.6 million in the prior year. Marketing expenses were reduced to $10.2 million, or 17.8% of net revenue, reflecting a strategic cut in digital advertising spend. Restructuring expenses increased to $1.2 million due to higher professional service fees and employee-related benefits associated with the strategic transformation plan initiated in March 2023.
Our third quarter results reflect another quarter of solid execution under our Strategic Transformation Plan," said Joey Zwillinger, Co-Founder and CEO. "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."
Balance Sheet and Cash Flow Highlights
Allbirds ended the quarter with $132.5 million in cash and cash equivalents, marking a significant improvement in operating cash use, which was reduced to $5.4 million from $17.5 million in the same period last year. Inventory levels were managed down to $79.9 million, a 37% decrease from the previous year.
Outlook and Guidance
For Q4 2023, Allbirds provided guidance targets, expecting net revenue between $66 million to $72 million, a decrease of 15% to 22% versus Q4 2022. The adjusted EBITDA loss is projected to be between $26 million to $23 million. The guidance reflects the impact of transitioning to a distributor model in Canada and South Korea and anticipates increased promotional activity during the holiday season.
Allbirds continues to execute its strategic transformation plan, focusing on reigniting its product and brand, optimizing U.S. distribution, transitioning to distributor partners in certain international markets, and improving cost savings and capital efficiency. The company has entered into non-binding letters of intent with distributor partners in Japan and Australia/New Zealand, with expected finalizations in mid-2024.
The company's complete financial tables and additional details can be found in the earnings release, and further commentary was provided during the earnings call on November 8, 2023.
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Explore the complete 8-K earnings release (here) from Allbirds Inc for further details.
