Allbirds, Inc. Q4 FY2024 earnings call

• Rebuilt the company over the past year, focusing on strengthening operating model, product and marketing engine. - Strengthened gross margin through strategic sourcing, product development, and full-price selling. - Streamlined cost structure, reducing SG&A by over $20M in 2024, closing 15 US stores in 2024 and 5 post-quarter, and transitioning to distributor model in international regions. - Q4 2024 had strong execution with limited new product introductions, scaled back marketing spend, competitive holiday season with reduced days on promotion. - Overhauled product engine with new design studio and development center, planning fall 2025 launch of refreshed core products including updated Runner. - Launched brand campaign 'Cards on the Table' with Stanley Tucci, and refined performance marketing strategy. - Redesigned website to launch in back half of 2025, aiming to improve conversion, and prototyping updated store presentation in San Francisco.

Fourth quarter net revenue totaled $56 million, at the mid-point of guidance. Full year 2025 net revenue is expected to be $175 million to $195 million, with approximately $18 million to $23 million negative impact from distributor transitions and store closures. Stripping out these structural changes, net sales are expected to grow ~10% at mid-point vs 2024. Q4 gross margin was 31.3%, impacted by inventory adjustments, stronger conversion on sale days, incremental air freight, and higher mix of international distributor sales (which have lower gross margin but higher bottom-line flow).

• Full year 2025 net revenue: $175M-$195M, stripping structural changes, net sales grow ~10% mid-point vs 2024. - Q1 2025 net revenue: $28M-$33M, down 22% mid-point vs prior year. - Adjusted EBITDA loss 2025: $65M-$55M. - Year is second-half weighted, return to top-line growth in Q4 2025 due to product and marketing initiatives. - Gross margin expected to improve in 2025, with Q1 pressure from channel mix and sunsetting product, then ramping later. - Increased marketing investments in 2025, with Q1 having disproportionate spend due to new brand campaign.

• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. - Macro backdrop challenging consumer behavior, which is factored into guidance.

Q: Elaborate on factors giving confidence in return to growth in Q4 and how macro backdrop factors in.

A: Confidence comes from accumulation of work rebuilding business, product engine, marketing, and website/store redesign. Macro backdrop shows consumer behavior change, observed in traffic data, but upper-funnel work starting to offset some, though choppy.

Q: What's monitored closely in front-half for back-half inflection, and what's different in Q4 enabling growth vs prior quarters.

A: Monitoring traffic; key is driving traffic to drive growth, looking at metrics like predictive lifetime value of customers. In Q4, new product assortments start to drop, with full line in Q4, accumulation of initiatives around product, marketing, consumer experience enable growth.