Q3 2025 Allbirds Inc Earnings Call
Only mode.
After managements prepared remarks, there will be a question and answer session at which time instructions will follow now I would like to turn the call over to Christine Greenie of the Blue shirt group. Please go ahead.
Good afternoon, everyone and thank you for joining us today with me on the call are Joseph <unk>, CEO and Andy Mitchell CFO.
During this call we will be making comments of a forward looking nature actual results may differ materially from those expressed.
Or implied as a result of various risks and uncertainties.
For more information about these risks please review the company's SEC filings, including the section titled Risk factors in our report on Form 10-Q for the quarter ending June 32025 for a more detailed description of the risk factors that may affect our results.
These forward looking statements are based on information as of November six 2025 and.
And except as required by law, we assume no obligation to publicly update or revise our forward looking statements.
Additionally, we will be discussing certain non-GAAP financial measures.
These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP.
A reconciliation of our non-GAAP measures to the most directly comparable GAAP measure can be found to the extent reasonably available in today's earnings release.
Now I would like to turn the call over to Joe to begin the formal remarks Joe.
Good afternoon, everyone. Thanks for joining us today.
In the third quarter, we demonstrated continued progress and delivered results consistent with our expectations.
We believe that great product is the foundation for revitalizing the brand and rebuilding, albeit its place in the hearts and minds of consumers.
<unk> holds a truly distinctive position in the market. One we are uniquely positioned to serve through our core principles of comfort style and sustainability it.
Through this lens that we are laser focused on returning the brand to growth and driving the business towards profitability.
Since we last spoke in August we delivered a steady stream of compelling products that consumers are clearly responding to.
Enthusiasm for our new styles continues to build and I'll share a few examples in a moment.
While the majority of the new products are elevating the brand and performing well some of our foundational franchises such as the original runner have been slower to rebuild this underscores that rebuilding our brand perception is a process that will require a sustained execution across multi.
Pulp product cycles.
Importantly, the positive momentum, we're seeing for new products affirms that we're on the right path.
It's undeniable that the products we've introduced over the past several quarters are the strongest we've delivered since the early days of the grant.
The team has done an outstanding job, creating a line that will serve as the foundation for years to come.
One of our most successful launches this quarter has been the debut of the world cruiser in September.
Court inspired silhouette introduced in a spectrum of 19 colors.
To Mark the moment, we teamed up with the Pantone color Institute to launch five exclusive shade celebrating self expression.
What's interesting is that the most vibrant colors are selling out first normally our natural tones lead in sales, but with the cruiser changed like blossom and Sichuan that are leading the pack.
These distinctive colors are becoming a form of branding in their own right instantly signaling all birds.
Paired with a comfortable easy to wear silhouettes.
And the right price point to would cruisers clearly hitting the mark and is poised to become a key franchise for the future.
Later in September we launched our first 100% waterproof collection and three silhouettes.
And it has quickly become another standout performer. The collection is redefining what waterproof can be comfortable and stylish while still delivering true performance in its first month on the market. It is exceeding expectations and proving that all births can offer full waterproof functionality without sacrificing the car.
Style and sustainability people have come to expect from us.
And our new relaxed category designed for life in and around the house, we introduced a slipper collection that is a top seller today.
To round out the season, we introduced the Kiwi collection this week indoor outdoor styles, including a mule a clog and our low group.
Theyre cozy easy to slip on and intentionally casual exactly how people dressed today.
This is an additive collection that builds on our core and shows how much opportunity there is for future growth in this category for us.
In the back half of the year, we aligned our marketing efforts to directly support our evolving product engine.
We shifted to a steady rhythm of mid and lower funnel marketing focused not just on driving traffic and conversion, but also on building long term brand equity.
Our program centers on three priorities partnering with the right Influencers and collaborators to spark awareness highlighting products utility to drive conversion and increasing both the volume and variety of the content to accelerate growth.
We are deploying a deliberate mix of traditional media performance marketing PR moments and brand activations each reinforcing the year.
Notable examples this quarter include our will cruiser launch event with Pantone.
A significant increase in influencer activation and strategic celebrity CD.
All helping to create the cultural relevance and expand our organic reach.
As we deliver on our product and marketing work streams. We are also focused on creating a standout experience for our customers both online and in store.
We continue to deliver fresh new floor sets to our retail stores and importantly, we re launched our website in July which transformed the look and feel of the site.
Our goal is to refine the customer experience at every moment of the shopping and purchasing journey from Richard storytelling on the home and landing pages to more utility and clarity on our PDP bids.
We're also redesigning every communication and touch point in the post purchase experience to ensure it field thoughtful seamless and brand centric.
We are delivering a clear expression of our values and a greater sense of care with every interaction in short, we're making it easier and more enjoyable for customers to discover products and complete their purchases.
With our product flywheel in motion, we are now positioned to begin executing against a renewed wholesale strategy.
For spring 2026, we anticipate the brand will be available in approximately 150 specialty retail stores across the United States and just last month, we hosted our sales meeting for the fall 2026th season welcoming both international distributors and U S sales agencies.
To experience the new line firsthand.
The collection was very well received and reinforce confidence that both domestic and international channels will contribute to growth as we move into next year.
We see this expanded presence in specialty retailer as a powerful tool for increasing overall brand awareness and setting the stage for long term growth.
We see meaningful opportunity ahead, new collections like Kiwi standout style introductions like the cruiser are expanding our product footprint, while utility driven offerings, such as waterproof styles helped us meet more of our customers every day.
In the near term, we believe we are well positioned to drive improved top line trends in the fourth quarter.
The updated guidance, we're providing today reflects sales ranging from flat to high single digit growth versus prior year.
This outlook takes into account current business trends.
And uncertain macro backdrop.
And our expectations for a highly competitive holiday shopping period.
Throughout the season, we plan to participate in key promotional moments, while delivering creative attention grabbing messaging.
To engage consumers and keep Oliver it's top of mind.
Our teams are working with urgency and discipline to accelerate progress on the turnaround in the quarters ahead.
In parallel we are taking steps to reduce costs and recognize the need to enhance liquidity, which could include raising capital.
We will consider all opportunities to maximize shareholder value.
We deeply appreciate the dedication and commitment our employees have shown throughout our transformation.
Thank you for the important work you're doing to reignite the <unk> brand.
We're also grateful for the continued support of shareholders.
We remain focused on value creation and look forward to keeping you updated on our progress as we move forward.
Now I'll ask Andy to review, the financials and discuss our guidance.
Thank you Joe and good afternoon, everyone.
We delivered strong third quarter performance with bottom line results just ahead of our expectations.
Third quarter net revenue totaled $33 million coming in at the low end of our guidance range.
The results reflect strong customer response to many of our new product introductions, such as the world cruiser and waterproof collection as well as mixed performance from our original icon.
All against the backdrop of a challenging macro environment.
Gross margin in Q3 came in at 43, 2% compared to 44, 4% in Q3 of 2024.
The year over year decline, primarily reflects a higher mix of digital and international distributor sales.
As well as increased duties in our U S business, which partially offset higher average selling prices.
For the full year, we anticipate the channel mix and tariff impacts will result in full year margin profile similar to Q3 and the low forties.
Looking at expenses, we continue to demonstrate exceptional cost management during the quarter.
Q3, SG&A totaled $22 million.
Down $9 million or 30% on a year over year basis.
This improvement was primarily driven by lower personnel expenses occupancy costs.
Stock based compensation expenses, and depreciation and amortization.
Q3 marketing expense came in at $12 million up 19% to last year as we invested behind our new product launches.
We continue to expect that full year marketing expense on both a dollar basis and as a percentage of sales will increase compared to 2024.
Our strong gross margin profile and strict cost control enabled us to deliver bottom line performance slightly above the high end of our guidance range. Despite topline results that came in at the low end of our expectations.
Q3, adjusted EBITDA loss totaled $15 7 million compared to a loss of $16 2 million a year ago.
Looking at the balance sheet, we ended the quarter with $24 million of cash and cash equivalents and $12 million of outstanding borrowings under our $50 million asset backed revolving credit facility.
Inventory totaled 43 million at quarter end down 25% year over year.
Operating cash use totaled $15 2 million, that's up sequentially from Q2 as planned reflecting higher marketing spend to support our new product launches as well as our seasonal working capital needs.
While the financing steps, we took mid year provided us with added flexibility we are exploring options to improve our liquidity position in the quarters ahead.
We are diligently managing costs and taken immediate actions to capture incremental expense savings across such areas as head count occupancy and technology.
Moving now to guidance we are.
Updating our top line outlook and reiterating the midpoint of our full year guidance range on the bottom line.
Full year net revenue is expected to be between 161 and $166 million.
This compares to our prior guidance range of $165 million to $180 million and includes approximately 23% to $25 million of impact associated with our international distributor transitions and retail store closures.
We're also introducing fourth quarter net revenue guidance of $56 million to $61 million.
Flat to up 9% versus a year ago.
Looking at adjusted EBITDA, we are tightening our full year guidance range to negative 63% to $57 million, which compares to our prior range of 65 million to $55 million.
For the fourth quarter, we expect adjusted EBITDA loss to be in the range of 16 million to $10 million, a significant improvement compared to $19 million a year ago.
We appreciate your time this afternoon now I'll ask the operator to open the call for Q&A.
Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced and to withdraw. Your question. Please press Star One again. The first question comes from Alex Stratton with Morgan Stanley. Your line is open.
Perfect. Thanks, so much can we just focus on the third quarter our sales result.
Operator: All participants have been placed in the listen-only mode. After management's prepared remarks, there will be a question-and-answer session, at which time instructions will follow. Now, I would like to turn the call over to Christine Greany of the Blue Shirt Group. Please go ahead.
<unk> liquidity position in the quarters ahead.
Came in on the low end of what you were expecting so maybe.
We are diligently managing costs and taken immediate actions to capture incremental expense savings across such areas as head count.
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 are how do you get there and then maybe even going forward just initial thoughts on 'twenty six actual carryforward that sales growth into that year or any initial thoughts there. Thanks so much.
Occupancy and technology.
Moving now to guidance.
We are updating our top line outlook and reiterating the midpoint of our full year guidance range on the bottom line.
Annie Mitchell: Good afternoon, everyone, and thank you for joining us today. With me on the call are Joe Vernachio, CEO, and Annie Mitchell, CFO. During this call, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about these risks, please review the company's SEC filings, including the section titled Risk Factors in our report on Form 10Q for the quarter ending 30 June 2025, for a more detailed description of the risk factors that may affect our results. These forward-looking statements are based on information as of 6 November 2025. Except as required by law, we assume no obligation to publicly update or revise our forward-looking statements. Additionally, we will be discussing certain non-GAAP financial measures.
Full year net revenue is expected to be between 161 and $166 million.
Hi, Alex.
This compares to our prior guidance range of $165 million to $180 million and includes approximately $23 million to $25 million of impact associated with our international distributor transitions and retail store closures.
Thanks for your question.
Yes, so it's really kind of a tale of three things.
First we've introduced a lot of new product this quarter and I'm happy to say that.
We're also introducing fourth quarter net revenue guidance of $56 million to $61 million.
All of that product is working and some of it is exceeding our expectations.
Flat to up 9% versus a year ago.
In the formal remarks, I outlined a few of those products, but we're really delighted with how the product is the new product is performing.
Looking at adjusted EBITDA, we are tightening our full year guidance range to negative 63% to $57 million, which compares to our prior range of 65 million to $55 million.
Underneath that we have some core franchises, particularly the runner, which has a significant amount of business against it that hasnt yet inflected yet.
For the fourth quarter, we expect adjusted EBITDA loss to be in the range of 16 million to $10 million.
And there.
There is more work to be done to reactivate that style and that model or and or to add make up some of those sales in these new products.
Significant improvement compared to $19 million a year ago.
We appreciate your time this afternoon now I'll ask the operator to open the call for Q&A.
Annie Mitchell: These non-GAAP financial measures are in addition to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of our non-GAAP measures to the most directly comparable GAAP measure can be found, to the extent reasonably available, in today's earnings release. Now, I would like to turn the call over to Joe to begin the formal remarks. Joe.
Even though we.
Thank you to ask a question. Please press star one on your telephone and wait for your name to be amounts and to withdraw your question. Please press star one again.
It feels like these new products have been in the market for a while it's really only been a handful of months at most and some of these are literally just weeks, but again they are performing as planned if not better than plan.
Question comes from Alex Stratton with Morgan Stanley Your line is open.
We're very encouraged by the fact that we've been able to bring in a significant amount of new product that is hitting the mark with the consumer.
Perfect. Thanks, so much can we just focus on the third quarter sales results.
Okay.
Joe Vernachio: Good afternoon, everyone. Thanks for joining us today. In the third quarter, we demonstrated continued progress and delivered results consistent with our expectations. We believe that great product is the foundation for revitalizing the brand and rebuilding Allbirds' place in the hearts and minds of consumers. Allbirds holds a truly distinctive position in the market. We are uniquely positioned to serve through our core principles of comfort, style, and sustainability. It is through this lens that we are laser-focused on returning the brand to growth and driving the business toward profitability. Since we last spoke in August, we've delivered a steady stream of compelling products that consumers are clearly responding to. Enthusiasm for our new styles continues to build, and I'll share a few examples in a moment.
Low end of what you were expecting so maybe what kind of disappointed or came in lower than you thought.
But underneath that the third component to it is that we can we can see that there are macro environment and macro events, taking place that is distracting the consumer.
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 'twenty six like should we carryforward that sales growth into the out year or any initial thoughts there. Thanks so much.
60% of our sales are through a telephone.
<unk> on their mobile phones, and we know what the distractions are on the phones and trying to break through that with everything thats coming through to people right now is.
Hi, Alex.
Thanks for your question.
As challenging as something that we have to continue to work towards what we are seeing is that when we communicate to consumers either new products that are right on the mark or a promotion program that is advantageous for them. They are converting its in these in between times, especially when we see.
Yes, so it's really kind of a tale of three things.
First we've introduced a lot of new product this quarter and I am happy to say that.
All of that product is working and some of it is exceeding our expectations.
In the formal remarks, I outlined a few of those products, but we're really delighted with how the product is the new product is performing underneath that we have some core franchises, particularly the runner.
A macro event take place, where we see the consumer yet really quiet and very considered on the purchases that they're making.
Joe Vernachio: While the majority of the new products are elevating the brand and performing well, some of our foundational franchises, such as the original Runner, have been slower to rebuild. This underscores that rebuilding our brand perception is a process that will require sustained execution across multiple product cycles. Importantly, the positive momentum we're seeing for new products affirms that we're on the right path. It's undeniable that the products we've introduced over the past several quarters are the strongest we've delivered since the early days of the brand. The team has done an outstanding job creating a line that will serve as the foundation for years to come. One of our most successful launches this quarter has been the debut of the Wool Cruiser in September, a court-inspired silhouette introduced in a spectrum of 19 colors.
So those are the three dynamics that are going on that led us to to the to the sales that we're at.
<unk> has a significant amount of business against it that hasnt, yet inflected yet.
And looking forward many of those trends continue over into Q4.
There is more work to be done to reactivate that style and that model or and or to add make up some of those sales in these new products.
But when we take a step back and look at how Q3 evolved we were introducing more products each month and so each month.
Even though we.
It feels like these new products have been in the market for a while.
The results kind of a little bit better and we're seeing that again as we go into Q4 and some of the early trends. So far this quarter is that have we.
Been a handful of months at most and some of these are literally just weeks, but again they are performing as planned if not better than planned so.
As we've been introducing this new product hopefully you saw that waterproof launched on September 30th.
We're very encouraged by the fact that we've been able to bring in significant amount of new product that is hitting the mark with the consumer.
And we had our Kiwi pack that cozy at home.
Just launched this week. So that is one of the main reasons behind the improvement that we're expecting in Q4 is the building as we continue to put more and more new product into the market.
But underneath that the third component to it is is that we can we can see that there are macro environment and macro events, taking place that is distracting the consumer.
Joe Vernachio: To mark the moment, we teamed up with the Pantone Color Institute to launch five exclusive shades celebrating self-expression. What's interesting is that the most vibrant colors are selling out first. Normally, our natural tones lead in sales, but with the Cruiser, it's shades like Blossom and Citron that are leading the pack. These distinctive colors are becoming a form of branding in their own right, instantly signaling Allbirds. Paired with a comfortable, easy-to-wear silhouette, and the right price point, the Wool Cruiser is clearly hitting the mark and is poised to become a key franchise for the future. Later in September, we launched our first 100% waterproof collection in three silhouettes. It has quickly become another standout performer. The collection is redefining what waterproof can be: comfortable and stylish, while still delivering true performance.
Another piece when we consider Q4 is the structural changes between international distributor transitions in retail door closures really impacted us in the first three quarters of this year I think Alex you talked about previously the first quarter impacted us by about almost $7 million Q2 was about 10.
60% of our sales are through the telephone.
On their mobile phones, and we know what the distractions are on the phones and trying to break through that with everything thats coming through to people right now.
Is it.
As challenging as something that we have to continue to work towards what we are seeing is that when we communicate to consumers either new products that are right on the mark or a promotion program that is advantageous for them. They are converting its in these in between times, especially when we see.
In Q3, it was about $5 million and for the last quarter, we expect that to be about $2 million to $4 million.
As we go into next year, we have two things in our favor one is again the product momentum that we've been building. This in the back half of this year plus all of the fantastic new products come in starting with spring Summer 'twenty six and then those structural impacts that I just listed off for this year gets smaller and smaller.
A macro event take place, where we see the consumer yet.
Got it and very considered on the purchases that they're making.
And so that is why we are optimistic about 2026.
So those are the three dynamics that are going on that led us to to the to the sales that were flat.
Thanks, so much good luck.
Thank you.
And the next question comes from Tom Forte with Maxim Group. Your line is open.
And looking forward many of those trends continue over into Q4, and but when we take a step back and look at how Q3 evolved we were introducing more product each month and so each month.
Joe Vernachio: In its first month on the market, it is exceeding expectations and proving that Allbirds can offer full waterproof functionality without sacrificing the comfort, style, and sustainability people have come to expect from us. In our new Relaxed category, designed for life in and around the house, we introduced a Slipper collection that is a top seller today. To round out the season, we introduced the Kiwi collection this week: indoor/outdoor styles, including a mule, a clog, and a low boot. They're cozy, easy to slip on, and intentionally casual, exactly how people dress today. This is an additive collection that builds on our core, and shows how much opportunity there is for future growth in this category for us. In the back half of the year, we aligned our marketing efforts to directly support our evolving product engine.
I have a lot of it's a catastrophe Francesco Myanmar.
<unk>.
Thanks for taking my question I was hoping you could add some color around your.
<unk> got a little bit better and we're seeing that again as we go into Q4 and some of the early trends. So far this quarter is it.
Inventory.
At completion.
Good terms.
It looks like it looks like <unk>, but was hoping you could give us some.
As of the introducing this new product hopefully you saw that waterproof launched on September 30th.
Comments around what kind of products on inventory, especially considering the new product launches and as we had into the black Friday period, and how do you see them, especially cause our silicon aneel.
And we had our Kiwi pack that cozy at home.
Launched this week. So that is one of the main reasons behind the improvement that we're expecting in Q4 is the building as we continue to put more and more new products into the market.
New websites any fees.
Kind of new product focus and baby brand story focuses I was wondering what is your strategy for the Black Friday.
Another piece when we consider Q4 is the structural changes between international distributor transitions in retail door closures.
Peter Thank you.
Great. Thanks, Jessica.
Thanks for joining us today I'll start out by talking a little bit about big picture inventory and then I'll turn it over to Joe to add some.
Joe Vernachio: We shifted to a steady rhythm of mid and lower funnel marketing, focused not just on driving traffic and conversion, but also on building long-term brand equity. Our program centers on three priorities: partnering with the right influencers and collaborators to spark awareness, highlighting product utility to drive conversion, and increasing both the volume and variety of the content to accelerate growth. We are deploying a deliberate mix of traditional media, performance marketing, PR moments, and brand activations, each reinforcing the other. Notable examples this quarter include our Wool Cruiser launch event with Pantone, a significant increase in influencer activation, and strategic celebrity seating, all helping to create cultural relevance and expand our organic reach. As we deliver on our product and marketing work streams, we are also focused on creating a standout experience for our customers, both online and in store.
Really impacted us in the first three quarters of this year I think Alex can you talk about this previously the first quarter impacted us by about almost $7 million Q2 was about $10 million in Q3, it was about $5 million and for the last quarter, we expect that to be about $2 million to $4 million.
Color for you.
When you look at our inventory we ended the quarter at $43 million, that's down 25% year over year.
And just up slightly from last quarter being down year over year.
As we go into next year, we have two things in our favor one is again the product momentum.
Really driven by two things first is the international transitions.
We did our last international transition at the very end of Q2 and that was currently EU region.
I mean this is the back half of this year plus all of the fantastic new products coming in starting with spring Summer 'twenty six and then those structural impacts that I just listed off for this year gets smaller and smaller.
Our international transitions are complete.
And as you may recall, we've talked about this previously the international distributors they pick up the product right at source versus before for instance, like in the EU, we would be holding all of that inventory until its sold to the end consumer so one of the structural change and the second is really just about continued very strong.
That is why we are optimistic about 2026.
Thanks, so much good luck.
Thank you.
And the next question comes from Tom Forte with Maxim Group. Your line is open.
<unk> management it was a priority for us in 'twenty three 'twenty four to clean up inventory, which we did successfully and really it was in service of all of this new product coming we wanted to make sure. We are as healthy as possible and had great process and rigor around inventory knowing that we were excited to invest.
I have a lot of it's actually Francesco model from Maxim.
Thanks for taking my question I was hoping you could awesome color around your inventory.
Inventory.
Joe Vernachio: We continue to deliver fresh new floor sets to our retail stores. Importantly, we relaunched our website in July, which transformed the look and feel of the site. Our goal is to refine the customer experience at every moment of the shopping and purchasing journey, from richer storytelling on the home and landing pages to more utility and clarity on our PDPs. We're also redesigning every communication and touchpoint in the post-purchase experience to ensure it feels thoughtful, seamless, and brand-centric. We're delivering a clearer expression of our values, and a greater sense of care with every interaction. In short, we're making it easier and more enjoyable for customers to discover products and complete their purchases. With our product flywheel in motion, we are now positioned to begin executing against a renewed wholesale strategy.
Completion and absolute terms.
It looks like it looks like <unk> was hoping you could give us some.
And all of the new product coming so with that backdrop, Joe John add some color.
Comments around what kind of products on inventory, especially considering the new product launches and as we had into the black Friday period, and holiday season, especially cause with liquidity.
Yes, I am glad that you asked about inventory.
A big focus of ours when you bring in a lot of new products you have to be really.
Cognizant of inventory and make sure you stay focused on that so thats.
The new website, and it's very kind of new product focus and Burberry brand story focus I was wondering what is your strategy for the Black Friday.
Something that we are.
Very rigorous about and keep our eye on for sure.
You talked about the what the website looks like I'm glad that you feel that it looks very brand centric and as Tony's story that was our objective we launched the new site in July and.
Thank you.
Great.
Thanks for joining us today I'll start out by talking a little bit about big picture inventory and then I'll turn it over to Joe to add some.
Sure.
Color for you.
Part of it is.
When you look at our inventory we ended the quarter at $43 million, that's down 25% year over year.
Portion of this was to be able to get our story out there to be able to tell great.
Stories about the product and have a lot more opportunity to share different aspects of the product on the PDP and the landing pages you asked about what our strategy is going into Q4.
And just up slightly from last quarter being down year over year is really driven by two things first is the international transitions.
Joe Vernachio: For spring 2026, we anticipate the brand will be available in approximately 150 specialty retail stores across the United States. Just last month, we hosted our sales meeting for the fall 2026 season, welcoming both international distributors and US sales agencies to experience the new line firsthand. The collection was very well received and reinforced confidence that both domestic and international channels will contribute to growth as we move into next year. We see this expanded presence in specialty retailers as a powerful tool for increasing overall brand awareness, and setting the stage for long-term growth. We see meaningful opportunity ahead. New collections like Kiwi, standout style introductions like the Cruiser, are expanding our product footprint, while utility-driven offerings such as waterproof styles help us meet more of our customers' everyday needs.
We did our last international transition at the very end of Q2 and that was for the EU region.
We anticipate that it's going to be a competitive marketplace. In Q4, we think people are going to be looking for promotions and we have our normal preparation for <unk>.
Now our international transitions are complete.
And as you may recall, we've talked about this previously the international distributors they pick up the product right at source versus before for instance, like in the EU, we would be holding all of that inventory until its sold to the end consumer so one of the structural change and the second is really just about continued very strong.
All the different aspects of Black Friday, cyber Monday that we will need we will have different products that will put up and take down in order to create some rhythm to to the promotion.
We're not.
We're not going to be precious we know we need to compete and we need to be in the market otherwise.
Inventory management it was a priority for us in 'twenty three 'twenty four to clean up inventory, which we did successfully and really it was in service of all of this new product coming we wanted to make sure. We are as healthy as possible and had great process and rigor around inventory knowing that we were excited to.
We will lose our share so.
We've got a very rigorous black Friday cyber Monday plan.
<unk> and we are going to be executing against it.
Right. Thank you very much.
And all of the new product coming.
Thank you.
So with that backdrop, Joe John add some color.
Yeah.
I am showing no further questions at this time I would now like to turn the call back over to Joe for closing remarks.
I'm glad that you asked about inventory.
Joe Vernachio: In the near term, we believe we are well positioned to drive improved top-line trends in the fourth quarter. The updated guidance we're providing today reflects sales ranging from flat to high single-digit growth versus prior year. This outlook takes into account current business trends, an uncertain macro backdrop, and our expectations for a highly competitive holiday shopping period. Throughout the season, we plan to participate in key promotional moments, while delivering creative, attention-grabbing messaging to engage consumers and keep Allbirds top of mind. Our teams are working with urgency and discipline to accelerate progress on the turnaround in the quarters ahead. In parallel, we are taking steps to reduce costs and recognize the need to enhance liquidity, which could include raising capital. We will consider all opportunities to maximize shareholder value. We deeply appreciate the dedication and commitment our employees have shown throughout our transformation.
A big focus of ours when you bring in a lot of new products you have to be really.
Thank you everyone for joining we'll see you at the next quarterly review.
Cognizant of inventory and make sure you do.
They focus on that so thats.
This concludes today's conference call. Thank you for participating and you may now disconnect.
Something that we are.
Very rigorous about and keep our eye on for sure.
You talked about the what the website it looks like I'm glad that you feel that it looks very brand centric and as Tun story that was our objective we launched the new site in July.
<unk>.
Part of it a portion.
A portion of this was to be able to get our story out there to be able to tell great.
Stories about the product and have a lot more opportunity to share different aspects of the product on the PDP and landing pages.
Asked about what our strategy is going into Q4.
We anticipate that it's going to be a competitive marketplace. In Q4, we think people are going to be looking for promotions and we have our normal preparation for <unk>.
All of the different aspects of Black Friday, cyber Monday that we will need we will have different products that we will put up and take down in order to create some rhythm to to the promotion.
Joe Vernachio: Thank you for the important work you're doing to reignite the Allbirds brand. We're also grateful for the continued support of shareholders. We remain focused on value creation, and look forward to keeping you updated on our progress as we move forward. Now, I'll ask Annie to review the financials and discuss our guidance.
We're not.
We're not going to be precious.
No.
Compete and we need to be in the market otherwise.
We will lose our share so.
We've got a very rigorous black Friday, cyber Monday plan Q.
Annie Mitchell: Thank you, Joe, and good afternoon, everyone. We delivered strong third-quarter performance with bottom-line results just ahead of our expectations. Third-quarter net revenue totaled $33 million, coming in at the low end of our guidance range. The results reflect strong customer response to many of our new product introductions, such as the Wool Cruiser and Waterproof Collection, as well as mixed performance from our original icons, all against the backdrop of a challenging macro environment. Gross margin in Q3 came in at 43.2% compared to 44.4% in Q3 of 2024. The year-over-year decline primarily reflects a higher mix of digital and international distributor sales, as well as increased duties in our US business, which partially offset higher average selling prices. For the full year, we anticipate that channel mix and tariff impacts will result in a full-year margin profile similar to Q3, in the low 40s.
Queued up and we are going to be executing against it.
Right. Thank you very much.
Thank you.
I am showing no further questions at this time I will now.
Now like to turn the call back over to Joe for closing remarks.
Thank you everyone for joining we'll see you at the next quarterly review.
This concludes today's conference call. Thank you for participating and you may now disconnect.
Okay.
Okay.
Sure.
Hum.
Hum.
Okay.
Okay.
Okay.
Okay.
Annie Mitchell: Looking at expenses, we continue to demonstrate exceptional cost management during the quarter. Q3 SG&A totaled $22 million, down $9 million, or 30% on a year-over-year basis. This improvement was primarily driven by lower personnel expenses, occupancy costs, stock-based compensation expenses, and depreciation and amortization. Q3 marketing expense came in at $12 million, up 19% to last year, as we invested behind our new product launches. We continue to expect that full-year marketing expense on both a dollar basis, and as a percentage of sales, will increase compared to 2024. Our strong gross margin profile, and strict cost control, enabled us to deliver bottom-line performance slightly above the high end of our guidance range, despite top-line results that came into the low end of our expectations. Q3 adjusted EBITDA loss totaled $15.7 million compared to a loss of $16.2 million a year ago.
[music].
Yes.
Okay.
Okay.
Hmm.
Sure.
Yeah.
Okay.
Yes.
Annie Mitchell: Looking at the balance sheet, we ended the quarter with $24 million of cash and cash equivalents and $12 million of outstanding borrowings under our $50 million asset-backed revolving credit facility. Inventories totaled $43 million at quarter end, down 25% year-over-year. Operating cash use totaled $15.2 million. That's up sequentially from Q2 as planned, reflecting higher marketing spend to support our new product launches, as well as our seasonal working capital needs. While the financing steps we took mid-year provided us with added flexibility, we are exploring options to improve our liquidity position in the quarters ahead. We are diligently managing costs and taking immediate actions to capture incremental expense savings across such areas as headcount, occupancy, and technology. Moving now to guidance, we are updating our top-line outlook and reiterating the midpoint of our full-year guidance range on the bottom line.
Okay.
Annie Mitchell: Full-year net revenue is expected to be between $161 and 166 million. This compares to our prior guidance range of $165 to 180 million, and includes approximately $23 to 25 million of impact associated with our international distributor transitions and retail store closures. We're also introducing fourth-quarter net revenue guidance of $56 to 61 million, flat to up 9% versus a year ago. Looking at adjusted EBITDA, we are tightening our full-year guidance range to negative $63 to 57 million, which compares to our prior range of negative $65 to 55 million. For the fourth quarter, we expect adjusted EBITDA loss to be in the range of negative $16 to 10 million, a significant improvement compared to negative $19 million a year ago. We appreciate your time this afternoon. Now I'll ask the operator to open the call for Q&A.
[music].
Joe Vernachio: Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. The first question comes from Alex Stratton with Morgan Stanley. Your line is open.
Alex Stratton: Perfect. Thanks so much. Can we just focus on the third-quarter sales results? Came in on the low end of what you were expecting. Maybe what kind of disappointed or came in lower than you thought? 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? Maybe even going forward, just initial thoughts on 2026, like should we carry forward that sales growth into that year or any initial thoughts there? Thanks so much.
Joe Vernachio: Hi, Alex. Thanks for your question. Yeah, it's really kind of a tale of three things. First, we've introduced a lot of new product this quarter, and I'm happy to say that all of that product is working, and some of it is exceeding our expectations. In the formal remarks, I outlined a few of those products. We're really delighted with how the new product is performing. Underneath that, we have some core franchises, particularly the Runner, which has a significant amount of business against it that hasn't yet inflected yet. There's more work to be done to reactivate that style and that model, and/or to make up some of those sales in these new products. Even though it feels like these new products have been in the market for a while, it's really only been a handful of months at most.
Joe Vernachio: Some of these are literally just weeks. Again, they're performing as planned, if not better than planned. We're very encouraged by the fact that we've been able to bring in a significant amount of new product that is hitting the mark with the consumer. Underneath that, the third component to it is that we can see that there are macro environment and macro events taking place that are distracting the consumer. 60% of our sales are through a telephone. It's on their mobile phones. We know what the distractions are on the phones, and trying to break through that with everything that's coming through to people right now is challenging and is something that we have to continue to work towards.
Joe Vernachio: What we are seeing is that when we communicate to consumers either new products that are right on the mark, or a promotion program that is advantageous for them, they are converting. It's in these in-between times, especially when we see a macro event take place, where we see the consumer get really quiet and very considered on the purchases that they're making. Those are the three dynamics that are going on that led us to the sales that we're at.
Annie Mitchell: Looking forward, many of those trends continue over into Q4. When we take a step back and look at how Q3 evolved, we were introducing more product each month. Each month, results got a little bit better. We're seeing that again as we go into Q4. Some of the early trends so far this quarter are that as we've been introducing this new product, hopefully you saw that Waterproof launched on 30 September 2023. We had our Kiwi Pack, that cozy at home, just launched this week. That is one of the main reasons behind the improvement that we are expecting in Q4, the building as we continue to put more and more new product into the market. Another piece when we consider Q4 is the structural changes between.
Annie Mitchell: International distributor transitions and retail door closures really impacted us in the first three quarters of this year. I think, Alex, we talked about this previously. The first quarter impacted us by about almost $7 million. Q2 was about $10 million. In Q3, it was about $5 million. For the last quarter, we expect that to be about $2 to 4 million. As we go into next year, we have two things in our favor. One is, again, the product momentum that we've been building. This is the back half of this year, plus all of the fantastic new products coming, starting with spring-summer 2026. Those structural impacts that I just listed off for this year get smaller and smaller. That is why we are optimistic about 2026.
[music].
Alex Stratton: Thanks so much. Good luck.
Annie Mitchell: Thank you.
Joe Vernachio: The next question comes from Tom Forte with Maxim Group. Your line is open.
Francesco Marmo: Hi, everybody. It's actually Francesco Marmo from Maxim. Thanks for taking my question. I was hoping you could add some color around your inventory completion. 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 your inventory, especially considering all the new product launches 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 focus. I was wondering what is your strategy for the Black Friday period. Thank you.
Annie Mitchell: Great. Francesco, thanks for joining us today. I'll start out by talking a little bit about big picture inventory, then I'll turn it over to Joe to add some color for you. When you look at our inventory, we ended the quarter at $43 million. That's down 25% year-over-year, and just up slightly from last quarter. Being down year-over-year is really driven by two things. First is international transitions. We did our last international transition at the very end of Q2, and that was for the EU region. Now our international transitions are complete. As you might recall, we've talked about this previously, the international distributors pick up the product right at source versus before, for instance, in the EU, we would be holding all of that inventory until it's sold to the end consumer. One is a structural change.
Annie Mitchell: The second is really just about continued very strong inventory management. It was a priority for us in 2023 and 2024 to clean up inventory, which we did successfully. It was in service of all of this new product coming. We wanted to make sure we were as healthy as possible and had great process and rigor around inventory, knowing that we were excited to invest in all of the new product coming. With that backdrop, Joe, do you want to add some color?
Good afternoon, ladies and gentlemen, and welcome to all parts third quarter 2025 conference call.
All participants have been placed in a listen only mode.
Joe Vernachio: Yeah, I'm glad that you asked about inventory. It is a big focus of ours. When you bring in a lot of new product, you have to be really cognizant of inventory and make sure you stay focused on that. That's something that we are very rigorous about and keep our eye on for sure. You talked about what the website looks like. I'm glad that you feel that it looks very brand-centric and is telling a story. That was our objective. We launched the new site in July. Part of it, a big portion of this, was to be able to get our story out there, to be able to tell great stories about the product and have a lot more opportunity to share different aspects of the product on the PDP and the landing pages. You asked about what our strategy is going into Q4.
After managements prepared remarks, there will be a question and answer session at which time instructions will follow now I would like to turn the call over to Christine Greening of the Blue shirt. Please.
Please go ahead.
Good afternoon, everyone and thank you for joining us today with me on the call our gel for Nacho CEO and Andy Mitchell.
No.
During this call we will be making comments of a forward looking nature.
Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties.
For more information about these risks please review the company's SEC filings, including the section titled Risk factors in our report on Form 10-Q for the quarter ending June 32025.
Joe Vernachio: We anticipate that it's going to be a competitive marketplace in Q4. We think people are going to be looking for promotions, and we have our normal preparation for all the different aspects of Black Friday, Cyber Monday that we will need. We will have different products that we'll put up and take down in order to create some rhythm to the promotion. We're not going to be precious. We know we need to compete, and we need to be in the market. Otherwise, we will lose our share. We've got a very rigorous Black Friday, Cyber Monday plan queued up, and we are going to be executing against it.
For a more detailed description of the risk factors that may affect that would result.
These forward looking statements are based on information as of November six 2025 and.
And except as required by law, we assume no obligation to publicly update or revise our forward looking statements.
Additionally, we will be discussing certain non-GAAP financial measures.
These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP.
A reconciliation of our non-GAAP measures to the most directly comparable GAAP measure can be found to the extent reasonably available in today's earnings release.
Francesco Marmo: Great, thank you very much.
Now I would like to turn the call over to Joe to begin the formal remarks Joe.
Joe Vernachio: Thank you.
Joe Vernachio: I am showing no further questions at this time. I will now like to turn the call back over to Joe for closing remarks.
Good afternoon, everyone. Thanks for joining us today.
In the third quarter, we demonstrated continued progress and delivered results consistent with our expectations.
Joe Vernachio: Thank you, everyone, for joining. We'll see you at the next quarterly review.
We believe that great product is the foundation for revitalizing the brand and rebuilt.
Joe Vernachio: This concludes today's conference call. Thank you for participating, and you may now disconnect.
<unk> place in the Hearts and minds of consumers.
<unk> holds a truly distinctive position in the market. One we are uniquely positioned to serve to our core principles of comfort style and sustainability.
It's through this lens that we are laser focused on returning the brand to growth and driving the business towards profitability.
Since we last spoke in August we have delivered a steady stream of compelling products that consumers are clearly responding to.
Enthusiasm for our new styles continues to build.
And I'll share a few examples in a moment.
While the majority of the new products are elevating the brand and performing well some of our foundational franchises such as the original red.
Have been slower to rebuild this underscores that rebuilding our brand perception is a process that will require sustained execution across multiple product cycles.
Importantly, the positive momentum, we're seeing for new product are firms that were on the right path.
It's undeniable that the products we've introduced over the past several quarters are the strongest we've delivered since the early days of the grant. The team has done an outstanding job, creating a line that will serve as the foundation for years to come.
One of our most successful launches this quarter has been the debut of the world cruiser in September.
CT inspired silhouette introduced in a spectrum of 19 colors.
So mark the moment, we teamed up with the Pantone color Institute to launch five exclusive shade celebrating self expression with.
What's interesting is that the most vibrant colors are selling first normally our natural tones lead in sales, but with the cruiser changed like blossom and Sichuan that are leading the pack.
These distinctive colors from becoming form of branding in their own right instantly signaling all birds.
Paired with a comfortable easy to wear silhouette and the right price point toward cruisers, clearly hitting the mark and is poised to become a key franchise for the future.
Later in September we launched our first 100% waterproof collection and three silhouettes.
And it has quickly become another standout performer. The collection is redefining what waterproof can be comfortable and stylish while still delivering true performance in its first month of in the market. It is exceeding expectations and proving that Alberta can offer full waterproof functionality without sacrificing the comfort.
Style and sustainability people have come to expect from us.
And our new relaxed category designed for life in and around the house, we introduced a slipper collection that is a top seller today.
To round out the season, we introduced key collection this week indoor outdoor styles, including a new all of clog and our logo.
Their cozy easy to slip on and intentionally casual exactly how people dressed today.
This is an additive collection that builds on our core and shows how much opportunity there is for future growth in this category for us.
In the back half of the year, we aligned our marketing efforts to directly support our evolving product engine.
We shifted to a steady rhythm of mid and lower funnel marketing focus not just on driving traffic and conversion, but also on building long term brand equity.
Our program centers on three priorities partnering with the right Influencers and collaborators to spark awareness.
Product utility to drive conversion and increasing both the volume and variety of the content to accelerated growth.
We are deploying a deliberate mix of traditional media performance marketing PR moments and brand activations each reinforcing Leah.
Notable examples this quarter include our cruiser launch event with Pantone.
A significant increase in influencer activation and strategic celebrity ceiling.
All helping to create the cultural relevance and expand our organic.
As we deliver on our product and marketing work streams. We are also focused on creating a standout experience for our customers both online and in store.
We continue to deliver fresh new floor sets to our retail stores and importantly, we re launched our website in July which transform the look and feel of the site.
Our goal is to refine the customer experience at every moment of the shopping and purchasing journey from richer storytelling on the home and landing pages to more utility and clarity on our PDP.
We're also redesigning every communication and touch point in the post purchase experience to ensure it feels thoughtful seamless and brand centric.
We are delivering a clear.
Expression of our values and a greater sense of care with every interaction in short, we're making it easier and more enjoyable for customers to discover products and completing their purchases.
With our product flywheel in motion, we are now positioned to begin executing against a renewed wholesale strategy for.
For spring 2026, we anticipate the brand will be available in approximately 150 specialty retail stores across the United States and just last month, we hosted our sales meeting for the fall 2000, 2016 than welcoming both international distributors and U S sales agencies.
To experience the new line firsthand.
The collection was very well received and reinforce confidence that both domestic and international channels will contribute to growth as we move into next year.
We see this expanded presence in specialty retailer.
A powerful tool for increasing overall brand awareness setting the stage for long term growth.
We see meaningful opportunity ahead, new collections like Kiwi standout style introductions cruises are expanding our product footprint, while utility driven offerings, such as waterproof styles helped us meet more of our customers every day.
In the near term, we believe we are well positioned to drive improved top line trends in the fourth quarter.
The updated guidance, we're providing today reflect sales ranging from flat to high single digit growth.
Prior year.
This outlook takes into account current business trends.
And uncertain macro backdrop.
And our expectations for a highly competitive holiday shopping period.
Throughout the season, we plan to participate in key promotional moments, while delivering creative attention grabbing messaging to engage consumers and keep top of mind.
Our teams are working with urgency and discipline to accelerate progress on the turnaround in the quarters ahead.
In parallel we are taking steps to reduce costs and recognize the need to enhance liquidity, which could include raising capital.
We will consider all opportunities to maximize shareholder value.
We deeply appreciate the dedication and commitment our employees have shown throughout our transformation.
Thank you for the important work you're doing to reignite the Albert's brand.
We are so grateful for the continued support of shareholders.
We remain focused on value creation and look forward to keeping you updated on our progress as we move forward.
Now I'll ask Andy to review, the financials and discuss our guidance.
Joe and good afternoon, everyone.
We delivered strong third quarter performance with bottom line result, just ahead of our expectations.
Third quarter net revenue totaled $33 million coming in at the low end of our guidance range.
The results reflect strong customer response to many of our new product introductions, such as the world cruiser and waterproof collection.
As well as mixed performance from our original icon.
All against the backdrop of a challenging macro environment.
Yes.
Gross margin in Q3 came in at 43, 2% compared to 44, 4% in Q3 of 2024.
The year over year decline, primarily reflects a higher mix of digital and international distributor sales.
As well as increased duties in our U S business, which partially offset higher average selling prices.
For the full year, we anticipate the channel mix and tariff impacts will result in full year margin profile similar to Q3 and the low forties.
Looking at expenses, we continue to demonstrate exceptional cost management during the quarter.
Q3, SG&A totaled $22 million down.
Down $9 million or 30% on a year over year basis.
This improvement was primarily driven by lower personnel expenses occupancy costs.
Rock based compensation expenses, and depreciation and amortization.
Q3.
<unk> came in at $12 million up 19% to last year as we invested behind our new product launches.
We continue to expect that full year marketing expense on both a dollar basis and as a percentage of sales will increase compared to 2024.
Our strong gross margin profile and strict cost control enabled us to deliver bottom line performance slightly above the high end of our guidance range.
Despite top line results that came in at the low end of our expectations.
Q3, adjusted EBITDA loss totaled $15 7 million compared to a loss of $16 2 million a year ago.
Looking at the balance sheet, we ended the quarter with $24 million of cash and cash equivalents and $12 million outstanding borrowings under our $50 million asset backed revolving credit facility.
Inventory totaled 43 million at quarter end down 25% year over year.
Operating cash use totaled $15 2 million that's up.
Up sequentially from Q2 as planned reflecting higher marketing spend to support our new product launches as well as our seasonal working capital needs.
While the financing steps, we took mid year provided us with added flexibility we are exploring options to improve our liquidity position in the quarters ahead.
We are diligently managing costs and taken immediate actions to capture incremental expense savings across such areas as head count occupancy and technology.
Moving now to guidance.
We are updating our top line outlook and reiterating the mid point of our fiscal year.
Our guidance range on the bottom line.
Full year net revenue is expected to be between 161 and $166 million.
This compares to our prior guidance range of $165 million to $180 million and includes approximately 23% to $25 million of impact associated with our international distributor transitions and retail store closures.
We're also introducing fourth quarter net revenue guidance of 56% to $61 million.
Flat to up 9% versus a year ago.
Looking at adjusted EBITDA, we are tightening our full year guidance range to negative 63% to $57 million, which compares to our prior range of 65 million to $55 million.
For the fourth quarter, we expect adjusted EBITDA loss to be in the range of 16 million to $10 million, a significant improvement compared to $19 million a year ago.
We appreciate your time. This afternoon now I will ask operator to open the call for Q&A.
Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced and to withdraw your question. Please press <unk>.
One one again the first question comes from Alex Stratton with Morgan Stanley. Your line is open.
Perfect. Thanks, so much can we just focus on the <unk>.
Third quarter sales result.
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 Youre assuming.
Not reflective of quarter to date trends are how do you get there and then maybe even going forward just initial thoughts on 'twenty six actually carry forward that sales growth into that year or any initial thoughts there. Thanks so much.
Hey, Alex.
Thanks for your question.
Yes, so it's really kind of a tale of three things.
First we've introduced a lot of new product this quarter and I am happy to say that.
All of that product is working and some of it is exceeding our expectations.
The formal remarks, I outlined a few of those products, but we're really delighted with how the product is the new product is performing underneath that we have some core franchises, particularly the runner, which has a significant amount of business against it that hasnt yet inflected yet.
And there is more work to be done to reactivate that style and that model or and or to add make up some of those sales in these new products.
Even though we.
It feels like these new products in the market for a while it's really only been a handful of months at most and some of these are literally really suggests weeks, but again, they're there.
We're performing as planned if not better than planned so.
We're very encouraged by the fact that we've been able to bring in a significant amount of new products that are hitting the mark with the consumer.
But underneath that preferred component to it is is that we can we can see that there are macro environment and macro events, taking place that is distracting the consumer.
60% of our sales are through a telescope.
It's on their mobile phones, and we know what the distractions are on the phones and trying to break through that with everything thats coming through people right now is as challenging as something that we have to continue to work towards what we are seeing is that when we communicate to consumers either.
New products that are right on the mark or a promotion program that is advantageous for them. They are converting it is in these in between times, especially when we see a macro event take place where we see the consumer yet really quiet and very considered on the purchases that they're making.
So those are the three dynamics that are going on that will lead us to to the to the sales that we're at.
And looking forward many of those trends continue over into Q4.
But when we take a step back and look at how Q3 evolved we were introducing more products each month and so each month.
The results kind of a little bit better and we're seeing that again as we go into Q4 and some of the early trends. So far this quarter is it hasnt been introducing this new product hopefully you saw that waterproof launched on September 30th.
And we had our Kiwi pack cozy at home.
Just launched this week. So that is one of the main reasons behind the improvement that we're expecting in Q4 is the building as we continue to put more and more new product into the market.
Another piece when we consider Q4 is the structural changes between international distributor transitions retail door closures really impacted us in the first three quarters of this year.
Alex can you talk about this previously the first quarter impacted us by about almost $7 million Q2 was about $10 million in Q3, it was about $5 million and for the last quarter, we expect that to be about $2 million to $4 million.
As we go into next year, we have two things in our favor one is again.
Yes.
<unk> mentioned that we've been building this in the back half of this year plus all of the fantastic new products come in starting with spring Summer 'twenty six.
Then those structural impacts that I just suffered this year get smaller and smaller.
And so that is why we are optimistic about 2026.
Thanks, so much good luck.
Thank you.
And the next question comes from Tom Forte with Maxim Group. Your line is open.
Hi, everybody.
Hey, Francesco Manmohan Maxim.
Thanks for taking my question I was hoping you could add some color around your.
Inventory.
Completion, I mean absolute terms.
It looks like it looks like <unk> was hoping you could give us.
Yes.
Comments around what kind of products on your inventory, especially considering all the new product launches and as we had into the Black Friday period, and the holiday season, especially cause I was looking at your at your new websites and it fits very kind of new product focus and baby brand story.
Focus has always wanted to be.
Your strategy for the <unk>.
Friday.
Thank you.
Great. Thanks.
Thanks for joining us today I'll start out by talking a little bit about big picture inventory and then I'll turn it over to Joe to add some.
Color for you.
When you look at our inventory we ended the quarter at $43 million, that's down 25% year over year.
And up slightly from last quarter being down year over year.
Really driven by two things first is the international transitions.
We did our last international transition at the very end of Q2 and that was for the EU region.
Now our international transitions are complete.
And as you may recall, we've talked about this previously.
International distributors, they pick up the product right at source versus before for instance, like in the EU, we would be holding all of that inventory until it is sold to the end consumer. So one of the structural change in assessment is really just about continued very strong inventory management. It was a priority for us in 'twenty three 'twenty four.
To clean up inventory, which we did successfully and really it was in service of all of this.
We wanted to make sure we are as healthy as possible and had great process and rigor around inventory knowing that we were excited to invest in all of the new product coming.
So with that backdrop, Joe John add some color.
And I'm glad that you asked about inventory.
Big focus of ours, when you bring in a lot of new products you have to be really.
Cognizant of inventory and make sure you stay focused on that so thats.
Something that we are.
Very rigorous about and keep our eye on for sure.
You talked about the.
The website it looks like I'm glad that you feel that it looks very brand centric and as Tun story that was our objective we launched the new site in July.
And.
Part of it.
A portion of this was to be able to get our story out there to be able to tell great.
Stories about the product and have a lot more opportunity to share different aspects of the product on the PDP and the landing pages.
Asked about what our strategy is going into Q4.
We anticipate that it's going to be a competitive marketplace. In Q4, we think people are going to be looking for promotions and we have our normal preparation for.
All the different aspects of Black Friday, cyber Monday that we will need we will have different products that will put up and take down in order to create some rhythm to to the promotion.
We're not.
We're not going to be precious.
We know we need to compete and we need to be in the market otherwise.
We will lose our share so.
We've got a very rigorous black Friday cyber Monday plan.
Queued up and we are going to be executing against it.
Alright, Thank you very much.
Thank you.
I am showing no further questions at this time I would now like to turn the call back over to Joe for closing remarks.
Thank you everyone for joining US we'll see you next quarterly review.
This concludes today's conference call. Thank you for participating and you may now disconnect.