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What changed in Allbirds, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Allbirds, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+378 added−376 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-12)

Top changes in Allbirds, Inc.'s 2025 10-K

378 paragraphs added · 376 removed · 266 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeInspired by Mother Nature and human nature, our brand exists to help people tread lighter on the planet while living more fully in it. With a vertically integrated approach, we maintain a direct relationship with our customers, allowing us to pair an organic marketing strategy fueled with elevated valuable content, with a rich data ecosystem.
Biggest changeMarketing Strategy and Brand At Allbirds, we believe in the power of balance—between nature and innovation, sustainability and style, performance and comfort. Inspired by Mother Nature and human nature, our brand exists to help people tread lighter on the planet while living more fully in it.
Our products contain natural and recycled materials that are both more sustainable and have tangible benefits for our customers, such as comfort, temperature regulation, and odor control. Some of these include include superfine ZQ certified merino wool, tree fibers, and sugarcane. Footwear is the foundation of our brand and represents the majority of our revenue.
Our products contain natural and recycled materials that are both more sustainable and have tangible benefits for our customers, such as comfort, temperature regulation, and odor control. Some of these include superfine ZQ certified merino wool, tree fibers, and sugarcane. Footwear is the foundation of our brand and represents the majority of our revenue.
Copies of our reports on Form 10-K, Form 10-Q, Form 8-K, and amendments to those reports may also be obtained, free of charge, electronically through our investor relations website located at www.ir.allbirds.com as soon as reasonably practical after we file such material with, or furnish it to, the SEC. 10 Table of Contents
Copies of our reports on Form 10-K, Form 10-Q, Form 8-K, and amendments to those reports may also be obtained, free of charge, electronically through our investor relations website located at www.ir.allbirds.com as soon as reasonably practical after we file such material with, or furnish it to, the SEC. 9 Table of Contents
Our 5 Table of Contents footwear products are manufactured in Vietnam. Our apparel and other non-footwear products are manufactured in the United States, China, Peru, and Mexico.
Our 5 Table of Contents footwear products are primarily manufactured in Vietnam. Our apparel and other non-footwear products are primarily manufactured in the United States, China, Peru, and Mexico.
By harnessing the best of nature; human and from the earth, we continue to inspire a movement toward a more sustainable, well-balanced future. 4 Table of Contents Direct Business Strategy In the United States, we reach our customers primarily through our direct business, a digitally-led vertical retail distribution strategy, which combines our eCommerce site with our retail stores so we can make a strong connection with our customers and meet them where they are, delivering both value and convenience.
By harnessing the best of nature; human and from the earth, we continue to inspire a movement toward a more sustainable, well-balanced future. 4 Table of Contents Direct Business Strategy In the United States, we reach our customers primarily through our direct business, a digitally-led vertical retail distribution strategy, which combines our eCommerce site and third-party marketplace site, so we can make a strong connection with our customers and meet them where they are, delivering both value and convenience.
We are focused on increasing brand awareness and consumer touchpoints through the following marketing initiatives: • Extending our reach and connecting with our customers through digital and performance marketing, social media, CTV and other media, stores as physical brand beacons, and customer experience. • Spreading our message through storytelling that celebrates human nature, word-of-mouth, thought leadership, public relations campaigns, partnerships, and community.
We are focused on increasing brand awareness and consumer touchpoints through the following marketing initiatives: • Extending our reach and connecting with our customers through digital and performance marketing, social media, CTV and other media, and customer experience. • Spreading our message through storytelling that celebrates human nature, word-of-mouth, thought leadership, public relations campaigns, partnerships, and community.
We have eight employee resource groups that bring employees together to support both our business and each other through various programs, educational opportunities, and community engagement. • Talent Development and Engagement We enable the flock to operate at their highest potential by building critical skills and leadership capabilities across all levels.
We also sponsor employee resource groups that bring employees together to support both our business and each other through various programs, educational opportunities, and community engagement. • Talent Development and Engagement We enable the flock to operate at their highest potential by building critical skills and leadership capabilities across all levels.
We conduct annual surveys to collect feedback and understand employee sentiment and engagement. • Total Rewards Our total rewards strategy is designed to encourage employees to live our values while helping us to achieve company sustainability goals.
We conduct annual surveys to collect feedback and understand employee sentiment and engagement. 7 Table of Contents • Total Rewards Our total rewards strategy is designed to encourage employees to live our values while helping us to achieve company sustainability goals.
Our distribution network, comprised of four primary distribution centers across three countries (the United States, the United Kingdom, and the Netherlands), helps us prioritize customer experience with quick and efficient pick, pack, and ship activities, including retail fulfillment and returns management.
Our distribution network, comprised of three primary distribution centers in the United States and the United Kingdom, helps us prioritize customer experience with quick and efficient pick, pack, and ship activities, including retail fulfillment and returns management.
The seamless online experience from search to order to fulfillment creates the convenient shopping experience that our customers desire. As of December 31, 2024, our physical retail channel consists of 33 company-operated stores in the United States and United Kingdom, with the majority in the United States.
The seamless online experience from search to order to fulfillment creates the convenient shopping experience that our customers desire. As of December 31, 2025, our physical retail channel consisted of 23 company-operated stores in the United States and United Kingdom, with the majority in the United States.
Item 1. Business Overview Allbirds is a purpose-driven lifestyle brand that innovates with sustainable materials to make better footwear and apparel products in a better way, while treading lighter on our planet.
Item 1. Business Overview Allbirds is a global lifestyle brand that innovates with naturally derived materials to make better footwear and apparel products in a better way, while treading lighter on our planet.
Within our three priorities, we have outlined ten measurable commitments that collectively can yield a 50% reduction in the per unit carbon footprint for each of our products by the end of 2025, relative to what our average carbon emissions would be per unit in 2025 without any further action to limit emissions.
Within our three priorities, we outlined measurable commitments that collectively could yield a 50% reduction in the per unit carbon footprint for each of our products by the end of 2025, relative to what our average carbon emissions would be per unit in 2025 without any further action to limit emissions. Reporting for 2025 is not yet available.
Our wholesale strategy includes partnering with select retailers in the United States who purchase our products and sell them via their own eCommerce sites and retail stores, which increases our brand awareness and reaches customers where they are.
We may add additional distributor partners covering additional countries in the future. Our wholesale strategy includes partnering with select retailers in the United States who purchase our products and sell them via their own eCommerce sites and retail stores, which increases our brand awareness and reaches customers where they are.
When shoes are returned to Allbirds, those that can’t go back onto the shelf are donated to Soles4Souls. Soles4Souls works with partner organizations in various communities in the U.S. as well as developing countries.
As an example, we have a long-standing partnership with Soles4Souls. When shoes are returned to Allbirds, those that can’t go back onto the shelf are donated to Soles4Souls. Soles4Souls works with partner organizations in various communities in the U.S. as well as developing countries.
As of December 31, 2024, we employed 542 ’birds, approximately 90% of whom were located in the United States. Approximately 31% of our ’birds work in one of our corporate functions, with the remainder working in our retail stores and customer experience.
As of December 31, 2025, we employed 362 ’birds, approximately 88% of whom were located in the United States. Approximately 39% of our ’birds worked in one of our corporate functions, with the remainder working in our retail stores and customer experience.
Corporate Information We were incorporated in Delaware in May 2015 as Bozz, Inc. In December 2015, we changed our name to Allbirds, Inc., and we became a Delaware PBC in February 2016. Our principal executive offices are located at 30 Hotaling Place, San Francisco, California 94111. Our telephone number is (628) 225-4848. Our U.S. website address is allbirds.com.
In December 2015, we changed our name to Allbirds, Inc., and we became a Delaware PBC in February 2016. Our principal executive offices are located at 530 Washington St, San Francisco, California 94111. Our telephone number is (628) 225-4848. Our U.S. website address is allbirds.com.
Our products, which are predominantly manufactured in countries other than the United States and which are sold in countries across the world, 9 Table of Contents may be subject to tariffs, treaties, and various trade agreements, as well as laws affecting the importation of consumer goods.
Our products, which are predominantly manufactured in countries other than the United States and which are sold in countries across the world, may be subject to tariffs, treaties, and various trade agreements, as well as laws affecting the importation of consumer goods. We monitor changes in these laws and believe we are in material compliance with applicable laws.
It is our practice to enter into confidentiality and invention assignment agreements (or similar agreements) with our employees, consultants, and contractors involved in the development of intellectual property on our behalf. We also enter into confidentiality agreements with other third parties in order to limit access to, and disclosure and use of, our confidential information and proprietary information.
It is our practice to enter into confidentiality and invention assignment agreements (or similar agreements) with our employees, consultants, and contractors involved in the development of intellectual property on our behalf.
We monitor changes in these laws and believe we are in material compliance with applicable laws. Seasonality Our business is affected by general seasonal trends common to the retail footwear and apparel industry, with sales typically lower in the first quarter of the year and typically higher during the end-of-year holiday period that falls within our fourth quarter.
Seasonality Our business is affected by general seasonal trends common to the retail footwear and apparel industry, with sales typically lower in the first quarter of the year and typically higher during the end-of-year holiday period that falls within our fourth quarter. Corporate Information We were incorporated in Delaware in May 2015 as Bozz, Inc.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost effective. Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, or challenged.
Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, or challenged.
Our deep expertise in footwear and materials research also informs our secondary apparel offerings, from classic tees and sweats to socks and underwear, ensuring the same commitment to comfort, sustainability, and timeless design across all categories. Marketing Strategy and Brand At Allbirds, we believe in the power of balance—between nature and innovation, sustainability and style, performance and comfort.
Footwear consists of both our core franchises and new product styles. Our deep expertise in footwear and materials research also informs our secondary apparel offerings, from classic tees and sweats to socks and underwear, ensuring the same commitment to comfort, sustainability, and timeless design across all categories.
This enables us to cultivate a balanced and diversified marketing funnel, which begins by earning our consumers attention and is consistently optimizing return on investment.
With a vertically integrated approach, we maintain a direct relationship with our customers, allowing us to pair an organic marketing strategy fueled with elevated valuable content, with a rich data ecosystem. This enables us to cultivate a balanced and diversified marketing funnel, which begins by earning our consumers attention and is consistently optimizing return on investment.
We offer great products that are also sustainable, and make it easy for our customers to understand the impact of the products they buy.
We offer great products that are also sustainable, and make it easy for our customers to understand the impact of the products they buy. In this way, we believe we empower our customers to make more informed purchasing decisions. Our Community A core tenet of our B Corp status is supporting the communities in which we operate.
Our strategy is aligned to the United Nations’ Sustainable Development Goals, including affordable and clean energy, responsible consumption and production, climate action, and life on land, among others. We believe that near term goals and progress must be coupled with long term ambition.
Our strategy is aligned to the United Nations’ Sustainable Development Goals, including affordable and clean energy, responsible consumption and production, climate action, and life on land, among others. From 2019 to 2025, we supported offset projects that either avoid or remove emissions, as we work to reduce the carbon footprint of our business.
Third-Party Distribution Strategy In addition to our direct business, we selectively choose distributor and third-party retail partners internationally and in the United States to sell our products. Our distributor strategy includes appointing exclusive distributors in certain international markets that sell products purchased from us across eCommerce, brick and mortar, and wholesale channels in their respective markets.
Our distributor strategy includes appointing exclusive distributors in certain international markets that sell products purchased from us across eCommerce, brick and mortar, and wholesale channels in their respective markets. As of December 31, 2025, we had international distributor partners covering more than 90 countries, including Canada, China and Japan.
Reduce To build a business that is compatible with less than 1.5° Celsius warming, we have an ambitious plan to dramatically reduce the per unit carbon footprint for each of our products by 50% by the end of 2025 and by 95% by 2030, in each case, relative to a baseline of what our average carbon emissions would be per unit in 2025 without any further action to limit emissions.
To build a business that is compatible with less than 1.5° Celsius warming, we have had a plan in place since 2020 to dramatically reduce the per unit carbon footprint for each of our products. Our plan has three strategic priorities: Regenerative Agriculture, Renewable Materials, and Responsible Energy.
Measure Allbirds measures CO2e produced in making our products and running our business—because you can’t reduce what you don’t measure. The information we gather not only informs product design and development, but enables us to identify hotspots in our value chain with the highest emissions and prioritize efforts in areas we can have the most impact.
Allbirds measures CO2e produced in making our products and running our business to both inform product design and development and enable us to focus on areas with the most impact. Beginning in 2024, we partnered with Carbonfact, a platform built for the fashion industry, to measure our impact.
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Our core franchises, including the Dasher and the Runner, serve as platforms for continuous evolution—leveraging material innovations, fresh colorways, partnerships, and adjacent styles to bring ongoing excitement to our customers.
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We closed 10 retail stores in 2025 (nine in the United States and one in the United Kingdom) and 15 retail stores in the United States in 2024. During the first quarter of 2026, we closed all of our remaining full-price stores in the United States.
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While we continue to view retail stores as brand beacons to increase our brand awareness, drive site traffic, and enable us to offer cross-platform shopping, we closed 15 retail stores in the United States in 2024.
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These actions are intended to allow us to focus on dedicating resources toward our e-commerce platform, wholesale partnerships and international distributorships, all of which offer greater reach, flexibility and operating leverage. Third-Party Distribution Strategy In addition to our direct business, we selectively choose distributor and third-party retail partners internationally and in the United States to sell our products.
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These actions have allowed us to focus on retail stores that are efficiently driving customer acquisition and communicating the brand in a consistent and engaging manner to provide our customers with a seamless shopping experience.
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We also enter into confidentiality agreements with other third parties in order to limit access to, and disclosure and use of, our confidential information and proprietary information. 8 Table of Contents We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost effective.
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As of December 31, 2024, we had international distributor partners covering more than 40 countries, including Canada, China and Japan. We plan to add additional distributor partners covering additional countries in the future.
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We use a Life Cycle Assessment, or LCA, methodology to measure the emissions created across the lifetime of our products, including raw materials production, manufacturing, transportation, product use, and end of life.
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Our LCA methodology has been built in partnership with external experts, and unless otherwise specified, has been third-party verified to meet ISO 14067 standards, the international standard for quantifying, monitoring, reporting, and validating greenhouse gas emissions. In 2020, we began labeling each of our products with its carbon footprint.
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We did this for two reasons: to hold ourselves accountable to reducing our impact over time, and to help our customers develop a sense for the climate impact of the things they buy. According to a survey we conducted of 1,300 U.S. customers in 2020, 92% of our customers trust us to deliver reliable information, tools, and advice around sustainability.
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We empower people to make better decisions for the planet by providing them with objective and quantitative information about the impact of the product they’re buying.
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Our plan has three strategic priorities: Regenerative Agriculture, Renewable Materials, and Responsible Energy. These initiatives are underpinned by five foundational areas: Fair Labor, Water, Chemistry, Animal Welfare, and Traceability and Transparency. These priorities have been defined through a materiality process informed by input from various stakeholder groups including employees, investors, customers, and suppliers.
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We have outlined an extension of our 2025 goals to align with the scientific community’s focus on achieving significant climate progress by 2030.
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To that end we established a target to achieve a 95% reduction in our per unit carbon footprint by 2030, relative to a baseline of what our average carbon emissions would be per unit in 2025 without any further action to limit emissions.
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This is equivalent to a 44% reduction (or a 42% reduction excluding product use) in our absolute carbon footprint against a 2020 baseline across Scope 1, 2, and 3 emissions, despite ambitious growth goals for units sold.
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Our target has been externally validated as compliant with all the requirements of the Science Based Targets initiative, or SBTi, including a path to a 1.5° Celsius reduction, and we received formal validation by the SBTi in 2021. Our sustainability plan is not just better for the planet; it is better for our business.
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We have conducted a rigorous feasibility assessment for each of our targets, including the investment required.
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We have targets to reduce raw materials use by 25%, relative to a baseline of what our average materials use would be per unit in 2025 without any further action to limit emissions, and to achieve a steady state of greater than 95% of shipments by ocean freight.
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We expect that these two 7 Table of Contents targets would both reduce costs and positively impact gross margin such that we can achieve all of our targets at a cost savings to the business. Remove Since 2019 we have supported offset projects that either avoid or remove emissions, as we work to reduce the carbon footprint of our business.
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To do that, we incorporated a cost of carbon emissions into our business by implementing an internal carbon tax across all of our sourcing and business decisions. Support for offset projects is a credible tool only if you also have a robust plan to reduce emissions.
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We are taking steps, through regenerative agriculture, materials innovation, and clean energy, to reduce emissions within our direct footprint and within our supply chain. While there are emissions that we are not able to abate today, we recognize the importance of investing in high quality carbon offset projects, with a focus on shifting to projects that remove or sequester emissions.
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We know all carbon offsets are not created equal, so we work with trusted partners to source projects we believe in. All of our offset projects must be certified to an internationally recognized offset standard such as Gold Standard and Verified Carbon Standard, and are screened against criteria like permanence, additionality, leakage, and vintage year.
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In this way, we believe we empower our customers to make more informed purchasing decisions. 8 Table of Contents Our Community A core tenet of our B Corp status is supporting the communities in which we operate. As an example, we have a long-standing partnership with Soles4Souls.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBelow is a summary of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects: • We may be unable to successfully execute on our strategic transformation plan or our long-term growth strategy, including efforts to maintain or grow our current revenue and profit levels, reduce our costs, or accurately forecast demand and supply for our products. • If we fail to attract new customers, retain existing customers, or maintain or increase sales to customers, our business, financial condition, results of operations, and growth prospects will be harmed. • Our operating results may fluctuate significantly and our past operating results may not be a good indication of future performance. • We may require additional capital to support business growth, and this capital might be unavailable or might be available only by diluting existing stockholders. • Our efforts to transition our international go-to-market strategy from a direct model to a distributor model may not be successful and may negatively impact our operating results and brand value. • Economic uncertainty in our key markets may affect consumer purchases of discretionary items, which has affected and may continue to adversely affect demand for our products. • If we are unable to maintain and enhance the value and reputation of our brand and/or counter any negative publicity, we may be unable to sell our products, which would harm our business and could materially adversely affect our financial condition and results of operations. • We have incurred significant net losses since inception and anticipate that we will continue to incur losses for the foreseeable future. • We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our net revenue and profitability. • Our focus on using sustainable, high-quality materials and environmentally friendly manufacturing processes and supply chain practices may increase our cost of revenue and hinder our revenue growth. • Climate change and increased focus by governments, organizations, customers, and investors on sustainability issues, including those related to climate change and socially responsible activities, may adversely affect our reputation, business, and financial results. 11 Table of Contents • If we are unable to anticipate product trends and consumer preferences, or we fail in our technical and materials innovation to successfully develop and introduce new high-quality products, we may not be able to maintain or increase our revenue and profits. • We utilize a range of marketing, advertising, and other initiatives to increase existing customers’ spend and to acquire new customers; if the costs of advertising or marketing increase, or if our initiatives fail to achieve their desired impact, we may be unable to grow the business profitably. • Our business is subject to the risk of manufacturer concentration. • We have a significant amount of long-lived assets, which are assessed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable; additionally, we may never realize the full value of our long-lived assets, causing us to record material impairment charges. • As a company that operates retail stores, we are subject to various risks, including commercial real estate and labor and employment risks; additionally, we may be unable to successfully open new store locations in existing or new geographies in a timely manner, if at all, or successfully implement and expand our third-party distribution and retail arrangements, which could harm our results of operations. • Our business depends on our ability to maintain a strong community of engaged customers, including through the use of social media.
Biggest changeBelow is a summary of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects: • We have incurred significant net losses since inception and anticipate that we will continue to incur losses for the foreseeable future. • There is substantial doubt about our ability to continue as a going concern. • We will require additional capital to support business growth, and this capital might be unavailable or might be available only by diluting existing stockholders. • We may be unable to successfully execute on our long-term growth strategy, including efforts to maintain or grow our current revenue levels, reduce our costs, or accurately forecast demand and supply for our products. • If we fail to attract new customers, retain existing customers, or maintain or increase sales to customers, our business, financial condition, results of operations, and growth prospects will be harmed. • Our operating results may fluctuate significantly and our past operating results may not be a good indication of future performance. • Our reliance on third-party distributors for international sales may negatively impact our operating results and brand value. • Economic uncertainty in our key markets may affect consumer purchases of discretionary items, which has affected and may continue to adversely affect demand for our products. • Our international operations expose us to various risks, such as. foreign currency exchange rate fluctuations, tariffs or global trade wars, trade restrictions, shipping channel constraints, and changing tax laws. • If we are unable to maintain and enhance the value and reputation of our brand and/or counter any negative publicity, we may be unable to sell our products, which would harm our business and could materially adversely affect our financial condition and results of operations. • We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our net revenue and profitability. • Our focus on using sustainable, high-quality materials and environmentally friendly manufacturing processes and supply chain practices may increase our cost of revenue and hinder our revenue growth. • Climate change and increased focus by governments, organizations, customers, and investors on sustainability issues, including those related to climate change and socially responsible activities, may adversely affect our reputation, business, and financial results. • If we are unable to anticipate product trends and consumer preferences, or we fail in our technical and materials innovation to successfully develop and introduce new high-quality products, we may not be able to maintain or increase our revenue and profits. 10 Table of Contents • We utilize a range of marketing, advertising, and other initiatives to increase existing customers’ spend and to acquire new customers; if the costs of advertising or marketing increase, or if our initiatives fail to achieve their desired impact, we may be unable to grow the business profitably. • Our business is subject to the risk of manufacturer concentration and our suppliers’ and manufacturers’ ability to provide materials for, and to produce, our products. • We have a significant amount of long-lived assets, which are assessed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable; additionally, we may never realize the full value of our long-lived assets, causing us to record material impairment charges. • We operate a limited number of retail locations and are subject to risks associated with commercial real estate and retail operations. • Our business depends on our ability to maintain a strong community of engaged customers, including through the use of social media.
The partial or complete loss of these key manufacturers, or a significant adverse change in our relationship with any of these manufacturers, could result in lost sales, added costs, and distribution delays that could harm our business, reputation and customer relationships.
The partial or complete loss of any key manufacturers, or a significant adverse change in our relationship with any of these manufacturers, could result in lost sales, added costs, and distribution delays that could harm our business, reputation and customer relationships.
To be successful, we must meet anticipated demand for our products, we must forecast inventory needs and place orders with our manufacturers based on our estimates of future demand for particular products.
To be successful, we must meet anticipated demand for our products, forecast inventory needs and place orders with our manufacturers based on our estimates of future demand for particular products.
Inventory levels in excess of customer demand may result in inventory write-offs, donations by us of our unsold products, inventory write-downs, and/or the sale of excess inventory at discounted prices, any of which could cause our gross margin to suffer, impair the strength and exclusivity of our brand, and have an adverse effect on our results of operations, financial condition, and cash flows.
Inventory levels in excess of customer demand may result in the sale of excess inventory at discounted prices, inventory write-downs or write-offs, and/or donations by us of our unsold products, any of which could cause our gross margin to suffer, impair the strength and exclusivity of our brand, and have an adverse effect on our results of operations, financial condition, and cash flows.
Certain requirements from our third-party technology and platform providers may also cause us to modify our offerings due to privacy concerns or negatively affect our revenue due to reduced availability of information about consumers.
Certain requirements from our third-party technology and platform providers may also cause us to modify our offerings due to privacy concerns or may negatively affect our revenue due to reduced availability of information about consumers.
Among others, these provisions include those that: 44 Table of Contents • provide for a dual class common stock structure in which holders of our Class B common stock may have the ability to control the outcome of matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, even if they own significantly less than a majority of the outstanding shares of our common stock; • restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • provide that our board of directors has the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • divide our board of directors into three classes, Class I, Class II, and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • provide that a special meeting of stockholders may be called only by the chair of our board of directors, a chief executive officer, or our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • provide that our board of directors may alter our amended and restated bylaws without obtaining stockholder approval; • require the approval of holders of at least two-thirds of the voting power of the shares of capital stock entitled to vote at an election of directors to adopt, amend, or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • require the approval of holders of at least two-thirds of the voting power of the shares of capital stock entitled to vote at an election of directors to amend or repeal any provisions of our amended and restated certificate of incorporation relating to our status as a PBC; • require the approval of holders of at least two-thirds of the voting power of the shares of capital stock entitled to vote at an election of directors to merge or consolidate with or into another entity if, as a result of such merger or consolidation, the capital stock of Allbirds would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign corporation that is not a public benefit corporation or similar entity and the certificate of incorporation (or similar governing document) of which does not contain a public benefit provision identical to ours; • require that stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to our board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and • authorize our board of directors to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
Among others, these provisions include those that: • provide for a dual class common stock structure in which holders of our Class B common stock may have the ability to control the outcome of matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, even if they own significantly less than a majority of the outstanding shares of our common stock; • restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • provide that our board of directors has the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • divide our board of directors into three classes, Class I, Class II, and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • provide that a special meeting of stockholders may be called only by the chair of our board of directors, a chief executive officer, or our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • provide that our board of directors may alter our amended and restated bylaws without obtaining stockholder approval; • require the approval of holders of at least two-thirds of the voting power of the shares of capital stock entitled to vote at an election of directors to adopt, amend, or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • require the approval of holders of at least two-thirds of the voting power of the shares of capital stock entitled to vote at an election of directors to amend or repeal any provisions of our amended and restated certificate of incorporation relating to our status as a PBC; • require the approval of holders of at least two-thirds of the voting power of the shares of capital stock entitled to vote at an election of directors to merge or consolidate with or into another entity if, as a result of such merger or consolidation, the capital stock of Allbirds would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign corporation that is not a public benefit corporation or similar entity and the certificate of incorporation (or similar governing document) of which does not contain a public benefit provision identical to ours; • require that stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to our board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and • authorize our board of directors to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
While our sustainability strategy and practices and the level of transparency with which we are approaching them are foundational to our business, they expose us to several risks, including: • that we may fail or be unable to fully achieve one or more of the 2025 Targets or the 2030 Goal due to a range of factors within or beyond our control (including a failure for governments and other third parties to make the investments that are required to make infrastructure improvements, such as greater availability of cleaner energy grids), or that we may adjust or modify our stated goals in light of new information, adjusted projections, or a change in business strategy, any of which could negatively impact our brand, reputation, and business; • that achieving the 2025 Targets and/or 2030 Goal may require us to expend significant resources, which could divert the attention of our senior management and key personnel, delay the time by which we can achieve profitability, harm us competitively, or otherwise limit our ability to make investments in our growth; • that our disclosures related to ESG may result in heightened scrutiny from stakeholders or other third parties of our ESG performance, activities, and decisions; • that a failure to or perception of a failure to disclose metrics and set goals that are rigorous enough or in an acceptable format, a failure to appropriately manage selection of goals, a failure to or perception of a failure to make appropriate disclosures, stakeholder perception of a failure to prioritize the “correct” ESG goals, or an unfavorable ESG-related rating by a third party could negatively impact our brand, reputation, and business; • that certain metrics we utilize receive limited or no assurance from and/or verification by third parties, may involve a less rigorous review process than assurance sought in connection with more traditional audits, such a review process may not identify errors and may not protect us from potential liability under the securities laws, and, if we were to seek more extensive assurance or attestation with respect to such ESG metrics, we may be unable to obtain such assurance or attestation or may face increased costs related to obtaining and/or maintaining such assurance or attestation; • that the third-party data used in our carbon footprint calculations are determined to be wrong or become unavailable to us for whatever reason, which would require us to find a new source of quality third-party data or develop our own, either of which could require significant resources, a temporary suspension of sharing a carbon footprint for each product, or an adjustment to carbon footprint numbers because of variations in the underlying data, and if our stakeholders react unfavorably to any such situation or we fail to adequately manage any transition, it could negatively impact our brand, reputation, and business; 23 Table of Contents • that the ESG or sustainability standards, norms, or metrics, which are constantly evolving, change in a manner that impacts us negatively or requires us to change the content or manner of our disclosures, and our stakeholders or third parties view such change(s) negatively, we are unable to adequately explain such changes, or we are required to expend significant resources to update our disclosures, any of which could negatively impact our brand, reputation, and business; • that our brand reputation, and business, could be negatively impacted if we are perceived, alleged or found to be in violation of, or non-compliant with, newly adopted or constantly evolving ESG- and sustainability-related laws and disclosure requirements that are applicable to us; and • that our brand, reputation, and business could be negatively impacted if any of our disclosures, including our carbon footprint numbers, reporting to third-party ESG standards, or reporting against our 2025 Targets, 2030 Goal, or other goals, are inaccurate, perceived to be inaccurate, or alleged to be inaccurate.
We anticipate continuing to make ESG disclosures. 22 Table of Contents While our sustainability strategy and practices and the level of transparency with which we are approaching them are foundational to our business, they expose us to several risks, including: • that we may fail or be unable to fully achieve one or more of the 2025 Targets or the 2030 Goal due to a range of factors within or beyond our control (including a failure for governments and other third parties to make the investments that are required to make infrastructure improvements, such as greater availability of cleaner energy grids), or that we may adjust or modify our stated goals in light of new information, adjusted projections, or a change in business strategy, any of which could negatively impact our brand, reputation, and business; • that achieving the 2025 Targets and/or 2030 Goal may require us to expend significant resources, which could divert the attention of our senior management and key personnel, delay the time by which we can achieve profitability, harm us competitively, or otherwise limit our ability to make investments in our growth; • that our disclosures related to ESG may result in heightened scrutiny from stakeholders or other third parties of our ESG performance, activities, and decisions; • that a failure to or perception of a failure to disclose metrics and set goals that are rigorous enough or in an acceptable format, a failure to appropriately manage selection of goals, a failure to or perception of a failure to make appropriate disclosures, stakeholder perception of a failure to prioritize the “correct” ESG goals, or an unfavorable ESG-related rating by a third party could negatively impact our brand, reputation, and business; • that certain metrics we utilize receive limited or no assurance from and/or verification by third parties, may involve a less rigorous review process than assurance sought in connection with more traditional audits, such a review process may not identify errors and may not protect us from potential liability under the securities laws, and, if we were to seek more extensive assurance or attestation with respect to such ESG metrics, we may be unable to obtain such assurance or attestation or may face increased costs related to obtaining and/or maintaining such assurance or attestation; • that the third-party data used in our carbon footprint calculations are determined to be wrong or become unavailable to us for whatever reason, which would require us to find a new source of quality third-party data or develop our own, either of which could require significant resources, a temporary suspension of sharing a carbon footprint for each product, or an adjustment to carbon footprint numbers because of variations in the underlying data, and if our stakeholders react unfavorably to any such situation or we fail to adequately manage any transition, it could negatively impact our brand, reputation, and business; • that the ESG or sustainability standards, norms, or metrics, which are constantly evolving, change in a manner that impacts us negatively or requires us to change the content or manner of our disclosures, and our stakeholders or third parties view such change(s) negatively, we are unable to adequately explain such changes, or we are required to expend significant resources to update our disclosures, any of which could negatively impact our brand, reputation, and business; • that our brand reputation, and business, could be negatively impacted if we are perceived, alleged or found to be in violation of, or non-compliant with, newly adopted or constantly evolving ESG- and sustainability-related laws and disclosure requirements that are applicable to us; and • that our brand, reputation, and business could be negatively impacted if any of our disclosures, including our carbon footprint numbers, reporting to third-party ESG standards, or reporting against our 2025 Targets, 2030 Goal, or other goals, are inaccurate, perceived to be inaccurate, or alleged to be inaccurate.
In addition, third-party distributors may utilize their own information technology systems and other infrastructure as we transition to a distributor model in certain countries outside of the United States. We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our personnel, customers, manufacturers, and suppliers around the world.
In addition, third-party distributors may utilize their own information technology systems and other infrastructure as we transition to a distributor model in countries outside of the United States. We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our personnel, customers, manufacturers, and suppliers around the world.
The GDPR, and national implementing legislation in EEA member states and the United Kingdom, impose a strict data protection compliance regime including: providing detailed disclosures about how personal data is collected and processed (in a concise, intelligible and easily accessible form); granting new rights for data subjects in regard to their personal data (including the right to be “forgotten” and the right to data portability), as well as enhancing current rights (e.g., data subject access requests); requirements to have data processing agreements in place to govern the processing of personal data on behalf of other organizations; introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; maintaining a record of data processing; and complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, trainings, and audits.
The GDPR, and national implementing legislation in EEA member states and the United Kingdom, impose a strict data protection compliance regime including: providing detailed disclosures about how personal data is collected and processed (in a concise, intelligible and easily accessible form); granting new rights for data subjects in regard to their personal data (including the right to be “forgotten” and the right to data portability), as well as enhancing current rights (e.g., data subject access requests); requirements to have data processing agreements in place to govern the processing of personal data on behalf of other organizations; introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; maintaining a record of data processing; and complying with the principle of accountability and the obligation to demonstrate compliance through policies, procedures, trainings, and audits.
As a result of our global suppliers, we are subject to risks associated with doing business abroad, including: • political unrest, terrorism, geopolitical events, war and other violent conflicts, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured, including, for example, Vietnam, China, and Peru; • the imposition of new laws and regulations, including those relating to labor conditions, quality, and safety standards, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed by the United States on imports from countries where our products are manufactured, including, for example, Vietnam, China, and Peru; • greater challenges and increased costs with enforcing and periodically auditing or reviewing our suppliers and manufacturers’ compliance with our supplier code of conduct, including their labor and sustainability practices, given that their facilities are located outside of the United States and, in many cases, far away from our offices and management; • reduced protection for intellectual property rights, including trademark protection, in some countries, particularly China; • disruptions in operations due to global, regional, or local public health crises (for example, the COVID-19 pandemic) or other emergencies or natural disasters; • disruptions or delays in shipments; and • changes in local economic conditions in countries where our manufacturers, suppliers, or customers are located.
As a result of our global suppliers, we are subject to risks associated with doing business abroad, including: • political unrest, terrorism, geopolitical events, war and other violent conflicts, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured, including, for example, Vietnam, China, and Peru; 27 Table of Contents • the imposition of new laws and regulations, including those relating to labor conditions, quality, and safety standards, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed by the United States on imports from countries where our products are manufactured, including, for example, Vietnam, China, and Peru; • greater challenges and increased costs with enforcing and periodically auditing or reviewing our suppliers and manufacturers’ compliance with our supplier code of conduct, including their labor and sustainability practices, given that their facilities are located outside of the United States and, in many cases, far away from our offices and management; • reduced protection for intellectual property rights, including trademark protection, in some countries, particularly China; • disruptions in operations due to global, regional, or local public health crises (for example, the COVID-19 pandemic) or other emergencies or natural disasters; • disruptions or delays in shipments; and • changes in local economic conditions in countries where our manufacturers, suppliers, or customers are located.
Unfavorable economic conditions have led and, in the future, may lead consumers to delay or reduce purchases of our products. Consumer demand for our products may also decline as a result of store closures, an economic downturn, or economic uncertainty in our key markets, particularly in North America, Europe, and Asia.
Unfavorable economic conditions have led and, in the future, may lead consumers to delay or reduce purchases of our products. Consumer demand for our products may also decline as a result of store closures, economic downturn, or economic uncertainty in our key markets, particularly in North America, Europe, and Asia.
Our new products may not receive consumer acceptance as consumer preferences could shift rapidly to different types of styles and our future success depends in part on our ability to anticipate and respond to these changes.
Our products may not receive consumer acceptance as consumer preferences could shift rapidly to different types of styles and our future success depends in part on our ability to anticipate and respond to these changes.
Currently, we rely predominantly on a few third-party logistics providers to store our finished products in, and distribute our products to customers from, their distribution center locations in the United States, United Kingdom, and the Netherlands.
Currently, we rely predominantly on a few third-party logistics providers to store our finished products in, and distribute our products to customers from, their distribution center locations in the United States and United Kingdom.
Our or our third-party vendors’ inability to continue to update, improve, and scale our website or mobile app and the underlying technology infrastructure (including upgrades to or replacement of legacy systems with successor systems or building new policies, procedures, training programs, and monitoring tools) could harm our reputation and our ability to acquire, retain, and serve our customers, which could adversely affect our business, financial condition, and results of operations.
Our or our third-party vendors’ inability to continue to update, improve, and scale our website and the underlying technology infrastructure (including upgrades to or replacement of legacy systems with successor systems or building new policies, procedures, training programs, and monitoring tools) could harm our reputation and our ability to acquire, retain, and serve our customers, which could adversely affect our business, financial condition, and results of operations.
Acquisitions, investments and other strategic alliances involve numerous risks, including: • problems integrating the acquired business, facilities, technologies, or products, including issues maintaining uniform standards, procedures, controls, policies, and culture; 46 Table of Contents • unanticipated costs associated with acquisitions, investments, or strategic alliances; • diversion of management’s attention from our existing business; • adverse effects on existing business relationships with suppliers, outsourced manufacturers, and other third parties; • risks associated with entering new markets in which we may have limited or no experience; • potential loss of key employees of acquired businesses; and • increased legal and accounting compliance costs.
Acquisitions, investments and other strategic alliances involve numerous risks, including: • problems integrating the acquired business, facilities, technologies, or products, including issues maintaining uniform standards, procedures, controls, policies, and culture; • unanticipated costs associated with acquisitions, investments, or strategic alliances; • diversion of management’s attention from our existing business; • adverse effects on existing business relationships with suppliers, outsourced manufacturers, and other third parties; • risks associated with entering new markets in which we may have limited or no experience; • potential loss of key employees of acquired businesses; and • increased legal and accounting compliance costs.
In order to attract new customers and continue to expand our customer base, we must appeal to and attract customers who identify with our sustainable footwear and apparel products.
In order to attract new customers and continue to expand our customer base, we must appeal to and attract customers who identify with our comfortable and sustainable footwear and apparel products.
To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may need to engage in equity or debt financings to secure additional funds. Recently, there has been volatility in and disruptions to the global economy, including the equity and debt financial markets.
To the extent that current and anticipated future sources of liquidity are insufficient to fund our current or future business activities and requirements, we will need to engage in equity or debt financings to secure additional funds. Recently, there has been volatility in and disruptions to the global economy, including the equity and debt financial markets.
In order to remain competitive, we must continue to enhance and improve the responsiveness, functionality, and features of our website, mobile app and underlying technology infrastructure, which is particularly challenging given the rapid rate at which new technologies, customer preferences and expectations, and industry standards and practices are evolving in the eCommerce industry.
In order to remain competitive, we must continue to enhance and improve the responsiveness, functionality, and features of our website and underlying technology infrastructure, which is particularly challenging given the rapid rate at which new technologies, customer preferences and expectations, and industry standards and practices are evolving in the eCommerce industry.
In addition, class action plaintiffs in the United States are employing novel legal theories to allege that federal and state eavesdropping/wiretapping laws and state constitutions prohibit the use of analytics technologies widely employed by website and mobile app operators to understand how their users interact with their services.
In addition, class action plaintiffs in the United States are employing novel legal theories to allege that federal and state eavesdropping/wiretapping laws and state constitutions prohibit the use of analytics technologies widely employed by website operators to understand how their users interact with their services.
Any such proceeding or action could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, decrease the use of our website and mobile app by customers and suppliers, and may result in the imposition of monetary liabilities.
Any such proceeding or action could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, decrease the use of our website by customers and suppliers, and may result in the imposition of monetary liabilities.
Further, in future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including changes in our business operations and strategy (such as our transition to a distributor model in a given territory), a decline in demand for our products, an increase in competition, a decrease in the growth of our overall market, our entry into new geographies where our prior operating history is less relevant or predictive, or our failure, for any reason, to continue to capitalize on growth opportunities.
Further, in future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including changes in our business operations and strategy (such as our transition to a distributor model in a given territory), a decline in demand for our products, an increase in competition, a decrease in the 13 Table of Contents growth of our overall market, our entry into new geographies where our prior operating history is less relevant or predictive, or our failure, for any reason, to continue to capitalize on growth opportunities.
Our website, portions of which are run through Shopify, and information technology systems, some of which are 30 Table of Contents managed by third parties, may be susceptible to a variety of interruptions or outages, including those caused by damage, disruptions, slowdowns, or shutdowns due to failures during the process of upgrading or replacing software, databases, or components, fire, flood, power outages, hardware failures, terrorist attacks, acts of war, break-ins, earthquakes, or catastrophic events.
Our website, portions of which are run through Shopify, and information technology systems, some of which are managed by third parties, may be susceptible to a variety of interruptions or outages, including those caused by damage, disruptions, slowdowns, or shutdowns due to failures during the process of upgrading or replacing software, databases, or components, fire, flood, power outages, hardware failures, terrorist attacks, acts of war, break-ins, earthquakes, or catastrophic events.
The market price of our Class A common stock has experienced and may in the future experience high volatility and significant fluctuations in response to numerous factors, many of which are beyond our control, including: • changes to our business operations and strategy; • actual or anticipated fluctuations in our financial condition and results of operations; • the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; 41 Table of Contents • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations, or capital commitments; • changes in stock market valuations and operating performance of other footwear and apparel companies generally, or those in our industry in particular; • the sustainability targets we may provide to the public, any changes in these targets, or our failure to meet them; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our Class A common stock, including sales by our co-founders or our other executive officers and directors or by their affiliates; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations, or government policies applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging, and other derivative transactions involving our capital stock; • general economic conditions in the United States and globally; • other events or factors, including those resulting from war (such as Russia’s invasion of Ukraine and the ongoing conflict in the Middle East), pandemics (including COVID-19), incidents of terrorism, or responses to these events; and • the other factors described in this “Part II, Item 1A.
The market price of our Class A common stock has experienced and may in the future experience high volatility and significant fluctuations in response to numerous factors, many of which are beyond our control, including: • changes to our business operations and strategy; • actual or anticipated fluctuations in our financial condition and results of operations; • the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations, or capital commitments; • changes in stock market valuations and operating performance of other footwear and apparel companies generally, or those in our industry in particular; • the sustainability targets we may provide to the public, any changes in these targets, or our failure to meet them; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our Class A common stock, including sales by our co-founders or our other executive officers and directors or by their affiliates; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations, or government policies applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging, and other derivative transactions involving our capital stock; • general economic conditions in the United States and globally; • other events or factors, including those resulting from war (such as the war in Iran and the broader conflict in the Middle East and Russia’s invasion of Ukraine), pandemics (including COVID-19), incidents of terrorism, or responses to these events; and • the other factors described in this “Part I, Item 1A.
There can be no assurance that we will be able to accurately project the rate or timing of increases, if any, in the use of our website or mobile app or expand, scale, and upgrade our technology, systems, and infrastructure to accommodate such increases on a timely basis.
There can be no assurance that we will be able to accurately project the rate or timing of increases, if any, in the use of our website or expand, scale, and upgrade our technology, systems, and infrastructure to accommodate such increases on a timely basis.
Our net revenue depends on the number of visitors who shop on our website and the volume of orders we can handle. Unavailability of our website or mobile app or reduced order fulfillment performance would reduce the volume of goods sold and could also adversely affect customer perception of our brand.
Our net revenue depends on the number of visitors who shop on our website and the volume of orders we can handle. Unavailability of our website or reduced order fulfillment performance would reduce the volume of goods sold and could also adversely affect customer perception of our brand.
In addition, we are subject, or may become subject, to various other data privacy and security laws and regulations of other foreign jurisdictions, including those in China and South Korea. On June 10, 2021, the Peoples Republic of China, or the PRC, passed the PRC Data Security Law, or the DSL.
In addition, we are subject, or may become subject, to various other data privacy and security laws and regulations of other foreign jurisdictions, including those in China and South Korea. On June 10, 2021, the People’s Republic of China, or the PRC, passed the PRC Data Security Law, or the DSL.
Our Class B common stock has 10 votes per share and our Class A common stock has one vote per share. Mr. Zwillinger, our co-founder, and Mr. Brown, our co-founder and Brand Ambassador, our directors, our principal stockholders, and their respective affiliates beneficially own a significant percentage of the voting power of our outstanding capital stock.
Our Class B common stock has 10 votes per share and our Class A common stock has one vote per share. Mr. Zwillinger, our co-founder, and Mr. Brown, our co-founder, our directors, our principal stockholders, and their respective affiliates beneficially own a significant percentage of the voting power of our outstanding capital stock.
For example, to acquire the supply of raw materials or commodities such as wool that we expect to require for our business, we may enter into long-term contracts with pricing denominated in currencies other than the U.S. dollar.
For example, to acquire the supply of raw materials or commodities such as wool that we expect to require for our business, we may enter into contracts with pricing denominated in currencies other than the U.S. dollar.
Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in customer demand for our products or for products of our competitors, changing consumer preferences, changing product trends, our failure to accurately forecast consumer acceptance of new products, product introductions by competitors, unanticipated changes in general market conditions, store closures, declines in overall consumer spending, and weakening of economic conditions or consumer confidence in future economic conditions.
Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in customer demand for our products or for products of our 20 Table of Contents competitors, changing consumer preferences, changing product trends, our failure to accurately forecast consumer acceptance of new products, product introductions by competitors, unanticipated changes in general market conditions, store closures, declines in overall consumer spending, and weakening of economic conditions or consumer confidence in future economic conditions.
We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm. The United Kingdom has implemented legislation similar to the GDPR, including the U.K.
We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered 34 Table of Contents harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm. The United Kingdom has implemented legislation similar to the GDPR, including the U.K.
Accordingly, Delaware law and our PBC status could result in our board of directors making decisions which are less financially lucrative for our stockholders in the short- and/ 40 Table of Contents or long-term if the public benefit and other stakeholder considerations are significant; this could harm our business, results of operations, and financial condition, which in turn could cause our stock price to decline.
Accordingly, Delaware law and our PBC status could result in our board of directors making decisions which are less financially lucrative for our stockholders in the short- and/or long-term if the public benefit and other stakeholder considerations are significant; this could harm our business, results of operations, and financial condition, which in turn could cause our stock price to decline.
Any harm to our reputation resulting from our failure or perceived failure to meet the SPO Framework could also impact employee engagement and retention, the willingness of our supplier or manufacturers to do business with us, or investors’ willingness to purchase or hold shares of our common stock, any of which could have a material and adverse effect on our business, results of operations, and financial condition.
Any harm to our 23 Table of Contents reputation resulting from our failure or perceived failure to meet the SPO Framework could also impact employee engagement and retention, the willingness of our supplier or manufacturers to do business with us, or investors’ willingness to purchase or hold shares of our common stock, any of which could have a material and adverse effect on our business, results of operations, and financial condition.
We may be unable to provide customers with the high-quality sustainable footwear and apparel they seek if our supply chain partners do not consistently produce high-quality products for us to sell. 27 Table of Contents We believe that many of our new customers find us by word of mouth and other non-paid referrals from existing customers.
We may be unable to provide customers with the high-quality sustainable footwear and apparel they seek if our supply chain partners do not consistently produce high-quality products for us to sell. We believe that many of our new customers find us by word of mouth and other non-paid referrals from existing customers.
The United States and the countries in which our products are produced or sold have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty, or tariff levels.
The United States and the countries in which our products are produced or sold have imposed and may in the future impose quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty, or tariff levels.
Any actions or any public statements or social media posts about Allbirds or our products by our customers, consumers who have not yet bought our products, our current or former employees, brand affiliates and partners, social media influencers, celebrities, or other public figures, whether authorized or not, that are contrary to our values may negatively affect consumer perception of our brand.
Any actions or any public statements or social media posts about Allbirds or our products by our customers, consumers who have not yet bought our products, our current or former 15 Table of Contents employees, brand affiliates and partners, social media influencers, celebrities, or other public figures, whether authorized or not, that are contrary to our values may negatively affect consumer perception of our brand.
Extreme weather conditions, natural disasters, public health crises, political crises and instability, and other catastrophic events, including those caused or exacerbated by climate change, could negatively impact our results of operations and financial condition.
Extreme weather conditions, natural disasters, public health crises, and other catastrophic events, including those caused or exacerbated by climate change, could negatively impact our results of operations and financial condition.
If we are unable to acquire new customers who purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary to 13 Table of Contents drive beneficial network effects with our suppliers, our net revenue may decrease, and our business, financial condition, and results of operations may be materially adversely affected.
If we are unable to acquire new customers who purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary to drive beneficial network effects with our suppliers, our net revenue may decrease, and our business, financial condition, and results of operations may be materially adversely affected.
Many of 17 Table of Contents our competitors are large apparel and/or footwear companies with strong worldwide brand recognition, while others are new market participants with low barriers to entry. Because of the fragmented nature of the industry, we also compete with other footwear and apparel sellers, including those specializing in athletic footwear and other casual footwear.
Many of our competitors are large apparel and/or footwear companies with strong worldwide brand recognition, while others are new market participants with low barriers to entry. Because of the fragmented nature of the industry, we also compete with other footwear and apparel sellers, including those specializing in athletic footwear and other casual footwear.
Any failure to preserve our corporate culture (or localize it authentically) or any failure to live up to our values as a company, particularly those related to environmental conservation and sustainability, could negatively affect our brand and reputation, harm our business, and limit our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.
Any failure to preserve our corporate culture or any failure to live up to our values as a company, particularly those related to environmental conservation and sustainability, could negatively affect our brand and reputation, harm our business, and limit our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.
Extreme weather conditions and volatile changes in weather conditions in the areas in which our offices, retail stores, suppliers, customers, distribution centers, and vendors are located could adversely affect our results of operations and financial condition.
Extreme weather conditions and volatile changes in weather conditions in the areas in which our offices, suppliers, customers, distribution centers, and vendors are located could adversely affect our results of operations and financial condition.
Either result could adversely affect our business, financial condition, and results of operations. Furthermore, the regulations governing domain names and laws protecting marks and similar proprietary rights could change in ways that block or interfere with our ability to use relevant domains or the Allbirds brand.
Either result could adversely affect our business, financial condition, and results of operations. 29 Table of Contents Furthermore, the regulations governing domain names and laws protecting marks and similar proprietary rights could change in ways that block or interfere with our ability to use relevant domains or the Allbirds brand.
Our brand and reputation could also be negatively impacted by adverse publicity, whether or not valid, regarding allegations that we, or persons associated with us or formerly associated with us, have violated applicable laws or regulations, including but not limited to those related to product labeling and safety, 16 Table of Contents marketing, employment, discrimination, harassment, whistle-blowing, privacy, corporate citizenship, improper business practices, or cybersecurity.
Our brand and reputation could also be negatively impacted by adverse publicity, whether or not valid, regarding allegations that we, or persons associated with us or formerly associated with us, have violated applicable laws or regulations, including but not limited to those related to product labeling and safety, marketing, employment, discrimination, harassment, whistle-blowing, privacy, corporate citizenship, improper business practices, or cybersecurity.
Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the U.K. Bribery Act 2010, and possibly other anti-bribery and anti-money laundering laws in countries in which we conduct activities.
Foreign Corrupt Practices Act of 1977, as amended, or FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the U.K. Bribery Act 2010, and possibly other anti-bribery and anti-money 36 Table of Contents laundering laws in countries in which we conduct activities.
These provisions could also limit the price that investors might be willing to pay in the future for shares of our Class A common stock, thereby depressing the market price of our Class A common stock. As a PBC, we may be less attractive as a takeover target than a traditional company.
These 42 Table of Contents provisions could also limit the price that investors might be willing to pay in the future for shares of our Class A common stock, thereby depressing the market price of our Class A common stock. As a PBC, we may be less attractive as a takeover target than a traditional company.
As a result of the disclosure obligations required of a public company, our business and financial condition is more visible than it was as a private company, which may result in an increased risk of threatened or actual litigation, including by competitors and other third parties.
As a result of the disclosure obligations required of a public company, our business and financial condition is more visible than it was as a private company, which may result in an increased risk of threatened or actual litigation, including by 45 Table of Contents competitors and other third parties.
If our ESG practices do not meet investor or other stakeholder expectations and standards (which are continually evolving and may emphasize different priorities than the ones we choose to focus on), or if our ESG practices, including our periodic reporting, change or otherwise do not live up to our own values or ESG- and sustainability-related goals, then our brand, reputation, and employee retention may be negatively impacted.
If our ESG practices do not meet investor or other stakeholder expectations and standards (which are continually evolving and may emphasize different priorities than the ones we choose to focus on), or if our ESG practices, including our periodic reporting, change or otherwise do not live up to our own values or ESG- and sustainability-related goals, then our 18 Table of Contents brand, reputation, and employee retention may be negatively impacted.
We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our net revenue and profitability. The market for footwear and apparel is highly competitive.
We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our net revenue and profitability. 16 Table of Contents The market for footwear and apparel is highly competitive.
Also, in most cases, our agreements with such third-party retailers allow for significant variability in the amount of product purchased from us, and there are risks that eventual order volumes may be lower than initially projected.
Also, in most cases, our agreements with such third-party retailers allow for significant variability in the amount of product 21 Table of Contents purchased from us, and there are risks that eventual order volumes may be lower than initially projected.
We may experience difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Our recruiting efforts 24 Table of Contents may also be limited or delayed by laws and regulations, such as restrictive immigration laws, and restrictions on travel or availability of visas.
We may experience difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Our recruiting efforts may also be limited or delayed by laws and regulations, such as restrictive immigration laws, and restrictions on travel or availability of visas.
We have occasionally in the past incurred and may in the future incur losses from theft or “leakage” of our products in our stores or in our distribution centers. While we have taken steps to detect and prevent such issues, those steps may not always be effective.
We have occasionally in the past incurred and may in the future incur losses from theft or “leakage” of our products in our stores or in our distribution centers. While we have taken steps to detect and prevent such issues, those steps may not 47 Table of Contents always be effective.
Our financial results may be adversely affected if substantial investments in businesses and operations, including in our retail stores, fail to produce expected returns. From time to time, we may invest in technology, business infrastructure, new businesses, product offering, and manufacturing innovation and expansion of existing businesses.
Our financial results may be adversely affected if substantial investments in businesses and operations fail to produce expected returns. From time to time, we may invest in technology, business infrastructure, new businesses, product offering, and manufacturing innovation and expansion of existing businesses.
To the extent that such changes have a negative impact on us, our suppliers, manufacturers, or our customers, 38 Table of Contents including as a result of related uncertainty, these changes may adversely impact our business, financial condition, results of operations, and cash flows.
To the extent that such changes have a negative impact on us, our suppliers, manufacturers, or our customers, including as a result of related uncertainty, these changes may adversely impact our business, financial condition, results of operations, and cash flows.
In addition, we rely on data received from third parties, including third-party platforms, to track certain performance indicators, and we may be limited in our ability to verify such data. In addition, our methodologies for tracking metrics may change over time, which could result in changes to the metrics we report.
In addition, we rely on data received from third parties, including third-party platforms, to track certain performance indicators, and we may be limited in our ability to verify such data. In addition, our methodologies for tracking metrics may change over time, which could result in changes 25 Table of Contents to the metrics we report.
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes appearing in Part II, Item 8 of this Annual Report on Form 10-K.
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes appearing in Part IV, Item 15 of this Annual Report on Form 10-K.
We have made significant investments in enhancing our brand and attracting new customers, and we expect to continue to make significant investments to promote our products, including in connection with our strategic transformation plan for our focused product strategy. Such campaigns can be expensive and may not result in new customers or increased sales of our products.
We have made significant investments in enhancing our brand and attracting new customers, and we expect to continue to make significant investments to promote our products, including in connection with our focused product strategy. Such campaigns can be expensive and may not result in new customers or increased sales of our products.
Eastern Standard Time on September 4, 2024. The common stock began trading on a Reverse Stock Split-adjusted basis on The Nasdaq Global Select Market on September 5, 2024. On September 23, 2024, the Company received notice from Nasdaq confirming that the Company had regained compliance with the minimum closing bid price criteria of the Nasdaq listing requirements.
The common stock began trading on a Reverse Stock Split-adjusted basis on The Nasdaq Global Select Market on September 5, 2024. On September 23, 2024, the Company received notice from Nasdaq confirming that the Company had regained compliance with the minimum closing bid price criteria of the Nasdaq listing requirements.
For example, our principal offices are located in Northern California, an area which has a history of earthquakes and wildfires, 49 Table of Contents and are thus vulnerable to damage or disruption.
For example, our principal offices are located in Northern California, an area which has a history of earthquakes and wildfires, and are thus vulnerable to damage or disruption.
As global economic conditions continue to be volatile or economic uncertainty remains, and with increasing inflation and interest rates and liquidity concerns, and failures of banks and other financial institutions, trends in consumer discretionary spending also remain unpredictable and subject to reductions as a result of significant increases in unemployment, financial market instability, uncertainties about the future, and other factors.
As global economic conditions continue to be volatile or economic uncertainty remains, and with increasing inflation and interest rates, trends in consumer discretionary spending also remain unpredictable and subject to reductions as a result of significant increases in unemployment, financial market instability, uncertainties about the future, and other factors.
As eCommerce and social media continue to rapidly evolve, we must continue to establish relationships with these channels and may be unable to develop or maintain these relationships on acceptable economic and other terms. In addition, we currently receive a significant number of visits to our website and mobile app via search engine results.
As eCommerce and social media continue to rapidly evolve, we must continue to establish relationships with these channels and may be unable to develop or maintain these relationships on acceptable economic and 19 Table of Contents other terms. In addition, we currently receive a significant number of visits to our website via search engine results.
In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated with promotional activities or seasonal trends in our business, place additional demands on our technology platform, and could cause or exacerbate slowdowns or interruptions.
In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated 30 Table of Contents with promotional activities or seasonal trends in our business, place additional demands on our technology platform, and could cause or exacerbate slowdowns or interruptions.
Countries impose, modify, and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for us to predict future developments regarding tariffs and other trade restrictions.
Countries impose, modify, and remove tariffs and other trade restrictions in response to a diverse array of factors, including geopolitical policy goals and considerations, and global and national economic and political conditions, which make it impossible for us to predict future developments regarding tariffs and other trade restrictions.
General geopolitical instability and the responses to it, such as the possibility of sanctions, trade restrictions, and changes in tariffs, including tariffs imposed by the United States and China, and the possibility of additional tariffs or other trade restrictions between the United States and other countries where we currently or might in the future manufacture or sell our products, could adversely impact our business.
General geopolitical instability and the responses to it, such as the possibility of sanctions, trade restrictions, and changes in tariffs, including tariffs imposed by the United States and foreign countries, and the possibility of additional tariffs or other trade restrictions between the United States and other countries where we currently or might in the future manufacture or 17 Table of Contents sell our products, could adversely impact our business.
Significant or continuing noncompliance with such standards and laws by one or more contractors could harm our reputation or result in a product recall and, as a result, could have an adverse effect on our sales and financial condition.
Significant or continuing noncompliance with such standards and laws by one or more contractors could harm 26 Table of Contents our reputation or result in a product recall and, as a result, could have an adverse effect on our sales and financial condition.
If we fail to accurately forecast consumer demand, we may experience excess inventory levels or a shortage of products available for sale in our stores or for delivery to customers.
If we fail to accurately forecast consumer demand, we may experience excess inventory levels or a shortage of products available for sale or for delivery to customers.
As a result of our limited operating history as well as our evolving business strategies, including our recent strategic transformation plan, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth.
As a result of our relatively limited operating history as well as our evolving business strategies, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth.
These distributors now manage our existing stores and sell our products through various channels, including retail stores and eCommerce platforms, under our brand names within their respective territories. Since we have limited experience with third-party distribution arrangements, we cannot guarantee their success.
These distributors now manage our stores and sell our products through various channels, including retail stores and eCommerce platforms, under our brand names within their respective territories. Since we have relatively limited experience with third-party distribution arrangements and limited control over the distributors, we cannot guarantee their success.
These priorities are underpinned by 10 targets, or the 2025 Targets, which we intend to achieve by the end of 2025. In addition, we have announced a goal to reduce our per-unit carbon emissions to less than 1 kg of carbon dioxide equivalent emissions by 2030, or the 2030 Goal. We anticipate continuing to make ESG disclosures.
These priorities are underpinned by 10 targets, or the 2025 Targets, which we intend to achieve by the end of 2025. In addition, we have announced a goal to reduce our per-unit carbon emissions to less than 1 kg of carbon dioxide equivalent emissions by 2030, or the 2030 Goal.
For example, changes to the terms of our 28 Table of Contents shipping arrangements or the imposition of surcharges or surge pricing may adversely impact our margins and profitability.
For example, changes to the terms of our shipping arrangements or the imposition of surcharges or surge pricing may adversely impact our margins and profitability.
Furthermore, in the past, stockholders have sometimes instituted securities class action litigation against companies following periods of volatility in the market price of their securities.
Furthermore, in the past, stockholders have sometimes instituted securities class action litigation against companies following periods of 40 Table of Contents volatility in the market price of their securities.
We maintain business interruption insurance, but it may not adequately protect us from adverse effects caused by significant disruptions in our third-party logistics and distribution centers.
We maintain business interruption insurance, but 28 Table of Contents it may not adequately protect us from adverse effects caused by significant disruptions in our third-party logistics and distribution centers.
However, as we continue to grow, including geographically expanding our presence outside of our headquarters in San Francisco, California, and developing the infrastructure associated with being a public company, we face a number of challenges that may affect our ability to sustain our corporate culture and shared values, including: • a need to identify, attract, reward, and retain people in key leadership positions in our organization who share and further our culture, values, mission, and public benefit objective; • the increasing size and geographic diversity of our workforce, which may limit our ability to promote a uniform and consistent culture and set of shared values across all of our offices and employees globally; • the wider array of alternative working arrangements we now permit or may in the future permit, including part-time or flexible roles, fully remote roles, or “hybrid” roles (where a mix of in-person and remote work is permitted); • the costs of our employee health and well-being initiatives and other ESG investments, which are required to maintain our corporate culture and live up to our values, but which may be more expensive than those of our competitors; • the loss of our certified B Corp status; • competitive pressures that may divert us from our mission, vision, and values, and may cause us to take actions that are contrary to, or that our workforce views as contrary to, our culture or values; • our rapidly evolving industry; and • the increasing need to develop expertise in new areas of business that affect us.
However, we face a number of challenges that may affect our ability to sustain our corporate culture and shared values, including: • a need to identify, attract, reward, and retain people in key leadership positions in our organization who share and further our culture, values, mission, and public benefit objective; • the size and geographic diversity of our workforce, which may limit our ability to promote a uniform and consistent culture and set of shared values across all of our employees globally; • the wider array of alternative working arrangements we now permit or may in the future permit, including part-time or flexible roles, fully remote roles, or “hybrid” roles (where a mix of in-person and remote work is permitted); • the costs of our employee health and well-being initiatives and other ESG investments, which are required to maintain our corporate culture and live up to our values, but which may be more expensive than those of our competitors; • the loss of our certified B Corp status; 24 Table of Contents • competitive pressures that may divert us from our mission, vision, and values, and may cause us to take actions that are contrary to, or that our workforce views as contrary to, our culture or values; • our rapidly evolving industry; and • the increasing need to develop expertise in new areas of business that affect us.
Our limited operating experience, combined with the rapidly evolving nature of the market in which we sell our products, substantial uncertainty concerning how these markets may develop, and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue.
This evolution, combined with the rapidly evolving nature of the markets in which we sell our products, substantial uncertainty concerning how these markets may develop, and other economic factors beyond our control, reduces our ability to accurately forecast quarterly or annual revenue.
These two cases are captioned Shnayder v. Allbirds, Inc., et al., Case No. 23-cv-01811-AMO (N.D. Cal.); Delgado v. Allbirds, Inc., et al., Case No. 23-cv-02372-AMO (N.D. Cal.). On July 25, 2023, the court entered an order consolidating the two cases, appointing lead plaintiffs, and approving lead plaintiffs’ selection of lead counsel. We intend to vigorously defend against these lawsuits.
These two cases are captioned Shnayder v. Allbirds, Inc., et al., Case No. 23-cv-01811-AMO (N.D. Cal.); Delgado v. Allbirds, Inc., et al., Case No. 23-cv-02372-AMO (N.D. Cal.). On July 25, 2023, the court entered an order consolidating the two cases, appointing lead plaintiffs, and approving lead plaintiffs’ selection of lead counsel.
Climate change and increased focus by governments, organizations, customers, and investors on sustainability issues, including those related to climate change and socially responsible activities, may adversely affect our reputation, business, and financial results. Climate change occurring around the world may impact our business in numerous ways.
Shifting focus and sentiment among certain governments, organizations, customers, and investors on sustainability issues, including those related to climate change and socially responsible activities, may adversely affect our reputation, business, and financial results. Climate change occurring around the world may impact our business in numerous ways.
Our contracts with some 26 Table of Contents suppliers and manufacturers may not adequately meet our production requirements, and we compete with other companies for raw materials and production.
Our contracts with some suppliers and manufacturers may not adequately meet our production requirements, and we compete with other companies for raw materials and production.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, stockholders, and stakeholders have focused increasingly on the environmental, social, and governance, or ESG, and related sustainability practices of companies. These parties have placed increased importance on the implications of the social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, stockholders, and stakeholders have, in the recent past, focused on the environmental, social, and governance, or ESG, and related sustainability practices of companies, and have placed importance on the implications of the social cost of their investments.
As a result of this concentration in our supply chain, our business and operations would be negatively affected if our footwear manufacturer in Vietnam or any of our other key manufacturers were to experience a significant disruption affecting the price, quality, availability, or timely delivery of products.
As a result of this concentration, our business and operations would be negatively affected if any of our key manufacturers, or manufacturing operations in Vietnam generally, were to experience a significant disruption affecting the price, quality, availability, or timely delivery of products.
In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by factors beyond our and these providers’ control, including pandemic, weather, fire, flood, power loss, earthquakes, acts of war or terrorism, or other events specifically impacting other shipping partners, such as labor disputes, financial difficulties, system failures, and other disruptions to the operations of the shipping companies on which we rely.
In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by factors beyond our and these providers’ control, including pandemic, weather, fire, flood, power loss, earthquakes, acts of war or terrorism, geopolitical wars or conflicts, or other events specifically impacting shipping channels, including armed conflicts, piracy, and shipping partners being unwilling or unable to safely access certain shipping channels, or impacting shipping partners, such as labor disputes, financial difficulties, system failures, and other disruptions to the operations of the shipping companies on which we rely.
To the extent we are unable to provide this report in a timely manner, or if the report is not viewed favorably by our stockholders, parties doing business with us, regulators, or others because we are unable to report sufficient progress toward our public benefit or otherwise, our reputation and status as a PBC may be harmed, which could in turn have a material adverse effect on our business, results of operations and financial condition.
To the extent we are unable to provide this report in a timely manner, or if the report is not viewed favorably by our stockholders, parties doing business with us, regulators, or others because we are unable to report sufficient progress toward our public benefit or otherwise, our reputation and status as a PBC may be harmed, which could in turn have a material adverse effect on our business, results of operations and financial condition. 38 Table of Contents If our publicly reported certified B Corp score declines, or if we lose our certified B Corp status, our reputation could be harmed and our business could suffer.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A common stock could decrease, which might cause our Class A common stock price and trading volume to decline. We may incur losses from fraud or theft.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A common stock could decrease, which might cause our Class A common stock price and trading volume to decline.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo date, our approach to cybersecurity has been effective in protecting the confidentiality, integrity, and availability of our information; however, we cannot guarantee that its efforts will be successful in preventing all cybersecurity incidents.
Biggest changeThese cybersecurity trainings provide employees the opportunity to gain an understanding of the various forms of cybersecurity incidents and enable our employees to handle and report any suspicious activity or threat. 48 Table of Contents To date, our approach to cybersecurity has been effective in protecting the confidentiality, integrity, and availability of our information; however, we cannot guarantee that its efforts will be successful in preventing all cybersecurity incidents.
In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact 50 Table of Contents potential. The Board receives regular updates on the activities of the Audit Committee, including with regard to cybersecurity oversight.
In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The Board receives regular updates on the activities of the Audit Committee, including with regard to cybersecurity oversight.
Removed
These cybersecurity trainings provide employees the opportunity to gain an understanding of the various forms of cybersecurity incidents and enable our employees to handle and report any suspicious activity or threat.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of December 31, 2024, we operated 33 retail locations around the world. Our corporate headquarters is located in San Francisco, where we lease approximately 33,000 square feet of space under two leases that expire in December 2026.
Biggest changeItem 2. Properties As of December 31, 2025, we operated 23 retail locations around the world. Our corporate headquarters is located in San Francisco, where we lease approximately 5,500 square feet of space under one lease that expires in December 2026.
Country # of Stores United States 30 United Kingdom 3 Total retail stores 33 While we believe that our current facilities are adequate to meet our foreseeable needs, we may lease additional facilities or vacate existing facilities as our operations require. For example, we have vacated and currently sublease two corporate office spaces in San Francisco and San Diego, respectively.
Country # of Stores United States 21 United Kingdom 2 Total retail stores 23 While we believe that our current facilities are adequate to meet our foreseeable needs, we may lease additional facilities or vacate existing facilities as our operations require. For example, we have vacated and currently sublease two corporate office spaces in San Francisco and San Diego, respectively.
As of December 31, 2024, we also leased property in the following countries around the world that serve as our 33 retail locations, totaling approximately 115,000 square feet, as set forth below.
As of December 31, 2025, we also leased property in the following countries around the world that serve as our 23 retail locations, totaling approximately 77,000 square feet, as set forth below.
Added
Subsequent to December 31, 2025, the Company closed all of its remaining full-price stores in the United States, and currently has a total of 4 retail locations in the United States and the United Kingdom. 49 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

5 edited+1 added−1 removed6 unchanged
Biggest changeZwillinger, et al., Case No. 23-cv-01092-CFC, filed in the United States District Court for the District of Delaware and Wolfson v. Zwillinger, et al., Case No. 2025-0007, filed in Court of Chancery of the State of Delaware, resp.
Biggest changeOn October 3, 2023 and January 3, 2025, we and certain of our executive officers and directors were named as defendants in shareholder derivative suits, captioned Park v. Zwillinger, et al., Case No. 23-cv-01092-CFC, filed in the United States District Court for the District of Delaware and Wolfson v.
On October 13, 2023, we 51 Table of Contents and certain of our past and current executive officers and directors were named as defendants in a substantially similar shareholder derivative suit, captioned Junker v. Zwillinger, et al., Case No. 23-cv-01152-CFC, filed in the United States District Court for the District of Delaware.
On October 13, 2023, we and certain of our past and current executive officers and directors were named as defendants in a substantially similar shareholder derivative suit, captioned Junker v. Zwillinger, et al., Case No. 23-cv-01152-CFC, filed in the United States District Court for the District of Delaware.
On November 3, 2023, we filed a motion to dismiss the consolidated amended complaint and the court granted the motion on May 10, 2024, but provided plaintiffs with leave to amend their complaint. The plaintiffs filed an amended complaint in July 2024 and we filed a motion to dismiss the amended complaint on September 5, 2024.
On November 3, 2023, we filed a motion to dismiss the consolidated amended complaint and the court granted the motion on May 10, 2024, but provided plaintiffs with leave to amend their complaint.
Mine Safety Disclosures Not applicable. 52 Table of Contents PART II
Mine Safety Disclosures Not applicable. 50 Table of Contents PART II
These derivative lawsuits allege violations of Section 14(a) of the Exchange Act, contribution under Section 21D of the Exchange Act, breach of fiduciary duties, and aiding and abetting based on allegations that are substantially similar to those asserted in the securities class action.
Zwillinger, et al., Case No. 2025-0007, filed in Court of Chancery of the State of Delaware. These derivative lawsuits allege violations of Section 14(a) of the Exchange Act, contribution under Section 21D of the Exchange Act, breach of fiduciary duties, and aiding and abetting based on allegations that are substantially similar to those asserted in the securities class action.
Removed
Full briefing on the motion was completed on December 4, 2024 and a hearing on the motion is set for May 29, 2025. We intend to vigorously defend against this lawsuit. On October 3, 2023 and January 3, 2025, we and certain of our executive officers and directors were named as defendants in shareholder derivative suits, captioned Park v.
Added
The plaintiffs filed an amended complaint in July 2024 and we filed a motion to dismiss the amended complaint and such motion was granted with prejudice on February 27, 2026. We intend to vigorously defend against this lawsuit.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePrior to that date, there was no public trading market for our Class A common stock. Holders of Record As of February 28, 2025, we had 17 holders of record of our Class A common stock and 26 holders of record of our Class B common stock.
Biggest changePrior to that date, there was no public trading market for our Class A common stock. Holders of Record As of February 28, 2026, we had 17 holders of record of our Class A common stock and 26 holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+35 added−33 removed48 unchanged
Biggest changeNet cash used in investing activities in 2023 was $7.7 million , and consisted primarily of $10.9 million in cash outflows for the purchases of property and equipment to support the ongoing operations of our corporate development and retail stores, offset by $2.2 million of proceeds from the sales of certain of our international businesses.
Biggest changeDuring 2024, net cash provided by investing activities was $2.1 million, which consisted primarily of $4.0 million of proceeds from the sales of certain of our international businesses and a decrease of $2.2 million in security deposits related to our closed retail stores, partially offset by $4.1 million cash outflows for the purchases of property and equipment to support the ongoing operations of our corporate development and retail stores. 63 Table of Contents Financing Activities During 2025, net cash provided by financing activities was $16.1 million, which consisted primarily of proceeds from borrowings under our Credit Agreement of $19.2 million and proceeds from the issuance of shares under our ATM program of $1.7 million, partially offset by the payment of deferred financing and offering costs of $3.1 million and payments on our Credit Agreement of $1.9 million.
Net cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization of property and equipment, impairment expense, inventory write-offs and write-downs, and changes in operating assets and liabilities during each year.
Net cash used in operating activities mainly consists of our net loss adjusted for certain non-cash items, including depreciation and amortization of property and equipment, stock-based compensation, impairment expense, inventory write-offs and write-downs, and changes in operating assets and liabilities during each year.
Some of these limitations are: • adjusted EBITDA and adjusted EBITDA margin do not reflect stock-based compensation expense, and therefore do not include all of our compensation costs; • adjusted EBITDA and adjusted EBITDA margin do not reflect depreciation and amortization expense and, although these are a non-cash expense, the assets being depreciated may have to be replaced in the future, increasing our cash requirements; • adjusted EBITDA and adjusted EBITDA margin do not reflect impairment expense for long-lived assets and, although these are a non-cash expense, the assets being impaired may never recover their fair value, increasing our cash requirements; • adjusted EBITDA and adjusted EBITDA margin do not reflect severance, reorganization, exit, disposal and other costs associated with restructuring plans, which reduce cash available to us; • adjusted EBITDA and adjusted EBITDA margin do not reflect gains or losses from sales of businesses that may reduce cash available to us if the actual cash received is lower than the cash paid; • adjusted EBITDA and adjusted EBITDA margin do not reflect other income or expense that may reduce cash available to us if the actual cash received is lower than the cash paid; 61 Table of Contents • adjusted EBITDA and adjusted EBITDA margin do not reflect interest income or expense, or the cash required to service interest on our debt, which reduces cash available to us; and • adjusted EBITDA and adjusted EBITDA margin do not reflect income tax expense, or tax payments that may reduce cash available to us.
Some of these limitations are: • adjusted EBITDA and adjusted EBITDA margin do not reflect stock-based compensation expense, and therefore do not include all of our compensation costs; • adjusted EBITDA and adjusted EBITDA margin do not reflect depreciation and amortization expense and, although these are a non-cash expense, the assets being depreciated may have to be replaced in the future, increasing our cash requirements; 59 Table of Contents • adjusted EBITDA and adjusted EBITDA margin do not reflect impairment expense for long-lived assets and, although these are a non-cash expense, the assets being impaired may never recover their fair value, increasing our cash requirements; • adjusted EBITDA and adjusted EBITDA margin do not reflect severance, reorganization, exit, disposal and other costs associated with restructuring plans, which reduce cash available to us; • adjusted EBITDA and adjusted EBITDA margin do not reflect gains or losses from sales of businesses that may reduce cash available to us if the actual cash received is lower than the cash paid; • adjusted EBITDA and adjusted EBITDA margin do not reflect other income or expense that may reduce cash available to us if the actual cash received is lower than the cash paid; • adjusted EBITDA and adjusted EBITDA margin do not reflect interest income or expense, or the cash required to service interest on our debt, which reduces cash available to us; and • adjusted EBITDA and adjusted EBITDA margin do not reflect income tax expense, or tax payments that may reduce cash available to us.
In addition, the Credit Agreement contains certain customary events of default including, but not limited to, failure to pay interest, principal and fees or other amounts when due, material misrepresentations or misstatements in any representation or warranty, covenant defaults, certain cross defaults to other material indebtedness, certain judgment defaults and events of bankruptcy.
In addition, the Credit Agreement contains certain customary events of default including, but not limited to, failure to pay interest, principal and fees or other amounts when due, material misrepresentations or misstatements in any representation or warranty, covenant defaults, certain cross defaults to other material indebtedness, certain judgment defaults and events of bankruptcy or insolvency.
As of December 31, 2024, the majority of our sales are through our direct channels. Revenue is recognized when we satisfy our performance obligation by transferring control of the promised goods to the customer, net of allowances for returns, discounts, and any taxes collected from customers. This occurs either upon shipment or upon receipt, depending on the terms of sale.
As of December 31, 2025, the majority of our sales are through our direct channels. Revenue is recognized when we satisfy our performance obligation by transferring control of the promised goods to the customer, net of allowances for returns, discounts, and any taxes collected from customers. This occurs either upon shipment or upon receipt, depending on the terms of sale.
During the years ended December 31, 2024 and 2023, the number of stock options granted was immaterial. On a limited basis, we have issued RSUs that contain service and market-based vesting conditions (PSUs). Such awards were valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met.
During the years ended December 31, 2025 and 2024, the number of stock options granted was immaterial. On a limited basis, we have issued RSUs that contain service and market-based vesting conditions (PSUs). Such awards were valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations relates to our operations and financial condition reported in the consolidated financial statements for the fiscal years ended December 31, 2024 and December 31, 2023 and should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations relates to our operations and financial condition reported in the consolidated financial statements for the fiscal years ended December 31, 2025 and December 31, 2024 and should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
For stock options, we generally estimate the fair value using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the fair value of common stock, (2) the expected stock price volatility, 65 Table of Contents (3) the expected term of the award, (4) the risk-free interest rate and (5) expected dividends.
For stock options, we generally estimate the fair value using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the fair value of common stock, (2) the expected stock price volatility, (3) the expected term of the award, (4) the risk-free interest rate and (5) expected dividends.
Shipping costs to receive products from our suppliers are included in the cost of inventory and recognized as cost of revenue upon the sale of 56 Table of Contents products to our customers. We generally expect our cost of revenue to decrease or increase in absolute dollars in line with net revenue fluctuations.
Shipping costs to receive products from our suppliers are included in the cost of inventory and recognized as cost of revenue upon the sale of products to our customers. We generally expect our cost of revenue to decrease or increase in absolute dollars in line with net revenue fluctuations.
A customer is considered to have control once they are able to direct the use and receive substantially all of the benefits of the product. Control is transferred to wholesale customers upon shipment. Control transfers to retail store customers at the time of sale and to digital customers upon shipment.
A customer is considered to have control once they are able to direct the use and receive substantially all of the benefits of the product. Control is transferred to third-party customers upon shipment. Control transfers to retail store customers at the time of sale and to digital customers upon shipment.
Other Income (Expense) 57 Table of Contents Other income (expense) consists of gains or losses on lease terminations and modifications, gains or losses on foreign currency, gains or losses on sales of property and equipment, and changes in the fair value of our equity investments.
Other Income Other income consists of gains or losses on lease terminations and modifications, gains or losses on foreign currency, gains or losses on sales of property and equipment, and changes in the fair value of our equity investments.
In the second quarter of 2024, we transitioned the operations of two stores in Japan and one store in New Zealand to unrelated third-party distributors and closed one store in Europe.
In the second quarter of 2024, we transitioned the operations of two stores in Japan and one store in New Zealand to unrelated third-party distributors and closed one store in Europe. In the third quarter of 2024, we transitioned the operations of six stores in China to an unrelated third-party distributor and closed two stores in Europe.
We have invested time and resources to train our manufacturers to use our natural materials, which we believe makes it difficult to replicate our novel manufacturing processes at our product quality. 53 Table of Contents Financial Highlights For the years ended December 31, 2024 and 2023: • We generated net revenues of $189.8 million and $254.1 million, respectively. • Our gross margin was 42.7% and 41.0%, respectively. • We generated net losses of $93.3 million and $152.5 million, respectively. • We generated adjusted EBITDA losses of $70.0 million and $78.5 million, respectively.
We have invested time and resources to train our manufacturers to use our natural materials, which we believe makes it difficult to replicate our novel manufacturing processes at our product quality. 51 Table of Contents Financial Highlights For the years ended December 31, 2025 and 2024: • We generated net revenues of $152.5 million and $189.8 million, respectively. • Our gross margin was 41.0% and 42.7%, respectively. • We generated net losses of $77.3 million and $93.3 million, respectively. • We generated adjusted EBITDA losses of $59.4 million and $70.0 million, respectively.
Adjusted EBITDA is defined as net loss before stock-based compensation expense, depreciation and amortization expense, impairment expense, restructuring expense (consisting of professional fees, severance payments, and other related charges from our August 2022 and March 2023 initiatives), non-cash gains or losses on the sales of businesses relating to our March 2023 initiatives, other income or expense (consisting of non-cash changes in the fair value of our equity investments, non-cash gains or losses on foreign currency, non-cash gains or losses on sales of property and equipment, and non-cash gains or losses on modifications or terminations of leases), interest income or expense, and income tax provision or benefit.
Adjusted EBITDA is defined as net loss before stock-based compensation expense, depreciation and amortization expense, impairment expense, restructuring expense (consisting of professional fees, personnel and related expenses, and other related charges resulting from our strategic initiatives), non-cash gains or losses on the sales of businesses relating to our strategic initiatives, other income or expense (consisting of non-cash changes in the fair value of our equity investments, non-cash gains or losses on foreign currency, non-cash gains or losses on sales of property and equipment, and non-cash gains or losses on modifications or terminations of leases), interest income or expense, and income tax provision or benefit.
Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. We believe that the following accounting estimates involve a high degree of judgment and complexity.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. We believe that the following accounting estimates involve a high degree of judgment and complexity.
(2) Includes depreciation and amortization expense of $12.4 million and $21.1 million for the years ended December 31, 2024 and 2023, respectively. 58 Table of Contents Year Ended December 31, 2024 2023 Consolidated Statements of Operations Data, as a Percentage of Net Revenue: Net revenue 100.0 % 100.0 % Cost of revenue 57.3 % 59.0 % Gross profit 42.7 % 41.0 % Operating expense: Selling, general, and administrative expense 70.3 % 68.5 % Marketing expense 21.9 % 19.3 % Impairment expense 0.9 % 10.8 % Restructuring expense 0.9 % 2.7 % Total operating expense 94.1 % 101.2 % Loss from operations (51.4) % (60.2) % Net loss from sales of businesses (0.2) % (1.1) % Interest income 1.8 % 1.6 % Other income (expense) 1.6 % (0.2) % Loss before provision for income taxes (48.2) % (59.9) % Income tax provision (1.0) % (0.1) % Net loss (49.2) % (60.0) % Other comprehensive loss: Foreign currency translation (loss) gain (1.2) % 0.1 % Total comprehensive loss (50.4) % (59.9) % Comparison of the Years Ended December 31, 2024 and 2023 Net Revenue Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Net revenue $ 189,757 $ 254,065 $ (64,308) (25.3) % Net revenue decreased by $64.3 million, or 25.3%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
(2) Includes depreciation and amortization expense of $8.0 million and $12.4 million for the years ended December 31, 2025 and 2024, respectively. 56 Table of Contents Year Ended December 31, 2025 2024 Consolidated Statements of Operations Data, as a Percentage of Net Revenue: Net revenue 100.0 % 100.0 % Cost of revenue 59.0 % 57.3 % Gross profit 41.0 % 42.7 % Operating expense: Selling, general, and administrative expense 60.7 % 70.3 % Marketing expense 29.7 % 21.9 % Impairment expense 2.8 % 0.9 % Restructuring expense 0.4 % 0.9 % Total operating expense 93.5 % 94.1 % Loss from operations (52.4) % (51.4) % Net loss from sales of businesses — % (0.2) % Interest (expense) income (0.7) % 1.8 % Other income 2.7 % 1.6 % Loss before provision for income taxes (50.4) % (48.2) % Income tax provision (0.3) % (1.0) % Net loss (50.7) % (49.2) % Other comprehensive loss: Foreign currency translation gain (loss) 1.2 % (1.2) % Total comprehensive loss (49.5) % (50.4) % Comparison of the Years Ended December 31, 2025 and 2024 Net Revenue Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Net revenue $ 152,466 $ 189,757 $ (37,291) (19.7) % Net revenue decreased by $37.3 million, or 19.7%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024.
We generally market directly to consumers via our localized digital platform and our physical footprint of 33 stores as of December 31, 2024. In addition to our direct business, we selectively partner with third parties, including distributors and retailers, to sell our products through their channels, which helps us reach more consumers and increase brand awareness.
We generally market directly to consumers via our localized digital platform. In addition to our direct business, we selectively partner with third parties, including distributors and retailers, to sell our products through their channels, which helps us reach more consumers and increase brand awareness.
Impairment expense Impairment expense decreased by $25.6 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, as a result of prior year non-cash impairment of property and equipment and operating lease right-of-use assets associated with certain of our retail stores of $27.4 million, partially offset by the impairment an equity investment of $1.8 million.
Impairment expense Impairment expense increased by $2.4 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily as a result of a non-cash impairment of property and equipment and operating lease right-of-use assets associated with certain of our retail stores of $3.5 million, partially offset by the prior year impairment of an equity investment of $1.8 million.
During 2024, net cash provided by investing activities was $2.1 million, which consisted primarily of $4.0 million of proceeds from the sales of certain of our international businesses and a decrease of $2.2 million in security deposits related to our closed retail stores, partially offset by $4.1 million cash outflows for the purchases of property and equipment to support the ongoing operations of our corporate development and retail stores.
During 2025, net cash used in investing activities was $1.9 million, which consisted primarily $3.1 million of cash outflows for the purchases of property and equipment, including capitalized software, to support the ongoing operations of our business, partially offset by a decrease of $0.9 million in security deposits related to our closed retail stores and $0.4 million of proceeds from the sales of certain of our international businesses.
Income Tax Provision Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Income tax provision $ (1,871) $ (334) $ (1,537) 460.2 % Income tax provision increased by $1.5 million, or 460.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates and a change in the valuation allowance.
Income Tax Provision Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Income tax provision $ (393) $ (1,871) $ 1,478 (79.0) % Income tax provision decreased by $1.5 million, or 79.0%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates and a change in the valuation allowance.
As of December 31, 2024, we had undiscounted operating lease commitments of $63.3 63 Table of Contents million, with $13.1 million payable within 12 months. See Note 13, Leases , of our consolidated financial statements included in Part II, Item 8, for more information regarding our operating lease commitments.
As of December 31, 2025, we had undiscounted operating lease commitments of $24.6 million, with $7.2 million payable within 12 months. See Note 13, Leases , of our consolidated financial statements included in Part II, Item 8, for more information regarding our operating lease commitments.
The decrease was primarily driven by a $11.4 million decrease in personnel and related expenses, an $8.6 million decrease in depreciation and amortization, a $7.9 million decrease in stock-based compensation, and a $6.2 million decrease in rent and utilities, as well as reductions in other types of operating expenses.
The decrease was primarily driven by a $18.3 million decrease in personnel and related expenses, a $10.0 million decrease in rent and utilities, a $4.4 million decrease in depreciation and amortization, and a $3.7 million decrease in stock-based compensation, as well as reductions in other types of operating expenses.
Inventory Purchase Obligations Inventory purchase obligations relate to a supplier agreement that requires us, through our manufacturers, to purchase a minimum quantity of materials per year. As of December 31, 2024, we had inventory purchase obligations of $9.5 million, with $0.9 million payable within 12 months.
Our material cash requirements include the following contractual and other obligations: Inventory Purchase Obligations Inventory purchase obligations relate to a supplier agreement that requires us, through our manufacturers, to purchase a minimum quantity of materials per year. As of December 31, 2025, we had inventory purchase obligations of $1.8 million, with $0.9 million payable within 12 months.
The continued execution of our customer acquisition strategy is key to acquiring more customers and driving growth and profitability for our business. Our ability to acquire more customers depends significantly on a number of factors, including the level and pattern of consumer spending in the product categories in which we operate and our ability to expand our brand awareness.
Our ability to acquire more customers depends significantly on a number of factors, including the level and pattern of consumer spending in the product categories in which we operate and our ability to expand our brand awareness.
The following table presents a reconciliation of adjusted EBITDA to its most comparable GAAP measure, net loss: Year Ended December 31, 2024 2023 (in thousands) (unaudited) Net loss $ (93,318) $ (152,458) Add (deduct): Stock-based compensation expense 11,472 19,346 Depreciation and amortization expense 12,439 21,058 Impairment expense 1,800 27,392 Restructuring expense 1,800 6,757 Net loss from sales of businesses 432 2,761 Other (expense) income (3,049) 436 Interest income (3,489) (4,076) Income tax provision 1,871 334 Adjusted EBITDA $ (70,042) $ (78,450) Adjusted EBITDA improved by $8.4 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The following table presents a reconciliation of adjusted EBITDA to its most comparable GAAP measure, net loss: Year Ended December 31, 2025 2024 (in thousands) (unaudited) Net loss $ (77,283) $ (93,318) Add (deduct): Stock-based compensation expense 7,763 11,472 Depreciation and amortization expense 7,999 12,439 Impairment expense 4,225 1,800 Restructuring expense 562 1,800 Net loss from sales of businesses — 432 Other expense (4,139) (3,049) Interest expense (income) 1,067 (3,489) Income tax provision 393 1,871 Adjusted EBITDA $ (59,413) $ (70,042) Adjusted EBITDA improved by $10.6 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024.
The change was primarily driven by the decline in revenue year over year. Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $66.7 million.
The change was primarily driven by the decline in revenue year over year, partially offset by the same factors as noted in the adjusted EBITDA discussion above. Liquidity and Capital Resources As of December 31, 2025, we had cash and cash equivalents of $26.7 million.
The change in operating assets and liabilities was primarily due to a decrease of $47.5 million in inventory due to lower inventory on hand. Investing Activities Net cash used in investing activities primarily relates to capital expenditures to support our growth and investment in property and equipment for expansion of our business, partially offset by proceeds from sale of businesses.
Investing Activities Net cash used in investing activities primarily relates to capital expenditures to support our growth and investment in property and equipment for expansion of our business, partially offset by proceeds from sale of businesses.
In the fourth quarter of 2024, we closed the operations of one store in the US. 2 In the third quarter of 2023, we transitioned the operations of three international stores to distributors.
In the second quarter of 2025, we closed the operations of four stores in the U.S. 2 In the third quarter of 2023, we transitioned the operations of three international stores to distributors.
Key Factors Affecting Our Performance Our financial and operating conditions have been, and will continue to be affected by a number of factors, including: 54 Table of Contents Ability to Grow Brand Awareness and Drive Efficient Customer Acquisition The ability to communicate our mission of making better things in a better way is integral to our success in engaging new customers and introducing them to our products and brand.
Ability to Grow Brand Awareness and Drive Efficient Customer Acquisition The ability to communicate our mission of making better things in a better way is integral to our success in engaging new customers and introducing them to our products and brand.
Interest Income Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Interest income $ 3,489 4,076 $ (587) (14.4) % Interest income decreased by $0.6 million, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Interest (Expense) Income Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Interest (expense) income $ (1,067) 3,489 $ (4,556) (130.6) % Interest (expense) income changed by $4.6 million, from income to expense, for the year ended December 31, 2025 as compared to the year ended December 31, 2024.
Restructuring expense Restructuring expense decreased by $5.0 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, and consisted primarily fewer costs incurred as part of our March 2023 strategic transformation plan.
Restructuring expense Restructuring expense decreased by $1.2 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily resulting from fewer costs incurred in 2025 as part of our strategic initiatives.
Cost of Revenue, Gross Profit, and Gross Margin Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Cost of revenue $ 108,693 $ 149,833 $ (41,140) (27.5) % Gross profit 81,064 104,232 $ (23,168) (22.2) % Gross margin 42.7 % 41.0 % 4.1 % Cost of revenue decreased by $41.1 million, or 27.5%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Cost of Revenue, Gross Profit, and Gross Margin Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Cost of revenue $ 89,915 $ 108,693 $ (18,778) (17.3) % Gross profit 62,551 81,064 $ (18,513) (22.8) % Gross margin 41.0 % 42.7 % (4.0) % Cost of revenue decreased by $18.8 million, or 17.3%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024.
During 2023, net cash used in operating activities was $30.2 million , which consisted of a net loss of $152.5 million and a net decrease of $43.8 million in our operating assets and liabilities, partially offset by non-cash charges of $78.4 million added back to net loss .
During 2025, net cash used in operating activities was $55.1 million, which consisted of a net loss of $77.3 million and a net decrease of $0.5 million in our operating assets and liabilities, partially offset by net non-cash items of $21.7 million added back to net loss.
Stock-Based Compensation We measure and recognize compensation expense for all stock-based awards, including stock options and restricted stock units, or RSUs, granted to employees, directors, and non-employees, and stock purchase rights granted under the 2021 ESPP, or ESPP Rights, to employees, based on the estimated fair value of the awards on the date of grant.
In making such estimates, we analyze historical returns, impact of seasonality, current economic and market trends, current business practices, and changes in customer demand and acceptance of our products. 64 Table of Contents Stock-Based Compensation We measure and recognize compensation expense for all stock-based awards, including stock options and restricted stock units, or RSUs, granted to employees, directors, and non-employees, and stock purchase rights granted under the 2021 ESPP, or ESPP Rights, to employees, based on the estimated fair value of the awards on the date of grant.
Execution of Our Vertical Retail Distribution and Omni-Channel Strategy and Optimization of Our Store Fleet Our long-term growth strategy relies on our ability to grow across our digital and retail channels, while still maintaining our goal of long-term profitability. We believe an omni-channel buying experience is important to meeting the needs of our customer base.
Execution of Our Vertical Retail Distribution and Omni-Channel Strategy and Optimization of Our Store Fleet Our long-term growth strategy relies on our ability to grow across multiple channels, while still maintaining our goal of long-term profitability. In 2025, we closed nine stores in the United States and 1 store in the United Kingdom.
The following table presents net loss and adjusted EBITDA as percentages of net revenue: Year Ended December 31, 2024 2023 (in thousands) (unaudited) Net revenue $ 189,757 $ 254,065 Net loss $ (93,318) $ (152,458) Net loss margin (49.2) % (60.0) % Adjusted EBITDA $ (70,042) $ (78,450) Adjusted EBITDA margin (36.9) % (30.9) % Adjusted EBITDA margin declined from (30.9)% to (36.9)% in the year ended December 31, 2024 compared to the year ended December 31, 2023.
The improvement in adjusted EBITDA was primarily due to lower operating expenses, partially offset by lower gross profit. 60 Table of Contents The following table presents net loss and adjusted EBITDA as percentages of net revenue: Year Ended December 31, 2025 2024 (in thousands) (unaudited) Net revenue $ 152,466 $ 189,757 Net loss $ (77,283) $ (93,318) Net loss margin (50.7) % (49.2) % Adjusted EBITDA $ (59,413) $ (70,042) Adjusted EBITDA margin (39.0) % (36.9) % Adjusted EBITDA margin declined from (36.9)% to (39.0)% in the year ended December 31, 2025 compared to the year ended December 31, 2024.
In the second quarter of 2024, we closed the operations of ten stores in the US. In the third quarter of 2024, we closed the operations of one store in the US.
In the third quarter of 2024, we closed the operations of one store in the U.S. In the fourth quarter of 2024, we closed the operations of one store in the U.S. In the first quarter of 2025, we closed the operations of five stores in the U.S.
Cash Flows Year Ended December 31, 2024 2023 (in thousands) Net cash used in operating activities $ (63,860) $ (30,222) Net cash provided by (used in) in investing activities 2,118 (7,712) Net cash provided by financing activities 287 640 Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash (1,635) 200 Net decrease in cash, cash equivalents, and restricted cash $ (63,090) $ (37,094) Operating Activities Our largest sources of operating cash are cash payments received from customers for sales of our products.
Subsequent to year end, in the first quarter of 2026, we closed our remaining full-price stores in the United States 62 Table of Contents Cash Flows Year Ended December 31, 2025 2024 (in thousands) Net cash used in operating activities $ (55,083) $ (63,860) Net cash (used in) provided by investing activities (1,903) 2,118 Net cash provided by financing activities 16,073 287 Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 882 (1,635) Net decrease in cash, cash equivalents, and restricted cash $ (40,031) $ (63,090) Operating Activities Our largest sources of operating cash are cash payments received from customers for sales of our products.
Other (Expense) Income Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Other (expense) income $ 3,049 $ (436) $ 3,485 (799.3) % 60 Table of Contents Other (expense) income increased by $3.5 million, for the year ended December 31, 2024 resulting in income in 2024 as compared to expense in the year ended December 31, 2023.
Other Income Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Other income $ 4,139 $ 3,049 $ 1,090 35.7 % Other income increased by $1.1 million, for the year ended December 31, 2025 as compared to expense in the year ended December 31, 2024.
The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to us and our subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, dividends and other distributions and a financial covenant that requires us to maintain a specified minimum fixed charge coverage ratio.
The Credit Agreement contains customary representations and warranties, and affirmative covenants and negative covenants applicable to the Company and certain of its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions of assets, dividends and other distributions, minimum unrestricted cash, and minimum consolidated EBITDA.
Our gross margin may fluctuate from period to period based on a number of factors, including business outcomes, the mix of products we sell in different geographies and channels, price increases, promotional activities, the innovation initiatives we undertake in each product category, cost drivers (including commodity prices, transportation rates, manufacturing costs), and inventory write-downs or write-offs, among other factors.
Our gross margin may fluctuate from period to period based on a number of factors, including business outcomes, the mix of products we sell in different geographies and channels, price increases, promotional activities, the innovation initiatives we undertake in each product category, cost drivers (including commodity prices, transportation rates, manufacturing costs), and inventory write-downs or write-offs, among other factors. 54 Table of Contents Operating Expense Selling, General, and Administrative expense Selling, general, and administrative expense (“SG&A expense”) consists of personnel and related costs including salaries, benefits, bonuses, and stock-based compensation for our corporate and retail employees, third-party professional fees, information technology, payment processing fees, fixed and variable lease costs for corporate offices and retail stores, depreciation and amortization, software costs, legal fees, and other administrative costs associated with operating the business.
As we continue to scale and build our global brand awareness, our goal is to acquire new customers in a cost-effective way. We will continue to evaluate our go-to-market strategy, both in the U.S. and internationally, and invest in customer acquisition while the underlying customer unit economics indicate the return on investment is strong.
We will continue to evaluate our go-to-market strategy, both in the U.S. and internationally, and invest in customer acquisition while the underlying customer unit economics indicate the return on investment is strong. The continued execution of our customer acquisition strategy is key to acquiring more customers and driving growth and profitability for our business.
Our primary uses of cash from operating activities are for personnel and related expenses, selling and marketing expenses, and third-party professional fees. We have generated negative operating cash flows and have supplemented working capital through net proceeds from the sale of equity securities, including proceeds from our IPO in November 2021.
We have generated negative operating cash flows and have supplemented working capital through net proceeds from the sale of equity securities, including proceeds from our IPO in November 2021 and sales under the ATM program, and borrowings under our Credit Agreement.
Our store count by primary geographical market is presented in the table below, as of the dates presented: Store Count by Primary Geographical Market December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 United States 1 42 42 44 45 45 42 32 31 30 International 2 16 17 18 15 15 15 11 3 3 Total 58 59 62 60 60 57 43 34 33 1 In the first quarter of 2024, we closed the operations of three stores in the US.
Our store count by primary geographical market is presented in the table below, as of the dates presented: Store Count by Primary Geographical Market December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 United States 1 45 42 32 31 30 25 21 21 21 International 2 15 15 11 3 3 3 3 2 2 Total stores 60 57 43 34 33 28 24 23 23 Growing Our Product Innovation Platform Innovation has been core to the Allbirds brand since our inception in 2015.
Financing Activities Net cash provided by financing activities in 2024 and 2023 was $0.3 million and $0.6 million, respectively, primarily due to net proceeds from the exercise of stock options and the issuance of common stock under the employee stock purchase plan, offset by taxes withheld on employee stock awards. 64 Table of Contents Critical Accounting Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP.
Net cash provided by financing activities in 2024 was $0.3 million, primarily due to net proceeds from the exercise of stock options and the issuance of common stock under the employee stock purchase plan, offset by taxes withheld on employee stock awards.
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
Critical Accounting Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures.
Our growth within our existing customer base will depend in part on our success focusing our product strategy to appeal to our existing customers.
At the same time, it is critical that we maintain our commitment to offering comfortable and sustainable products. Our growth within our existing customer base will depend in part on our success focusing our product strategy to appeal to our existing customers.
Results of Operations The following tables set forth our results of operations for the periods presented in dollars and as a percentage of net revenue: Year Ended December 31, 2024 2023 (in thousands) Consolidated Statements of Operations Data: Net revenue $ 189,757 $ 254,065 Cost of revenue 108,693 149,833 Gross profit 81,064 104,232 Operating expense: Selling, general, and administrative expense (1)(2) 133,379 174,044 Marketing expense 41,638 49,042 Impairment expense 1,800 27,392 Restructuring expense 1,800 6,757 Total operating expense 178,617 257,235 Loss from operations (97,553) (153,003) Net loss from sales of businesses (432) (2,761) Interest income 3,489 4,076 Other income (expense) 3,049 (436) Loss before provision for income taxes (91,447) (152,124) Income tax provision (1,871) (334) Net loss $ (93,318) $ (152,458) Other comprehensive loss: Foreign currency translation (loss) gain (2,345) 276 Total comprehensive loss $ (95,663) $ (152,182) ________________ (1) Includes stock-based compensation expense of $11.5 million and $19.3 million for the years ended December 31, 2024 and 2023, respectively.
Because we have a recent history of pre-tax book losses and are expected to be in a pre-tax book loss position in the near term, a valuation allowance was maintained against the deferred tax assets in the United States, China, Hong Kong, Canada, Germany and New Zealand as of December 31, 2025. 55 Table of Contents Results of Operations The following tables set forth our results of operations for the periods presented in dollars and as a percentage of net revenue: Year Ended December 31, 2025 2024 (in thousands) Consolidated Statements of Operations Data: Net revenue $ 152,466 $ 189,757 Cost of revenue 89,915 108,693 Gross profit 62,551 81,064 Operating expense: Selling, general, and administrative expense (1)(2) 92,488 133,379 Marketing expense 45,238 41,638 Impairment expense 4,225 1,800 Restructuring expense 562 1,800 Total operating expense 142,513 178,617 Loss from operations (79,962) (97,553) Net loss from sales of businesses — (432) Interest (expense) income (1,067) 3,489 Other income 4,139 3,049 Loss before provision for income taxes (76,890) (91,447) Income tax provision (393) (1,871) Net loss $ (77,283) $ (93,318) Other comprehensive loss: Foreign currency translation gain (loss) 1,807 (2,345) Total comprehensive loss $ (75,476) $ (95,663) ________________ (1) Includes stock-based compensation expense of $7.8 million and $11.5 million for the years ended December 31, 2025 and 2024, respectively.
Impairment Expense Impairment expense consists of non-cash impairment charges relating to equity investments and long-lived assets, which include property and equipment and operating lease right-of-use assets. Restructuring Expense Restructuring expense consists of professional service fees, severance and other employee-related benefits, and other miscellaneous costs associated with exit and disposal activities.
Restructuring Expense Restructuring expense consists of severance and other employee-related benefits, professional service fees, and other miscellaneous costs associated with exit and disposal activities.
Interest Income Interest income primarily consists of interest income generated from our cash and cash equivalents, offset by interest expense associated with our credit agreement with JPMorgan Chase Bank, N.A, which we refer to as our Credit Agreement. We expect interest income and expense to fluctuate based on our future bank balances, credit line utilization, and the interest rate environment.
We expect interest income and expense to fluctuate based on our future bank balances, credit line utilization, and the interest rate environment.
We aim to grow our closet share within our existing customer base by focusing and developing on our core franchises. We believe we must continue to both innovate with new products and focus on core products in order to drive consumer engagement and increase our closet share.
We aim to grow our closet share within our existing customer base by focusing and developing on our core franchises and introducing new products we believe will resonate with our customers. While we continue to do this, we must constantly evaluate and improve our strategy to anticipate current and future consumer preferences and demands.
Operating Expenses Year Ended December 31, 2024 2023 $ Change % Change (dollars in thousands) Operating expense: Selling, general, and administrative expense $ 133,379 $ 174,044 $ (40,665) (23.4) % Marketing expense 41,638 49,042 (7,404) (15.1) % Impairment expense 1,800 27,392 (25,592) (93.4) % Restructuring expense 1,800 6,757 (4,957) (73.4) % Total operating expense $ 178,617 $ 257,235 $ (78,618) (30.6) % Selling, general, and administrative expense Selling, general, and administrative expense decreased by $40.7 million, or 23.4%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Operating Expenses Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Operating expense: Selling, general, and administrative expense $ 92,488 $ 133,379 $ (40,891) (30.7) % Marketing expense 45,238 41,638 3,600 8.6 % Impairment expense 4,225 1,800 2,425 134.7 % Restructuring expense 562 1,800 (1,238) (68.8) % Total operating expense $ 142,513 $ 178,617 $ (36,104) (20.2) % Selling, general, and administrative expense Selling, general, and administrative expense decreased by $40.9 million, or 30.7%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024.
The Credit Agreement has a maturity date of April 17, 2026. As of December 31, 2024 and 2023, we had no outstanding balances under the Credit Agreement. See Note 6, Long-Term Debt , of our consolidated financial statements included in Part II, Item 8, for more information regarding the Credit Agreement.
See Note 6, Long-Term Debt , of our consolidated financial statements included in Part II, Item 8, for more information regarding the Credit Agreement. See Note 16, Subsequent Events , of our consolidated financial statements included in Part II, Item 8, for information on the Consent and First Amendment to Credit Agreement.
Further, we must continue to emphasize our commitment to people, the planet, and our stockholders in order to further increase our reach and highlight the integrity of our brand. We believe our brand strength will enable us to continue to grow brand awareness, allowing us to deepen relationships with consumers and expand our access to global markets.
We believe our brand strength will enable us to continue to grow brand awareness, allowing us to deepen relationships with consumers and expand our access to global markets. As we continue to scale and build our global brand awareness, our goal is to acquire new customers in a cost-effective way.
In addition, these initiatives may require ongoing investments that could delay our ability to achieve medium to long-term profitability. Ability to Scale Infrastructure for Profitable Growth To grow our business, we intend to continue to improve our operational and capital efficiencies and thoughtfully optimize our infrastructure. Our ability to scale relies upon our supply chain infrastructure.
In the third quarter of 2025, we closed the operations of one store in the U.K. 53 Table of Contents Ability to Scale Infrastructure for Profitable Growth To grow our business, we intend to continue to improve our operational and capital efficiencies and thoughtfully optimize our infrastructure. Our ability to scale relies upon our supply chain infrastructure.
The decrease in gross profit was primarily driven by the decrease in net revenue and associated cost of revenue. 59 Table of Contents Gross margin improved to 42.7% from 41.0% for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to lower freight and duty costs, fewer inventory adjustments and a higher average selling price in our direct business.
Gross margin declined to 41.0% from 42.7% for the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to a higher mix of digital and international distributor sales, as well as increased duties and lower average selling prices in our U.S. business.
The decrease was driven by an decrease in interest income on our money market funds.
The change was primarily driven by a decrease in interest income of 58 Table of Contents approximately $3.5 million on our money market funds and an increase in interest expense relating to our Credit Agreement.
The decrease was primarily driven by lower unit sales in our direct business and lower freight and duty costs per unit. Gross profit decreased by $23.2 million, or 22.2%, in the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The decreases were partially offset by approximately $1.0 million of increased duties costs. 57 Table of Contents Gross profit decreased by $18.5 million, or 22.8%, in the year ended December 31, 2025 as compared to the year ended December 31, 2024. The decrease in gross profit was primarily driven by the decreases in net revenue and cost of revenue.
Marketing expense Marketing expense decreased by $7.4 million, or 15.1%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease was primarily driven by decreased digital advertising spend for performance marketing.
Marketing expense Marketing expense increased by $3.6 million, or 8.6%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The increase was primarily driven by an investment in upper funnel marketing initiatives in the first quarter of the year.
Allbirds is still relatively unknown to consumers worldwide, underscoring a large opportunity to scale our customer base and drive future growth. Our continued focus on elevating our product offerings combined with our differentiated brand approach and authenticity is critical to attracting new customers and increasing closet share.
Our continued focus on elevating our product offerings combined with our differentiated brand approach and authenticity is critical to attracting new customers and increasing closet share. Further, we must continue to emphasize our commitment to people, the planet, and our stockholders in order 52 Table of Contents to further increase our reach and highlight the integrity of our brand.
Interest on borrowings under the Credit Agreement accrue at a variable rate equal to (i) the Term Secured Overnight Financing Rate (“SOFR”), plus (ii) 0.10%, plus (iii) a specified spread of 1.75% or 2.00% dependent on the average quarterly revolver availability, calculated on the last day of each fiscal quarter being greater than 20% of the total revolver commitments or less than or equal to 20% of the total revolver commitments, respectively.
Interest on borrowings under the revolving credit facility accrues at a variable rate equal to (i) the sum of the Term Secured Overnight Financing Rate (“SOFR”), plus (ii) 0.15%, plus (ii) a margin of 5.75% per annum. The commitment fee under the Credit Agreement is 0.45% per annum on the average daily unused portion of each lender’s commitment.
Marketing Expense Marketing expense consists of advertising costs incurred to acquire new customers, retain existing customers, and build our brand awareness. We expect marketing expense to increase in 2025 as we are prioritizing our marketing spend to align with our product strategy.
Marketing Expense Marketing expense consists of advertising costs incurred to acquire new customers, retain existing customers, and build our brand awareness. Impairment Expense Impairment expense consists of non-cash impairment charges relating to long-lived assets (including property and equipment and operating lease right-of-use assets) and equity investments.
The increase was primarily due to fluctuations in foreign currency.
The increase was primarily due to greater gains on the termination and modification of certain operating leases of approximately $0.4 million and fluctuations in foreign currency of approximately $0.3 million in the current period.
Removed
Recent Developments March 2023 Strategic Transformation In March 2023, we announced the implementation of a strategic transformation plan designed to reignite growth in the coming years, as well as improve capital efficiency, and drive profitability. The plan focuses on four key areas.
Added
Recent Developments In 2025, we maintained three key focus areas: product, marketing, and customer experience. The product focus area included the design and development of a variety of new product styles that were brought to market in the second half of 2025.
Removed
Our product and brand initiatives include increasing focus on our core franchises, through a concentration on comfort and quality and better commercialization of our innovative materials, as well as a highly focused brand strategy that reconnects with core consumers. Our store-based distribution initiatives in the United States include optimizing our existing store fleet and selectively expanding our third-party distribution channels.
Added
The marketing focus area included investments in upper funnel brand marketing, and campaigns under the Allbirds by Nature banner, with messaging reinforcing four key attributes: comfort, style, quality, and sustainability. The customer experience focus area included a redesigned website that launched during the year and optimization of our retail store fleet.
Removed
Store optimization will include slowing the pace of new store openings, closing certain stores that do not meet our profitability targets, and investing in corporate and retail store talent and store marketing. As of December 31, 2023, we had completed all planned new store openings and we continue to evaluate ways to optimize our existing store fleet.
Added
This included the closure of 10 Allbirds stores in 2025. In the second quarter of 2025, we entered into two financing agreements in order to optimize working capital and enhance financial flexibility. The first is a new asset-based revolving credit agreement, which replaced our prior revolving credit agreement.
Removed
In 2024, we closed 15 stores in the United States. Our international go-to-market strategy initiative encompasses evaluating ways to reduce complexity and grow internationally in a cost- and capital-efficient manner. In the third quarter of 2023, we signed distribution agreements with independent third-party distributors in South Korea and Canada, and completed the transition of these businesses.
Added
The second is a sales agreement, which may allow us to sell, from time to time, up to $50 million (subject to the “baby shelf” limitation in General Instruction I.B.6 of Form S-3) of shares of Class A common stock through an At-the-Market program.
Removed
In 2024, we signed distribution agreements with independent third-party distributors in Australasia, Japan, and China and completed the transition of these businesses. In addition, we signed various distribution agreements in new geographies, where no existing business was transitioned.
Added
Despite these focus areas, our performance in the fourth quarter of 2025 did not meet our net revenue expectations. Subsequent to year end, in the first quarter of 2026, we closed our remaining full-price stores in the United States, which also resulted in a reduction in force.
Removed
Distributors oversee the distribution of our products, purchased from us, across eCommerce, brick and mortar, and wholesale channels in their respective territories and are required to allocate dedicated brand and marketing resources to their operations for us.
Added
Our board of directors formally engaged advisors to conduct a strategic alternatives process that began during the fourth quarter of 2025 and culminated in the Company entering into a definitive agreement during the first quarter of 2026 with an affiliate of American Exchange Group to sell substantially all of the assets of the Company (the “Asset Sale”).
Removed
We may continue to enter into similar distribution arrangements with third parties in other international markets, which we expect to impact both our short and long term results of operations.
Added
In addition, in the first quarter of 2026, the Company entered into the Consent and First Amendment to Credit Agreement in connection with the Asset Sale. See Note 16, Subsequent Events , of our consolidated financial statements included in Part II, Item 8, for more information.
Removed
The distributor model will result in a reduction to net revenue and gross profit in the near term, because the selling price to distributors will be below the full price we have historically sold to our direct consumers.
Added
Key Factors Affecting Our Performance Our financial and operating conditions have been, and will continue to be affected by a number of factors, including: Liquidity and Capital Resources Recent financial performance, including a net loss of $77.3 million and net cash used in operating activities of $55.1 million in the year ended December 31, 2025, has raised substantial doubt about the Company’s ability to continue as a going concern.
Removed
Because we expect lower operating expenses as compared to the direct model, we also expect these transitions to improve adjusted EBITDA profitability and inventory efficiency, while also helping to reduce overall complexity in our business.

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