Smartbird, Inc.

Thank you for standing by and welcome to Allbirds' second quarter 2025 earnings conference call. I would now like to turn the call over to Christine Greenie, Investor Relations.

Good afternoon everyone and thank you for joining us. With me on the call today are Joe Vernaccio, CEO, and Annie Mitchell, CFO. During this call, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about these risks, please review the company's SEC filings, including the section titled Risk Factors in our report on Form 10Q for the quarter ending March 31, 2025, for a more detailed description of the risk factors that may affect our results. These forward-looking statements are based on information as of August 7, 2025, and except as required by law, we assume no obligation to publicly update or revise our forward-looking statements. Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of our non-GAAP measures to the most directly comparable measures can be found to the extent reasonably available in today's earnings release. Now I would like to turn the call over to Joe to begin the formal remarks. Joe?

Good afternoon everyone. Thanks for joining us today. We're pleased to conclude the first half of the year well positioned for what's ahead. Our operating and financial results reflect strong execution among our teams and continued progress on our path to reignite the Allbirds brand. In the second quarter, we delivered top-line results at the high end of our expectations and adjusted EBITDA exceeded our guidance range. The pace of change and the progress we've made over the past several quarters is significant and has set the stage for growth. Over the past year, we've been focusing on strengthening the foundation of our business, making it leaner, more efficient and better positioned for long-term success. And most recently, we took actions to enhance our financial position. With that groundwork firmly in place, we've reignited the engine that powers our future, product, marketing and the customer experience. What's now coming to life is a carefully sequenced strategy to reintroduce Allbirds, starting from our roots and building toward a clear, reimagined future as a modern lifestyle footwear brand. Beginning this month and continuing through the end of the year, we plan to drop new products every month and introduce new marketing content every week. We are confident in what the future holds as we turn the page on a new era of growth. The current macro environment creates some uncertainty around consumer spending, but it does not change our conviction in the work we have done and the compelling product marketing and customer experience we're bringing to the market. The reintroduction of our brand, our products and our new sensibility began in earnest in July. We started with the Tree Runner NZ, an improved version of our best-selling style, familiar but better. Alongside it, the Cruiser, brand new and also crafted from our signature eucalyptus-derived tree material. Shoes for people on the move, traveling in the hot weather, chasing summer daylight. Just this week, we return to our roots, retelling our origin story through the Wool Runner NZ. As one of our most beloved styles, it continues to be the purest expression of who we are. This relaunch gave the silhouette a fresh perspective, putting merino wool, breathable, luxurious and naturally derived, back in the spotlight. With it, we honored both the design and the material that first put Allbirds on the map a decade ago. Next, we plan to introduce the new Wool Cruiser in more than 15 colorways. This bold expression of color will come to life through a special collaboration, reinforcing a quality customers have always loved about us, vibrant, joyful color. As we head into autumn, we expect to launch our first ever waterproof collection. Perfectly timed for cold mornings, wet commutes and slushy sidewalks. Then in November, we have plans to debut the Kiwi collection. A slipper, a clog and a low boot. Footwear designed for life at home and quick trips out, to the mailbox, the market or a neighbor's doorstep. Cozy, step and comfort and intentionally casual. These styles are made for how people really live during the holidays. Not dressed up, but warm, easy and inviting. This season, we're introducing a broader range of new styles and materials than ever before, bringing depth, discovery and innovation across the line. We're expanding into new textures and finishes like velvet, tweed and sculpted knit patterns. With new drops expected to arrive every few weeks. In total, we expect to launch 19 new styles this season, a major step forward from a year ago. Perhaps the most interesting of these is Remix. We're once again highlighting our commitment to making better things in a better way with the launch of Remix. A step forward in circularity. In partnership with Blue Maka, a leader in foam upcycling and Cirque, a pioneer in textile to textile recycling. We're giving manufacturing waste a second life. On the new runner and cruiser platform, we will turn foam scraps, textile waste, polycotton blends, material destined for landfill into beautiful, comfortable shoes. We've often said that to win in this market, you need a relentless flow of compelling product and we're delivering on that. Our new product launches are now wrapped in a wave of fresh marketing content. Breaking through today's crowded landscape requires both volume and variety and we're responding by dramatically scaling our output. Where we once created 5 to 10 assets per month, we're now producing over 100. This marks a meaningful shift in our marketing approach aimed at significantly expanding our reach and impact. These additional assets will significantly fuel our paid media strategy. Beyond paid media, we're activating the brand through high impact PR and experiential efforts. For example, we recently placed ads in TSA security trays across all terminals at Seattle Airport, a strong market for us. We're also hosting PR events and store activations in New York and San Francisco, supported by tactics like wild postings around our store locations. Together, these immersive and intentional efforts are designed to reengage our existing consumers and invite new ones into the brand. On the customer experience front, we went live with a fully redesigned website in mid-July. The site features modern navigation, richer product detail pages, and an updated aesthetic that reflects our brand evolution. We're thrilled with the design and functionality and anticipate this will drive improved dwell times and higher conversion rates. For our in-store shoppers, we're refreshing our fleet. With relatively modest updates to layout, fixtures, navigation, and merchandising, we've significantly improved the in-person experience. Enhancing the way people shop and engage with the brand. After completing refreshes at three locations, San Francisco, New York City, and the Stanford Shopping Center, we are seeing measurable increases in the average daily sales performance. This gives us confidence in our strategy. We plan to continue refreshing additional locations with more coming in the next few months. Looking further ahead into the first half of 2026, our commitment to our three focus areas remains just as strong. On the product innovation front, two key launches help illustrate what's next. First, we plan to debut a new material that we have branded Teralux. It's an innovative material designed to provide leather-like aesthetics and performance. It looks and feels and performs like leather. Made using plant proteins, biopolymers, and recycled materials that would otherwise be put in landfill, Teralux will anchor a curated castle called the Elevated Collection. Designed to meet rising consumer demand for comfort in more refined, style-forward moments. We believe this category represents a significant growth opportunity and anticipate bringing it to market in early 2026. Also planned to launch next year is our Aerie material, a new upper mesh fabric derived from our popular tree fiber and engineered for lightweight breathability and all-day cooling during the hottest months of the year. It's another example of how we're using material innovation to meet consumer demand. These are just two of many innovations in the pipeline, each one advancing our mission to lead in comfort, style, and sustainability. In late May, we held our Spring 2026 sales meeting where we previewed what's coming for our external partners. Over the course of two days, we hosted our distributors from around the world as well as our new sales agents representing the US marketplace. The assortment was very well received and it was validating to receive such positive feedback from our trusted partners who have a keen sense of the market. With the product momentum we're building, we believe we're now better positioned to advance our wholesale channel strategy. With the broadest assortment Alvarez has ever had, we're beginning to sell into footwear specialty accounts for Spring 2026. We're taking a very deliberate and measured approach to the channel, one that grows over the seasons to come. Entering the second half of the year, taking into account the global macro environment, we're assuming a more conservative view of the top line. However, what's unchanged is our expectation that the convergence of our initiatives will drive sales growth in the fourth quarter. We've been talking about this moment for many quarters and now it's here. Live in the marketplace today is the first wave of our new product, marketing and customer experience. We invite you to explore the new site, try the new shoes and experience the storytelling. We're proud of this reintroduction of Alvarez and confident that it marks the beginning of a new chapter that will drive growth. Building a strong foundation for sustained profitability and create long-term shareholder value. Before turning the call to Annie, I'd like to thank our teams who have remained laser focused on our plans. We would not have reached this important juncture without their hard work and strong desire to win.