Item 7. 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. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included under Part I, Item 1A, above.
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.
We generate our revenue via sales of footwear and apparel products, primarily through our direct business, a digitally-led vertical retail distribution strategy. 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.
Designing and creating products using innovative, sustainable materials is a challenging process for both us and our supply chain partners. 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.
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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 a financial measure that is not calculated in accordance with generally accepted accounting principles in the United States, or GAAP. See the section titled “Non-GAAP Financial Measures” below for the definition of adjusted EBITDA, as well as a reconciliation of adjusted financial measures to their most directly comparable GAAP financial measures.
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. 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. 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. 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.
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.
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”). 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.
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. Refer to the section titled Liquidity and Capital Resources and Note 2 to the consolidated financial statements included in this Form 10-K for additional information.
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. 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
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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.
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. 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. We also partner with select third-party retailers and distributors to sell our products in our effort to reach more consumers and build brand awareness.
Growth Within Existing Customer Base and Increasing Closet Share
In addition to seeking to acquire new customers, we continuously seek ways to engage with our base of existing customers. 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. 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.
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. In the first quarter of 2026, we closed our remaining full-price United States stores, in order to build a simpler and more profitable business, and continue to operate two outlet stores in the United States and two stores in the United Kingdom. We believe an omni-channel buying experience is important to meeting the needs of our customer base, and are focused on dedicating resources toward our e-commerce platform, our third-party marketplace platform, wholesale partnerships with other retailers, and international distributorships.
Our store count by primary geographical market is presented in the table below, as of the dates presented:
Store Count by Primary Geographical Market
Growing Our Product Innovation Platform
Innovation has been core to the Allbirds brand since our inception in 2015. Our future innovation and product pipeline will depend, in part, on our ability to apply our expertise in materials science to source and commercialize materials that are sustainable, durable, and comfortable. Our success in leveraging these materials in our products is partially reliant on the ability of our manufacturing and supply chain partners to produce and distribute these materials at scale. It also takes months of testing before we commercialize new materials and products, which could cause delays in our existing growth plans. In addition, these initiatives may require ongoing investments that could delay our ability to achieve medium to long-term profitability.
1 In the first quarter of 2024, we closed the operations of three stores in the U.S. In the second quarter of 2024, we closed the operations of ten stores in the U.S. 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. 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. 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. In the third quarter of 2025, we closed the operations of one store in the U.K.
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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. We believe our investments in direct and meaningful relationships with all of our partners, from raw materials suppliers to Tier 1 manufacturers and logistics providers, helps put us on a path of achieving profitable growth in the future. We will continue to make similar investments in developing relationships across the full supply chain. Most importantly, we are firmly committed to reducing our carbon footprint and our environmental impact. This commitment may require current and future investments, which may result in higher expenses.
Current Macroeconomic Conditions and Trends
Consumers are increasingly becoming more conscious of the products they purchase and are seeking brands that are responsible and purpose-driven. Consumers’ increasing care in the products and brands they trust has contributed to continued demand for our products. Our status as a PBC and a B Corp highlight our commitment to sustainability and our purpose while providing an objective reference point for consumers. As a purpose-native company, we believe we are well-positioned at the intersection of key macro trends impacting our industry.
However, we continue to monitor and respond to evolving developments regarding recent macroeconomic events including elevated inflation, tariffs, rising interest rates, liquidity concerns at, and failures of, banks and other financial institutions, supply chain disruptions, fluctuations in currency exchange rates, and geopolitical conflicts, which have led to further economic uncertainty in the global economy. These macroeconomic conditions have had and are likely to continue to have adverse consequences on consumer spending, including the buying patterns of our customers and prospective customers. See the section titled “Risk Factors—Risks Related to Our Business, Brand, Products, and Industry” in Part I, Item 1A. Risk Factors, for further details.
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.
Components of Results of Operations
Net Revenue
We generate net revenue primarily from sales of our footwear and apparel products. We sell products directly through our own digital channels (including our websites, our discontinued mobile app, and marketplace platforms), our leased retail stores, and third-party retailers and distributors. 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.
Cost of Revenue
Cost of revenue consists primarily of the cost of purchased inventory, inbound and outbound shipping costs, import duties, distribution center and related equipment costs, and inventory write-downs or write-offs. 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.
Gross Profit and Gross Margin
Gross profit represents net revenue less the cost of revenue. Gross margin is gross profit expressed as a percentage of net revenue. 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.
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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.
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.
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.
Net Loss from Sales of Businesses
Net loss from sales of businesses consists of gains or losses associated with the sale of certain net assets used in connection with the operation of our businesses in certain geographical markets, based on the difference between the net book value of assets and liabilities sold against the consideration received.
Interest (Expense) Income
Interest expense is primarily associated with our credit agreement with Second Avenue Capital Partners, which we refer to as our Credit Agreement. Interest income primarily consists of interest income generated from our cash and cash equivalents. We expect interest income and expense to fluctuate based on our future bank balances, credit line utilization, and the interest rate environment.
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.
Income Tax Provision
Our provision for income taxes consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We record deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities. The deferred tax assets and liabilities are calculated by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. 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.
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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,
(in thousands)
Consolidated Statements of Operations Data:
Operating expense:
Net loss from sales of businesses — (432)
Loss before provision for income taxes (76,890) (91,447)
Other comprehensive loss:
Foreign currency translation gain (loss) 1,807 (2,345)
________________
(1)Includes stock-based compensation expense of $7.8 million and $11.5 million for the years ended December 31, 2025 and 2024, respectively.
(2)Includes depreciation and amortization expense of $8.0 million and $12.4 million for the years ended December 31, 2025 and 2024, respectively.
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Year Ended December 31,
Consolidated Statements of Operations Data, as a Percentage of Net Revenue:
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) %
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,
(dollars in thousands)
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. The decrease was primarily driven by a decrease in our U.S. direct business of $23.1 million, driven by declines in our retail and e-commerce businesses resulting from store closures. Net revenue also declined in our international business by $11.9 million, primarily due to our transition to third-party distributors.
Cost of Revenue, Gross Profit, and Gross Margin
Year Ended December 31,
(dollars in thousands)
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. The decrease was primarily driven by decreases in product costs of approximately $12.5 million, freight costs of approximately $2.7 million, and distribution center expenses of $2.5 million, which were all driven by fewer unit sales in our U.S. direct business, the shift to international distributors, and U.S. retail store closures. The decreases were partially offset by approximately $1.0 million of increased duties costs.
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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.
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.
Operating Expenses
Year Ended December 31,
(dollars in thousands)
Operating expense:
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 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.
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.
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.
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. In 2025, restructuring expenses related to severance and other employee-related benefits were incurred as a result of strategic actions taken in the fourth quarter. In the prior year, restructuring expenses related to severance and other employee-related benefits, and professional service fees.
Interest (Expense) Income
Year Ended December 31,
(dollars in thousands)
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. The change was primarily driven by a decrease in interest income of
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approximately $3.5 million on our money market funds and an increase in interest expense relating to our Credit Agreement.
Other Income
Year Ended December 31,
(dollars in thousands)
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 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.
Income Tax Provision
Year Ended December 31,
(dollars in thousands)
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.
Non-GAAP Financial Measures
This Annual Report on Form 10-K and accompanying financial tables include references to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures. We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, are useful to investors as they are widely used measures of performance, and the adjustments we make to these non-GAAP financial measures provide investors further insight into our profitability and additional perspectives in comparing our performance to other companies and in comparing our performance over time on a consistent basis. These non-GAAP financial measures should not be considered as alternatives to net loss or net loss margin as calculated and presented in accordance with GAAP.
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.
Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue.
There are a number of limitations related to the use of these non-GAAP financial measures. 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;
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•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.
Further, other companies, including companies in our industry, may calculate these non-GAAP financial measures differently, which reduces their usefulness as comparative measures. Because of these limitations, we consider, and investors should consider, these non-GAAP financial measures together with other operating and financial performance measures presented in accordance with GAAP.
The following table presents a reconciliation of adjusted EBITDA to its most comparable GAAP measure, net loss:
Year Ended December 31,
(in thousands)(unaudited)
Add (deduct):
Depreciation and amortization expense 7,999 12,439
Net loss from sales of businesses — 432
Adjusted EBITDA improved by $10.6 million in the year ended December 31, 2025 as compared to the year ended December 31, 2024. The improvement in adjusted EBITDA was primarily due to lower operating expenses, partially offset by lower gross profit.
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The following table presents net loss and adjusted EBITDA as percentages of net revenue:
Year Ended December 31,
(in thousands)(unaudited)
Net loss margin (50.7) % (49.2) %
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. 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. Following our IPO in 2021, we have funded our operations primarily from the sale of our products and recently through borrowings under our Credit Agreement. Management’s evaluation of the Company’s ability to continue as a going concern for the twelve-month period following the date on which the financial statements are available for issuance indicated certain negative conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern, including a net loss of $77.3 million and net cash used in operating activities was $55.1 million in the year ended December 31, 2025. As of December 31, 2025, the Company had $26.7 million in cash and cash equivalents and $17.4 million outstanding on its Credit Agreement. The Company expects to continue to incur net losses and negative cash flows from operating activities, and the Company does not expect to continue its operations following the completion of the Asset Sale (as defined in Note 16 to our consolidated financial statements included in this Annual Report on Form 10-K). If the Asset Sale is not completed for any reason, we do not anticipate we would be able to meet our future liquidity needs without accessing additional capital or engaging in strategic transactions which are not within our control and are subject to various risks and uncertainties. See Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
Our material cash requirements are primarily for working capital, and may vary materially from those currently planned and will depend on many factors, including cash on hand and cash flows from operations, borrowings under our Credit Agreement, waivers or modifications concerning our existing debt obligations and the Asset Sale. We anticipate that following the closing of the Asset Sale, we will not have any remaining operations and will wind up our assets, liabilities and affairs under a plan of dissolution, after which proceeds will be distributed to common stockholders.
Our material capital resources include the following:
Debt
On February 20, 2019, we entered into a credit agreement with JPMorgan Chase Bank, N.A. (the “Prior Credit Agreement”), providing for a revolving line of credit of up to $40.0 million, subject to a borrowing base formula, and an optional accordion, which, if exercised, would have allowed us to increase the aggregate commitment by up to $35.0 million, subject to obtaining additional lender commitments and satisfying certain conditions. The Prior Credit Agreement was amended on April 17, 2023 to, among other things, (i) increase the committed amount from $40.0 million to $50.0 million, subject to a borrowing base formula, (ii) increase the uncommitted incremental borrowing capacity from $35.0 million to $50.0 million, (iii) increase the interest rate margin by 0.50%, (iv) extend the maturity date from February 20, 2024 to April 17, 2026 and (v) provide that a Dominion Event Date (as defined therein) would occur on any date on which Availability (as defined therein) was less than 25.0% of the Aggregate Revolving Commitments (as defined therein). In connection with entry into the Credit Agreement, we repaid and fully discharged our obligations under the Prior Credit Agreement.
On June 30, 2025, we entered into a secured $50.0 million revolving credit agreement with Second Avenue Capital Partners LLC (the “Credit Agreement”). The borrowing capacity is subject to a borrowing base formula relating to the
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value of our eligible assets, and under the revolving credit facility may be increased up to an additional $25.0 million, subject to obtaining additional lender commitments and satisfying certain conditions.
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.
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. 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.
The Credit Agreement has a maturity date of June 30, 2028. As of December 31, 2025, there was $17.3 million outstanding under the Credit Agreement. As of December 31, 2024, there were no borrowings outstanding under the Prior 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.
ATM Offering
In June 2025, we entered into an “at-the-market offering” (“ATM”) program with TD Securities (USA) LLC (“TD Cowen”), pursuant to which we may offer and sell, from time to time, through TD Cowen or its affiliates, acting as sales agents, shares of our common stock having an aggregate offering price of up to $50 million (subject to the “baby shelf” limitation in General Instruction I.B. 6 of Form S-3). Under the ATM, the sales agents may sell shares by any method deemed to be an “at-the-market offering.” During the year ended December 31, 2025, we sold 386,289shares of Class A common stock under the ATM program for net proceeds of $1.7 million.
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. See Note 12, Commitments and Contingencies, of our consolidated financial statements included in Part II, Item 8, for more information regarding our inventory purchase obligations.
Operating Leases
We lease various office and retail spaces for our operations with lease terms ranging from 1 year to 12 years, certain of which contain renewal provisions. 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. Subsequent to year end, in the first quarter of 2026, we closed our remaining full-price stores in the United States
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Cash Flows
Year Ended December 31,
(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
Operating Activities
Our largest sources of operating cash are cash payments received from customers for sales of our products. 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 and sales under the ATM program, and borrowings under our Credit Agreement.
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.
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. The change in operating assets and liabilities was primarily due to a decrease of $8.3 million for operating lease right of use assets and short-term and long-term lease liabilities as a result of retail store closures, partially offset by a decrease of $3.0 million in inventory as a result of lower on-hand inventory, a decrease of $4.1 million in prepaid expenses and other current assets due to a decrease in tax and other receivables, and an increase of $2.6 millionin accounts payable due to timing of payments made.
During 2024, net cash used in operating activities was $63.9 million, which consisted of a net loss of $93.3 million and a net decrease of $0.3 million in our operating assets and liabilities, partially offset by non-cash charges of $29.7 million added back to net loss. The change in operating assets and liabilities was primarily due to a decrease of $11.3 million for operating lease right of use assets and short-term and long-term lease liabilities as a result of retail store closures, partially offset by a decrease of $6.9 million in inventory as a result of lower on-hand inventory, a decrease of $2.0 million in accounts receivable due to timing of payments received, a decrease of $1.6 million in prepaid expenses and other current assets due to a decrease in tax and other receivables, and an increase of $1.0 million in accounts payable due to timing of payments made.
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.
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.
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.
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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 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.
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. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. 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. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of our operations. See Note 2, Significant Accounting Policies, in the notes to our consolidated financial statements included in Part II, Item 8, for a description of our other significant accounting policies and estimates.
Inventory
Inventory consists of finished goods, stated at the lower of cost or net realizable value. We value our inventory using the weighted-average cost method and include product costs from our suppliers, freight, import duties and other landing costs. We periodically review inventory and record write-downs as necessary to appropriately value end of life, slow-moving, damaged, and excess inventory. To determine if the value of inventory requires a write-down, we estimate the net realizable value of inventory by considering current and anticipated demand, customer preferences and buying trends, the age of the merchandise, and product quality. Inventory write-downs are recognized in cost of revenue in the consolidated statements of operations and comprehensive loss. Our reserve estimates require us to make assumptions based on the current rate of sales, age of inventory, salability and profitability of inventory, all of which may be affected by changes in our product mix and consumer preferences. These adjustments are estimates which could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, customer demand or other factors differ from expectations.
Revenue Recognition
Our primary source of revenue is from sales of shoes and apparel products. We determine revenue recognition in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. Revenue is recognized when transfer of control to the customer has occurred, based on the terms of sale. 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. The transaction price is determined based upon the invoiced sales price, less anticipated sales returns from and discounts to customers. As customers may return products, we record a reserve for estimated product returns in each reporting period as a reduction of net revenue. We record the expected customer refund liability as a reduction to revenue, and the expected inventory right of recovery as a reduction of cost of revenue. Returned assets related to the refund liability are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. We believe revenue recognition is subject to uncertainty as actual return costs can differ from previous estimates based on the amount of customer returns or exchanges, which would result in adjustments to the amount of liability and corresponding revenue in the period in which such differences occur. 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.
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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. The fair value of each stock option and ESPP Right granted is estimated using the Black-Scholes option-pricing model. The fair value of each RSU award is based on the estimated fair value of our common stock on the date of grant. Compensation expense is generally recognized as expense on a straight-line basis over the service period based on the vesting requirements. We recognize forfeitures as they occur.
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. 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. Previously recognized compensation expense is not reversed if PSUs for which the requisite service has been rendered have vested and the market condition has not been met.
Recent Accounting Pronouncements
For information on recent accounting pronouncements, see Note 2, Significant Accounting Policies, in the notes to our consolidated financial statements included in Part II, Item 8.
Emerging Growth Company Status
We are currently an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and, as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until December 31, 2026, the last day of the fiscal year following the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.235 billion in annual gross revenue, we have more than $700.0 million in market value of our Class A stock held by non-affiliates or we issue more than $1.0 billion of non-convertible debt securities over a three-year period.
Smaller Reporting Company Status
We are currently a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act and therefore qualify for reduced disclosure requirements for smaller reporting companies.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
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Item 8. Financial Statements and Supplementary Data
ALLBIRDS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID:34) 67
Consolidated Balance Sheets 68
Consolidated Statements of Operations and Comprehensive Loss 69
Consolidated Statements of Stockholders’ Equity 70
Consolidated Statements of Cash Flows 71
Notes to Consolidated Financial Statements 73
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Allbirds, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Allbirds, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has experienced recurring net losses and negative cash flows that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
San Francisco, California
March 30, 2026
We have served as the Company’s auditor since 2017.
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ALLBIRDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
Assets
Current assets:
Prepaid expenses and other current assets 9,712 13,536
Liabilities and stockholders’ equity
Current liabilities:
Accrued expenses and other current liabilities 14,401 18,821
Noncurrent liabilities:
Other long-term liabilities — 29
Commitments and contingencies (Note 12)
Stockholders’ equity:
Accumulated other comprehensive loss (3,874) (5,681)
Total liabilities and stockholders’ equity $ 109,419 $ 188,879
See accompanying notes to consolidated financial statements.
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ALLBIRDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
Year Ended December 31,
Operating expense:
Selling, general, and administrative expense 92,488 133,379
Net loss from sales of businesses — (432)
Loss before provision for income taxes (76,890) (91,447)
Net loss per share data:
Other comprehensive loss:
Foreign currency translation gain (loss) 1,807 (2,345)
See accompanying notes to consolidated financial statements.
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ALLBIRDS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
Shares Amount Shares Amount
Exercise of stock options — — 1,250 — 52 — — 52
Vesting of restricted stock units 217,997 — — — — — — —
Comprehensive income — — — — — (2,345) — (2,345)
Exercise of stock options — $ — 2,756 $ — $ 4 $ — $ — $ 4
Vesting of restricted stock units 302,031 — — — — — — —
Conversion of Class B shares into Class A common stock 2,781 — (2,781) — — — — —
Stock-based compensation — — — — 7,876 — — 7,876
Comprehensive loss — — — — — 1,807 — 1,807
See accompanying notes to consolidated financial statements.
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ALLBIRDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance costs 482 8
Loss on disposal of assets 391 —
Net loss from sales of businesses — 459
Gift card breakage (1,995) —
Changes in assets and liabilities:
Prepaid expenses and other current assets 4,078 1,624
Accounts payable and accrued expenses 2,592 1,016
Other long-term liabilities (29) (9)
Net cash used in operating activities (55,083) (63,860)
Cash flows from investing activities:
Purchase of property and equipment (3,145) (4,095)
Proceeds from sales of businesses 390 4,010
Changes in security deposits 852 2,203
Net cash (used in) provided by investing activities (1,903) 2,118
Cash flows from financing activities:
Proceeds from line of credit 19,226 —
Payments on line of credit (1,855) —
Proceeds from the exercise of stock options 8 34
Taxes withheld and paid on employee stock awards (4) (1)
Payment of deferred financing costs (3,118) —
Net cash provided by financing activities 16,073 287
Net decrease in cash, cash equivalents, and restricted cash (40,031) (63,090)
Cash, cash equivalents, and restricted cash—beginning of year 67,583 130,673
Cash, cash equivalents, and restricted cash—end of year $ 27,552 $ 67,583
Supplemental disclosures of cash flow information:
Cash paid for interest $ 58 $ 124
Noncash investing and financing activities:
Purchase of property and equipment included in accrued liabilities $ 24 $ 54
Reconciliation of cash, cash equivalents, and restricted cash:
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ALLBIRDS, INC.
Year Ended December 31,
Restricted cash included in prepaid expenses and other current assets 862 851
Total cash, cash equivalents, and restricted cash $ 27,552 $ 67,583
See accompanying notes to consolidated financial statements.
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ALLBIRDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
1. Description of Business
Allbirds, Inc. (“Allbirds” and, together with its wholly owned subsidiaries, the “Company,” “we,” or “our”) was incorporated in the state of Delaware on May 6, 2015. Headquartered in San Francisco, California, Allbirds is a global lifestyle brand that innovates with sustainable materials to make better footwear and apparel products in a better way, while treading lighter on our planet. The majority of our revenue is from sales directly to consumers via our digital and retail channels.
2. Significant Accounting Policies
Basis of Preparation—The consolidated financial statements have been presented in U.S. dollars and prepared in accordance with United States generally accepted accounting principles (“GAAP”). Certain monetary amounts, percentages, and other figures included elsewhere in these consolidated financial statements and accompanying notes have been subject to rounding adjustments. As such, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
Going Concern—Accounting Standards Codification (ASC) 205-40, Presentation of Financial Statements - Going Concern requires management to evaluate an entity’s ability to continue as a going concern for the twelve-month period following the date on which the financial statements are available for issuance. Such an evaluation indicated certain negative conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern. During the year ended December 31, 2025, the Company incurred a net loss of $77.3 million and net cash used in operating activities was $55.1 million. As of December 31, 2025, the Company had $26.7 million in cash and cash equivalents and $17.4 million outstanding on its asset-based revolving credit facility (refer to Note 6, for further information). The Company expects to continue to incur net losses and negative cash flows from operating activities, and the Company does not expect to continue its operations following the completion of the Asset Sale (as defined in Note 16). If the Asset Sale is not completed for any reason, we do not anticipate we would be able to meet our future liquidity needs without accessing additional capital or engaging in strategic transactions which are not within our control and are subject to various risks and uncertainties.
The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Reverse Stock Split—On August 30, 2024, following stockholder and Board of Directors’ approval, we announced that we had filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Ninth Amended and Restated Certificate of Incorporation (the “Certificate”) to effect a reverse stock split (the “Reverse Stock Split”) of the Company’s Class A common stock and Class B common stock (together the “common stock”), at a ratio of 1-for-20, effective as of 5:00 p.m. Eastern Standard Time on September 4, 2024 (the “Effective Time”). Accordingly, each holder of common stock owned fewer shares of common stock as a result of the Reverse Stock Split. However, the Reverse Stock Split affected all holders of common stock uniformly and did not affect any stockholder’s percentage ownership interest in the Company, except to the extent that the Reverse Stock Split resulted in an adjustment to a stockholders’s ownership of common stock due to the treatment of fractional shares in the Reverse Stock Split. Therefore, voting rights and other rights and preferences of the holders of Common Stock were not affected by the Reverse Stock Split (other than as a result of the treatment of fractional shares). Common stock issued pursuant to the Reverse Stock Split remained fully paid and nonassessable, without any change in the par value per share.
No fractional shares were issued as a result of the Reverse Stock Split. Instead, each stockholder received a cash payment equal to the fraction of which such stockholder was otherwise entitled multiplied by the closing price per share of Class A common stock on the date of the Effective Time as reported by Nasdaq (as adjusted to give effect to the Reverse Stock Split). The common stock began trading on a Reverse Stock Split-adjusted basis on The Nasdaq Global Select Market on September 5, 2024. The trading symbol for the Class A common stock remained “BIRD.”
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ALLBIRDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
All share and per share data in the accompanying consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the effect of the Reverse Stock Split.
Principles of Consolidation—The consolidated financial statements include the accounts of Allbirds, Inc. and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Risks and Uncertainties—We continue to monitor and respond to evolving developments about recent macroeconomic events, including elevated inflation, the U.S. Federal Reserve adjusting interest rates, bank failures, supply chain disruptions, fluctuations in currency exchange rates, tariffs, and geopolitical conflicts, which have led to economic uncertainty in the global economy. These macroeconomic conditions have had and are likely to continue to have adverse consequences on consumer spending, including the buying patterns of our customers and prospective customers. The conditions caused by the aforementioned recent macroeconomic events could affect the rate of consumer spending and could adversely affect demand for our products, lengthen our sales cycles, reduce the value of inventory, reduce expected spending from new customers, and affect our suppliers, all of which could adversely affect our business, results of operations, and financial condition.
As of the date of the issuance of the financial statements, we are not aware of any specific event or circumstance related to the aforementioned macroeconomic events that would require us to update our estimates or judgments or adjust the carrying value of our assets or liabilities. Actual results could differ from those estimates and any such differences may be material to the consolidated financial statements.
Segments—We operate as one operating segment. Our Chief Executive Officer is our chief operating decision maker who evaluates performance and makes operating decisions about allocating resources based on consolidated financial data. There was no change in our operating segment for the year ended December 31, 2025. Refer to Note 8 for more information on our segments and geographic information.
Foreign Currency Transactions—Our reporting currency is the U.S. dollar. The functional currency for each subsidiary included in these consolidated financial statements that is domiciled outside of the United States is generally the applicable local currency of that country or the U.S. dollar. The translation of foreign currencies into U.S. dollars is performed for assets and liabilities using current foreign currency exchange rates in effect at the balance sheet date and for revenues and expense accounts using average foreign currency exchange rates during the period. Capital accounts are translated at historical foreign currency exchange rates. Translation gains and losses are included in stockholders’ equity as a component of accumulated other comprehensive income or loss. Adjustments that arise from foreign currency exchange rate changes on transactions denominated in a currency other than the functional currency are recognized as other income or expense within the consolidated statements of operations and comprehensive loss.
Cash, Cash Equivalents, and Restricted Cash—We consider all highly liquid investments with an original maturity date of three months or less as cash equivalents. Cash and cash equivalents are comprised primarily of domestic and foreign bank accounts and money market funds. These cash and cash equivalents are valued based on Level 1 inputs, which consist of quoted prices in active markets. We place our cash and cash equivalents with several high credit quality financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. We have not experienced any losses in such accounts and periodically evaluate the credit worthiness of the financial institutions. Our foreign bank accounts are not subject to FDIC insurance.
Restricted cash serves as collateral for a bond with the United States Customs and Border Protection (“CBP”), which allows us to take possession of our inventory before all formalities with the CBP are completed for imported products. Restricted cash is included in prepaid expenses and other current assets on the consolidated balance sheets.
Accounts Receivable—Accounts receivable consist primarily of amounts due from customers, which results from sales to customers including credit card deposits in transit at the balance sheet date, the majority of which are settled within 2 to 3 business days, and third-party accounts receivable, which are settled per the terms of the sale. Third-party accounts receivable was $6.0 million and $4.9 million as of December 31, 2025 and 2024, respectively. Credit card receivables were
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ALLBIRDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
$0.7 million and $1.0 million as of December 31, 2025 and 2024, respectively. Other receivables were $0.1 million and $0.3 million as of December 31, 2025 and 2024, respectively.
Inventory—Inventory consists of finished goods, stated at the lower of cost or net realizable value. We value our inventory using the weighted-average cost method and include product costs from our suppliers, freight, import duties and other landing costs.
We periodically review inventory and record reserves as necessary to appropriately value slow-moving, damaged, and excess inventory. To determine if the value of inventory requires a write-down, we estimate the market value of inventory by considering current and anticipated demand, customer preferences and buying trends, and the age of the merchandise. Inventory write-downs are recognized as cost of revenue in the consolidated statements of operations and comprehensive loss. As of December 31, 2025 and 2024, we recorded an inventory reserve to reduce the value of our inventory by $1.6 million and $3.6 million, respectively, within inventory on the consolidated balance sheets. We recognized $6.0 million and $7.0 million of inventory write-downs for the years ended December 31, 2025 and 2024, respectively.
Investments—We account for our investments in equity securities under the measurement alternative described in FASB ASC Topic 321, Investments - Equity Securities, which requires the accounting for equity investments without a readily determinable fair value, which are not accounted for under the equity method of accounting, be measured at their cost, less impairment, if any, and adjusted for observable price changes arising from orderly transactions in the same or similar investment from the same issuer. These investments are carried on the consolidated balance sheets within other assets. Any unrealized gains or losses or impairments will be reported within earnings in our consolidated statements of operations and comprehensive loss. We assess whether an other-than-temporary impairment loss on an investment has occurred due to declines in fair value or other market conditions. Refer to Note 4, Balance Sheet Components, for additional information.
Property and Equipment - Net—Property and equipment - net is stated at cost less accumulated depreciation. Depreciation and amortization expense is computed using the straight-line method over the estimated useful lives of the respective assets, which are generally three to five years. Leasehold improvements are amortized over the shorter of estimated useful lives of the assets or the term of the associated lease. Expenditures for repairs and maintenance are expensed as incurred. Upon disposal, the cost and related accumulated depreciation are removed from the accounts, and the resulting gain or loss is recognized as other income or expense in the consolidated statements of operations and comprehensive loss.
Useful lives by major asset classes are below:
Asset Class Depreciation Period
Computers and equipment 3 years
Furniture and fixtures 3 years
Machinery and equipment 5 years
Internal-use software 3 years
Leasehold improvements Shorter of lease term or estimated useful life
Capitalized Internal-Use Software—Costs of software developed for internal-use is accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 350-40, Internal-Use Software. Capitalization of costs begins when the preliminary project stage is completed, management authorizes and commits to funding the computer software project, it is probable that the project will be completed, and the software will be used to perform the function intended. Such costs are capitalized in the period incurred. Capitalization ceases at the point when the project is substantially complete and ready for its intended use. The capitalized costs are amortized using the straight-line method over the estimated useful lives of the software, which is generally three years. For the years ended December 31, 2025 and 2024, we capitalized $7.0 million and $4.2 million, respectively, in internal-use software within property and equipment in the consolidated balance sheets.
Leases—We determine if an arrangement is or contains a lease at inception by evaluating various factors, including if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration and other facts and circumstances. Lease classification is determined at the lease commencement date. Right-of-use assets
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ALLBIRDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist primarily of the fixed payments under the arrangement, less any lease incentives. Variable lease payments are expensed as incurred and include certain non-lease components, such as maintenance and other services provided by the lessor to the extent the charges are variable. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For any right-of-use assets that are impaired, the lease expense is no longer recognized on a straight-line basis.
We use an estimate of our incremental borrowing rate (“IBR”) based on the information available at the lease commencement date in determining the present value of lease payments, unless the implicit rate is readily determinable. The IBR is the company specific rate of interest that would have to be paid by us to borrow on a collateralized basis over a similar term of the lease in a similar economic environment as of the date of the lease. In determining the appropriate IBR, we consider various factors, including, but not limited to, the lease term, our credit rating, U.S Treasury rates, and the currency in which the arrangement is denominated. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
We do not separate non-lease components from lease components for our leases. In addition, we do not recognize right-of-use assets and lease liabilities for short-term leases, which have a lease term of 12 months or less and do not include an option to purchase the underlying asset that we are reasonably certain to exercise. Lease cost for short-term leases is recognized on a straight-line basis over the lease term.
Any impairment to the associated right-of-use assets is recognized in the period the impairment occurs and is recorded in the consolidated statements of operations and comprehensive loss as impairment expense.
Operating leases are included in operating lease right-of-use assets, current lease liabilities, and noncurrent lease liabilities on the consolidated balance sheets. We did not have any finance leases for any periods presented.
Impairment of Long-Lived Assets—We evaluate the recoverability of property and equipment, operating lease right-of-use assets, and identifiable intangible assets with definite lives (“long-lived assets) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When a triggering event occurs, a test for recoverability is performed, comparing projected undiscounted future cash flows to the carrying value of the asset group. If the carrying amount of an asset group exceeds its estimated undiscounted net future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value.
Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows (asset group), which we determined are at the individual store level. The carrying amount of a store asset group includes stores’ operating lease right-of-use assets and property and equipment, which consists primarily of leasehold improvements. We evaluate corporate assets or other long-lived assets that are not store-specific at the consolidated level.
We determined that triggering events, including a current-period and history of operating cash flow losses, occurred during 2025 and required an impairment review of our long-lived assets. Based on the results of our undiscounted cash flow analysis, we identified certain asset groups in which the projected future undiscounted net cash flows are less than the carrying value of an asset group. For these asset groups, the assets were written down to their estimated fair values. Based on the results of our impairment analysis, we recorded non-cash impairment charges of $3.5 million, recognized as impairment expense in our consolidated statements of operations and comprehensive loss.
There is uncertainty in the projected undiscounted future cash flows used in our impairment review analysis, which requires the use of estimates and assumptions. If our actual performance does not achieve our projections, or if the assumptions used change in the future, we may be required to recognize impairment charges in future periods, and any such charges could be material.
Restructuring—In the first quarter of 2023, we announced a strategic transformation plan designed to improve our revenue trend, as well as improve capital efficiency and drive profitability in the business. As part of this effort, we incurred professional fees, severance and other employee-related benefits, and other related charges which are recognized within restructuring expense in the consolidated statements of operations and comprehensive loss. This plan was completed
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AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
in 2024. In the fourth quarter of 2025, we took strategic actions, including a reduction in force, and incurred severance and other employee-related benefits.
The following table presents a roll-forward of our restructuring charges, which are included within accrued expenses and other current liabilities in the consolidated balance sheets:
Cash Payments (22) (81)
Business Combinations and Dispositions—In 2024, we entered into agreements appointing exclusive distributors in South Korea, Canada, Australasia, Japan, and China. As part of the appointments, we entered into an asset purchase agreement with each distributor for the sale of certain net assets used in connection with the operations of our businesses in the respective territories. Refer to Note 3, Business Combinations and Dispositions, for further details.
Revenue Recognition—Our primary source of revenue is from sales of shoes and apparel products. We sell products directly through our own digital channels (including our websites, our discontinued mobile app, and marketplace platforms), our leased retail stores, and third-party retailers and distributors.
Revenue transactions associated with the sale of our inventory comprise a single performance obligation which consists of the sale of products to customers through our direct to consumer or third-party channels. Payment is due either at the time of purchase or within a timeframe specified in the contract, without significant financing components. We satisfy the performance obligation and record revenues when transfer of control to the customer has occurred, based on the terms of sale. 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 (receipt) and to digital customers upon shipment. This transfer of control represents a single deliverable and revenue is recognized at a point in time. All revenue is reported net of sales taxes collected from customers on behalf of taxing authorities and variable consideration, including returns and discounts. We account for shipping and handling fees charged to customers as revenue and we account for shipping and handling costs as fulfillment costs. We recognize the revenue and costs associated with shipping and handling at the time the products are shipped to the customer.
In the normal course of business, payment may be collected from the customer prior to recognizing revenue and such, cash receipts are included in deferred revenue in the consolidated balance sheets until control has transferred to the customer. For the years ended December 31, 2025 and 2024, we recognized $3.7 million and $3.4 million, respectively, of revenue that was deferred as of December 31, 2024 and 2023. As of December 31, 2025 and 2024, we had $0.3 million and $0.3 million, respectively, in cash collections of purchases via our digital channel which had not yet shipped. The deferred revenue balance of $1.7 million at December 31, 2025 is expected to be recognized over the next 12 months.
We offer non-expiring gift cards and merchandise credits to our customers. Proceeds from the sale of gift cards are initially deferred and recognized within deferred revenue on the consolidated balance sheets, and are recognized as revenue when the product is received by the customer after the gift card has been tendered for payment. As of December 31, 2025 and 2024, we had $1.4 million and $3.6 million in gift card liabilities included within our deferred revenue balance on the consolidated balance sheets.
Our sales policy allows customers to return merchandise for any reason within 30 days of receipt for an exchange or refund. We record a reserve for estimated product returns, based upon historical returns, impact of seasonality, current economic and market trends, current business practices, and changes in customer demand and acceptance of our products, in each reporting period as an offsetting decrease of net revenue, with an increase to our sales-refund reserve in accrued expenses. We have also recorded a related inventory returns receivable, less expected costs to recover, in prepaid expenses and other current assets with an offsetting decrease to cost of revenue as of December 31, 2025 and 2024 in the consolidated balance sheets.
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AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
Cost of Revenue—Cost of revenue primarily consists of the cost of purchased inventory, inbound and outbound shipping costs, import duties, distribution center and related equipment costs, and inventory write-offs and write-downs. Shipping costs to receive products from our suppliers are included in the cost of inventory and recognized as cost of revenue upon sale of products to our customers.
Selling, General, and Administrative Expense—Selling, general, and administrative 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.
Marketing Expense—Marketing expense consists of advertising costs to market our products and is expensed as incurred.
Stock-Based Compensation—Stock-based compensation expense related to stock awards, including stock options, restricted stock units (“RSUs”), stock awards with market-based or performance-based vesting conditions, and stock purchase rights granted under the 2021 Employee Stock Purchase Plan (“ESPP Rights”), is recognized based on the estimated fair value of the awards on the date of the grant. The fair value of each stock option award and ESPP Rights is valued on the grant date using the Black-Scholes option pricing model. The fair value of each RSU is based on the estimated fair value of our common stock on the date of grant. The fair of stock awards with market-based or performance-based vesting conditions is based on the estimated fair value using equity valuation models, such as the Monte Carlo simulation, using assumptions and judgments made by management and third-party valuation specialists. Stock-based compensation is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are accounted for in the period in which they occur.
The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of our common stock, risk-free interest rates and the expected dividend yield of our common stock. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment.
Income Taxes—We record deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities. The deferred tax assets and liabilities are calculated by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. We determine whether a valuation allowance is necessary in accordance with the provisions of the FASB ASC 740, Income Taxes. We recognize the benefits from our deferred tax assets only when an analysis of both positive and negative factors indicate that it is more likely than not that the benefits will be realized.
Our estimate of the potential outcome of any uncertain tax position is subject to our assessment of relevant risks, facts, and circumstances existing at that time. Obtaining new information, settlements with tax authorities and the expiration of statutes of limitations may cause adjustments in income tax expense in the period this occurs.
Fair Value Measurements—FASB ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. It clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Observable inputs, such as quoted prices in active markets
Level 2—Inputs other than the quoted prices in active markets that are observable either directly or indirectly
Level 3—Unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions.
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AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. We record cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses at cost. The carrying values of these instruments approximate their fair value due to their short‐term maturities. We hold certain assets that are required to be measured at fair value on both a recurring and non-recurring basis, which are outlined in Note 5, Fair Value Measurements.
Emerging Growth Company—As an “emerging growth company,” the Jumpstart Our Business Startups Act, or the JOBS Act, allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. For certain pronouncements, we have elected to use the adoption dates applicable to private companies. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.
Smaller Reporting Company—We are currently a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act and therefore qualify for reduced disclosure requirements for smaller reporting companies.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. The guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The adoption of the guidance in the first quarter of 2024 did not have a material impact on our consolidated financial statements and related disclosures.
In March 2023, the FASB issued ASU No. 2023-01, Leases (Topic 842) - Common Control Arrangements. This ASU addresses issues related to accounting for leases under common control arrangements. The standard will include an amendment to Topic 842 for all entities with leasehold improvements in common control arrangements to amortize leasehold improvements that it owns over the improvements’ useful life to the common control group if certain criteria are met. The amendments in this update are effective for reporting periods beginning after December 15, 2023, with early adoption permitted. The adoption of the guidance in the first quarter of 2024 did not have a material impact on our consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which amended disclosure requirements for segment reporting. The amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, amendments to enhance interim disclosure requirements and introduce additional details about the chief operating decision maker. These changes address certain investor concerns that disclosures over reportable segment expenses were limited. The amendments in this update are effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted this during the year ended December 31, 2024. For further details refer to Note 8, Segments and Geographic Information.
In December 2023, the FASB issued ASU No. 2023-09, Income Tax (Topic 740): Improvements to Income Tax Disclosures, which amended disclosure requirements for income taxes. The primary changes from this update relate to improvements over income tax disclosures related to the rate reconciliation, income taxes paid and other disclosures. These changes help investors better 1) understand on an entity’s’ exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (2) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (3) identify potential opportunities to increase future cash flows. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, with early adoption permitted. We adopted this guidance as of the year ended December 31, 2025 on a prospective basis. For further details refer to Note 11, Income Taxes.
Recently Issued Accounting Pronouncements
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which amends the disclosure or presentation
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AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
requirements of a variety of topics in the ASC in order to conform with certain SEC amendments in Release No. 33-10532, Disclosure Update and Simplification. The effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. We are evaluating the potential impact of this guidance on our consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40). This ASU improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU will be effective for annual periods beginning after December 15, 2026, for interim reporting periods beginning after December 15, 2027, with early adoption is permitted. We are evaluating the potential impact of this guidance on our consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this Update remove all references to prescriptive and sequential software development stages, providing more consistent operability of software capitalization guidance. This ASU will be effective for annual periods beginning after December 15, 2027, for interim reporting periods beginning after December 15, 2027, with early adoption is permitted. We are evaluating the potential impact of this guidance on our consolidated financial statements and related disclosures.
3. Business Combinations and Dispositions
Dispositions
As part of our strategic transformation plan announced in March 2023, we sold certain of our international businesses to unrelated third-parties. These sales did not qualify for accounting as discontinued operations under ASC 205, Presentation of Financial Statements. All gains or losses on the sale of businesses were recorded within net loss from the sale of businesses in the consolidated statement of operations and comprehensive loss for the years ended December 31, 2024. No such charges relating to these dispositions were incurred during the year ended December 31, 2025.
Japan
On May 27, 2024, we entered into an asset purchase agreement with an unrelated third party for the sale of certain net assets used in connection with the operation of our Japan subsidiary, Allbirds G.K. The net assets sold primarily included inventory and property and equipment related to our retail store leases, partially offset by sales return liabilities and gift card liabilities. As part of this transaction, we were total consideration of $0.9 million. Consideration received was more than the net book value of the transferred net assets of $0.8 million, resulting in an immaterial gain for the year ended December 31, 2024.
Australasia
On June 26, 2024, we entered into an asset purchase agreement with an unrelated third party for the sale of certain net assets used in connection with the operation of our New Zealand subsidiary, Allbirds (New Zealand) Limited. The net assets sold primarily included inventory, partially offset by gift card liabilities. As part of this transaction, we were paid total consideration of $0.3 million. Consideration received was less than the net book value of the transferred net assets of $0.5 million, resulting in a loss of $0.2 million for the year ended December 31, 2024.
China
On August 6, 2024, we entered into an asset purchase agreement with an unrelated third party for the sale of certain net assets used in connection with the operation of our China subsidiary, Allbirds (Shanghai) Trading Co., LTD. The net assets sold primarily included inventory and property and equipment related to our retail store leases, partially offset by sales return liabilities and gift card liabilities. As part of this transaction, we were paid total consideration of $2.1 million. Consideration received was less than the net book value of the transferred net assets of $2.2 million, resulting in a loss of approximately $0.2 million for the year ended December 31, 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
4. Balance Sheet Components
Inventory
Inventory consisted of the following as of December 31, 2025 and 2024:
Reserve to reduce inventories to net realizable value (1,650) (3,618)
Property and Equipment - Net
Property and equipment consisted of the following as of December 31, 2025 and 2024:
Machinery and equipment 640 640
Less: accumulated depreciation and amortization (48,237) (44,647)
Total property and equipment - net $ 10,513 $ 17,825
Depreciation and amortization expense for the years ended December 31, 2025 and 2024 was $8.0 million and $12.4 million, respectively, recognized as selling, general, and administrative expense in the consolidated statements of operations and comprehensive loss.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following as of December 31, 2025 and 2024:
Inventory returns receivable 501 798
Other receivables — 1,366
Deferred offering costs 224 —
Total prepaid expenses and other current assets $ 9,712 $ 13,536
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AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
Other Assets
Other assets consisted of the following as of December 31, 2025 and 2024:
Investment in equity securities $ — $ 200
Intangible assets 75 42
Debt issuance costs 2,407 —
Investments in equity securities
On November 20, 2020, we entered into an agreement to make a minority equity investment of $2.0 million in Natural Fiber Welding, Inc. in exchange for 201,207 shares of Series A-3 Preferred Stock. Our investment is carried at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Throughout the year, we assess whether impairment indicators exist to trigger an impairment analysis. In the fourth quarter of 2024, we recorded an impairment charge of $1.8 million in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024. In the third quarter of 2025, we recorded an impairment charge of $0.2 million in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2025.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following as of December 31, 2025 and 2024:
Total accrued expenses and other current liabilities $ 14,401 $ 18,821
5. Fair Value Measurements
Items Measured at Fair Value on a recurring basis
Money Market Funds—We previously held cash in a U.S. treasury securities money market fund. The funds are classified as cash and cash equivalents on our consolidated balance sheet as of December 31, 2024 and represent Level 1 assets on the fair value hierarchy. We had no cash in money market funds as of December 31, 2025.
For assets measured at fair value, the following tables summarize the respective fair values and classifications by level of input within the fair value hierarchy as of December 31, 2025 and 2024. We had no liabilities measured at fair value as of December 31, 2025 and 2024:
(in thousands) Level 1 Level 2 Level 3 Total
Assets
NFW investment — — — —
$ — $ — $ — $ —
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
(in thousands) Level 1 Level 2 Level 3 Total
Assets
Items Measured at Fair Value on a non-recurring basis
Equity Investments—Our equity investment in NFW represents non-marketable equity securities in a privately held company that does not have a readily determinable fair value and are accounted for under the measurement alternative in ASC 321. In the fourth quarter of 2024, we recorded an impairment charge of $1.8 million in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024. In the third quarter of 2025, we recorded an impairment charge of $0.2 million in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2025.
There was no carrying values of our investment as of December 31, 2025. The carrying value of our investment was $0.2 million as of December 31, 2024.
6. Long-term Debt
On February 20, 2019, we entered into a credit agreement with JPMorgan Chase Bank, N.A. (the “Prior Credit Agreement”), providing for a revolving line of credit of up to $40.0 million, subject to a borrowing base formula, and an optional accordion, which, if exercised, would have allowed us to increase the aggregate commitment by up to $35.0 million, subject to obtaining additional lender commitments and satisfying certain conditions. The Prior Credit Agreement was amended on April 17, 2023 to, among other things, (i) increase the committed amount from $40.0 million to $50.0 million, subject to a borrowing base formula, (ii) increase the uncommitted incremental borrowing capacity from $35.0 million to $50.0 million, (iii) increase the interest rate margin by 0.50%, (iv) extend the maturity date from February 20, 2024 to April 17, 2026 and (v) provide that a Dominion Event Date (as defined therein) would occur on any date on which Availability (as defined therein) was less than 25.0% of the Aggregate Revolving Commitments (as defined therein). In connection with entry into the Credit Agreement (as hereinafter defined), we repaid and fully discharged our obligations under the Prior Credit Agreement.
On June 30, 2025, we entered into a secured $50.0 million revolving credit agreement with Second Avenue Capital Partners LLC (the “Credit Agreement”). The borrowing capacity is subject to a borrowing base formula, and may be increased up to an additional $25.0 million, subject to obtaining additional lender commitments and satisfying certain conditions. The Credit Agreement will mature on June 30, 2028.
Interest on borrowings under the Credit Agreement accrues at a variable rate equal to the sum of (i) 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.
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. As of December 31, 2025, the Company was in compliance with these covenants. 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.
Concurrently with entry into the Credit Agreement, we drew down $5.0 million on the revolving credit facility. The borrowings were used to, among other things, pay third-party debt issuance costs in the amount of $2.9 million.
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AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
During the year ended December 31, 2025, we drew approximately $19.2 million on our revolving credit facility, inclusive of interest and fees. As of December 31, 2025, there was $17.3 million outstanding under the Credit Agreement. As of December 31, 2024, there were no borrowings outstanding under the Prior Credit Agreement.
Refer to Note 16 for information on the Consent and First Amendment to Credit Agreement.
7. Stockholders’ Equity
On August 30, 2024, following stockholder approval, we announced that we had filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate to effect a Reverse Stock Split of the Company’s common stock in the ratio of 1-for-20, effective as of 5:00 p.m. Eastern Standard Time on September 4, 2024. Accordingly, each holder of common stock owned fewer shares of common stock as a result of the Reverse Stock Split. However, the Reverse Stock Split affected all holders of common stock uniformly and did not affect any stockholder’s percentage ownership interest in the Company, except to the extent that the Reverse Stock Split resulted in an adjustment to a stockholder’s ownership of Common Stock due to the treatment of fractional shares in the Reverse Stock Split. Therefore, voting rights and other rights and preferences of the holders of common stock were not affected by the Reverse Stock Split (other than as a result of the treatment of fractional shares). Common stock issued pursuant to the Reverse Stock Split remained fully paid and nonassessable, without any change in the par value per share.
No fractional shares were issued as a result of the Reverse Stock Split. Instead, each stockholder received a cash payment equal to the fraction of which such stockholder was otherwise entitled multiplied by the closing price per share of Class A common stock on the date of the Effective Time as reported by Nasdaq (as adjusted to give effect to the Reverse Stock Split). The common stock began trading on a Reverse Stock Split-adjusted basis on The Nasdaq Global Select Market on September 5, 2024. All share and per share data in the accompanying financial statements and accompanying notes have been retroactively adjusted to reflect the effect of the Reverse Stock Split.
As of December 31, 2025 and 2024, we were authorized to issue 2,220,000,000 shares of capital stock, comprised of 2,000,000,000 shares of Class A common stock, 200,000,000 shares of Class B common stock, and 20,000,000 shares of preferred stock. All classes of our stock have a par value of $0.0001. There was no change in the number of shares authorized for issuance or the par value of the common stock and preferred stock as a result of the Reverse Stock Split.
Common Stock
As of December 31, 2025 and 2024, the Company had two classes of common stock: Class A common stock and Class B common stock. Each class had a par value of $0.0001.
Voting—Holders of Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders, and holders of Class B common stock are entitled to 10 votes per share on all matters to be voted upon by the stockholders. The holders of our Class A common stock and Class B common stock generally vote together as a single class on all matters submitted to a vote of our stockholders, unless otherwise required by Delaware law or our amended and restated certificate of incorporation. Delaware law could require either holders of our Class A common stock or Class B common stock to vote separately as a single class in the following circumstances: (i) if we were to seek to amend our amended and restated certificate of incorporation to increase or decrease the number of authorized shares of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; (ii) if we were to seek to amend our amended and restated certificate of incorporation to increase or decrease the par value of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; and (iii) if we were to seek to amend our amended and restated certificate of incorporation in a manner that alters or changes the powers, preferences or special rights of a class of our capital stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment. As a result, in these limited instances, the holders of a majority of the Class A common stock could defeat an amendment to our amended and restated certificate of incorporation. Our amended and restated certificate of incorporation does not provide for cumulative voting for the election of directors.
Dividends—Holders of Class A common stock and Class B common stock are entitled to ratably receive dividends if, as and when declared from time to time by our board of directors at its own discretion out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock, if any. Under Delaware law, we can
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AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
only pay dividends either out of “surplus” or out of the current or the immediately preceding year’s net profits. Surplus is defined as the excess, if any, at any given time, of the total assets of a corporation over its total liabilities and statutory capital. The value of a corporation’s assets can be measured in a number of ways and may not necessarily equal their book value.
Right to Receive Liquidation Distributions—Upon our dissolution, liquidation, or winding-up, the assets legally available for distribution to our stockholders are distributable ratably among the holders of our Class A common stock and Class B common stock, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock.
Conversion—Each share of our Class B common stock is convertible at any time at the option of the holder into one share of our Class A common stock. Each share of our Class B common stock will convert automatically into one share of our Class A common stock upon any transfer, whether or not for value, except for (i) certain permitted transfers to entities, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock, and (ii) certain other permitted transfers described in our amended and restated certificate of incorporation. In addition, if held by a natural person (including a natural person serving in a sole trustee capacity), each share of our Class B common stock will convert automatically into one share of our Class A common stock upon the death or incapacity of such natural person as described in our amended and restated certificate of incorporation. All outstanding shares of our Class B common stock will convert automatically into an equivalent number of shares of our Class A common stock upon the final conversion date, defined as the later of (a) the last trading day of the fiscal quarter immediately following the tenth anniversary of November 5, 2021 and (b) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the date on which the outstanding shares of Class B common stock first represent less than 10% of the aggregate number of the then outstanding shares of Class A common stock and Class B common stock (except if the final conversion date determined according to (a) or (b) would otherwise occur on or after the record date of any meeting of stockholders and before or at the time the vote at such meeting is taken, then the final conversion date shall instead be the last trading day of the fiscal quarter during which such vote was taken).
Other Matters—The Class A common stock and Class B common stock have no preemptive rights pursuant to the terms of our amended and restated certificate of incorporation and our amended and restated bylaws. There are no redemption or sinking fund provisions applicable to the Class A common stock and Class B common stock. All outstanding shares of our Class A common stock are fully paid and non-assessable.
Shares of common stock reserved for future issuance as of December 31, 2025 and 2024 consist of the following:
Shares reserved for convertible preferred stock outstanding — —
2015 Equity Incentive Plan:
Shares available for future grants — —
2021 Equity Incentive Plan:
2021 Employee Stock Purchase Plan:
Total shares of common stock reserved for future issuance 2,225,262 2,206,765
ATM Offering Program
In June 2025, we entered into an “at-the-market offering” (“ATM”) program with TD Securities (USA) LLC (“TD Cowen”), pursuant to which we may offer and sell, from time to time, through TD Cowen or its affiliates, acting as sales agents, shares of our common stock having an aggregate offering price of up to $50 million (subject to the “baby shelf”
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ALLBIRDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025 AND 2024 AND FOR THE YEARS ENDED DECEMBER 31, 2025, AND 2024
limitation in General Instruction I.B.6 of Form S-3). Under the ATM, the sales agents may sell shares by any method deemed to be an “at-the-market offering.” During the year ended December 31, 2025, we sold 386,289shares of Class A common stock under the ATM program for net proceeds of $1.7 million.
8. Segments and Geographic Information
Segment Information
Operating segments are defined as components of an entity for which separate financial information is available and reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Specifically, our CODM uses consolidated net loss as the measure of segment profit or loss for evaluating performance and allocating resources through comparison of actual amounts against budgeted and prior period amounts. The measure of segment assets is reported on the consolidated balance sheets as “Total assets”. Therefore, we operate as one operating and reportable segment as our CODM reviews consolidated financial information in managing the business.
The following table sets forth significant expense categories and other specified amounts included in consolidated net loss that are otherwise regularly provided to the CODM for the years ended December 31, 2025 and 2024:
Year Ended December 31,
Selling, general, and administrative expense1 35,623 48,499
Segment and consolidated net loss $ (77,283) $ (93,318)
Geographic Information
The following table presents long-lived assets by geographic area, comprising property and equipment - net, definite-lived intangible assets, and operating lease right-of-use assets:
Long-lived assets:
The following table disaggregates our net revenue by geographic area, where no individual foreign country contributed in excess of 10% of net revenue for the years ended December 31, 2025 and 2024. We recognized the following net
1 Selling, general and administrative expense consists of third-party professional fees, information technology costs, fixed and variable lease costs for corporate offices and retail stores, software and license costs, legal fees, and other administrative costs associated with operating the business.
2 Payroll and benefits expense consists of salaries, benefits, and bonuses for our corporate and retail employees. Payroll and benefits expense excludes stock-based compensation expense.