Hi everybody, thank you for joining us today. We're excited to have the CEO of Allbirds, Joe Vernachio, and the CFO, Annie Mitchell. They are guiding a very clear turnaround in the Allbirds brand. Allbirds IPO'd in 2021, had a big market cap, and this management team is guiding the brand through a big transformation. Joe, if we could start with you, something a little high level, the key focus areas are product, marketing, and customer experience. That is expected to drive a return to growth. Can you talk about those three? Yeah, yeah, I'd love to. It's important to know that we've spent the last couple of years just improving the foundational underlying business, the mechanics of the business, the inventory, and how we're structured. We'll put that to the side. Now we turn our attention to the three main important things that you have to do in a consumer-driven business, especially in footwear. You've got to have a relentless flow of compelling product. We started that process over a year ago. That first product is starting to come to bear July, August, and September of this year, and will only increase as time goes on. Second is marketing. We have to tell our story to the consumer. We have to reintroduce this brand and all the charm that existed when it first began back to the consumer. We started that early in Q1 with a very top-of-funnel piece of content that we can talk about more in a little bit. The last piece to it is the experience. How does a consumer purchase your product? What is it like on our site? What is it like in our store? You have to remember, most people, when they engage on your site and your store, most people actually do not purchase products. They walk away not with an object, they walk away with an experience. If you give them a good experience, you may or may not have the right product that moment. If you give them a great experience, they will come back to you. They will be open to you. When you do have the right stuff, you get those sales in the future. It's kind of those three main components of product, marketing, and experience. Can you talk about the product pipeline for Fall 2025? I think you're pretty excited about it. Yeah, yeah. I'll give you a simple example. Between January and July of this year, we've introduced four new products. Between July and December of this year, we will introduce 19 new products. The new product pipeline is flowing in full force. We'll have a variety of products that start with the very first piece, which will be re-anchoring ourselves in that original runner and in wool to make sure that we don't ever lose that position, that those products, that silhouette, that material is iconic with our brand. We don't ever want to lose that, but we can't just sit on that. Right behind that, we'll be introducing a court silhouette that we're calling the Cruiser, which will give us a lot of dimension. It's what a lot of people wear right now in their silhouettes. They're wearing these cork-style silhouettes. Just some highlights for the back end of the year, we'll have waterproof shoes. We've never had waterproof, so shoes that look exactly like our shoes but are completely fully waterproof, which is really hard to find. When you find a waterproof shoe today, it's pretty dowdy, it's pretty ugly looking, or it's a shell boot that just does not go with anything. We think there's a big opportunity there. We've got kind of a very, very cozy leaning into our wool proposition with shearling linings of slippers, clogs, and short boots that people will be able to just wear for very casual occasions. You see it right now. You walk down the street, you're hard-pressed not to see somebody wearing a slipper out just on the street. While these are designed in that use occasion, it is used in many, many different options. We think it's a big opportunity for us in the future. That's exciting. Annie, macro, how's your core consumer feeling and how are you approaching tariffs? Sure. We definitely saw some consumer uncertainty and some choppiness following the announcements on April 2nd. What we've been pleased to see, though, is that that has been stabilizing and smoothing out over time. It used to be with every new headline, the consumer would respond either positively or negatively, similar to how the stock market did. Really since then, each headline or each moment is less and less impactful or goes away faster. Our core consumer has a household income of $150,000, equally split male and female, generally married with both folks working and a number of kids. This demographic has not been as meaningfully impacted as maybe some others. I think that's why, again, we're seeing these moments of reaction, some choppiness, some uncertainty, but overall, it's not been a huge impact for us, which we're pleased to see and hoping that things continue to smooth out and stay stable going forward. Good to hear. Yeah, from the tariff perspective, all of our footwear is produced in Vietnam, which has an incremental tariff of 10%. That is on top of the underlying duties that we would normally pay. The 10% is related to the 90-day pause that was put in place. The initial announcement was 46%. You probably remember that day like the rest of us. I think we joked that we all blacked out. Blacked out. Yeah, we blacked out for a moment or two when we heard the amounts. Oh. Exactly. Now that we are down to the 10%, we believe that is a base case for what to expect going forward. When we do scenario planning, we have now scenario planned all the way up to us going back to an incremental 46%. We have some scenarios for that that largely include meaningful price taking. As a quick reminder, that will not just be for Allbirds. That will be for everybody in the footwear industry and really across numerous industries as well. The bigger impact of that is actually how the consumer responds. Our base case is that the 10% or something like it stays. With that, we have taken very modest price increases for Fall holiday because we believe in our product architecture. We believe in the price points that we want to come out at. We're trying to hold to that as much as possible. Excellent. Joe, back to you. Who is the Allbirds core consumer and how do you accelerate customer acquisition in men's and women's? Yeah, so the core consumer is probably sitting in this room right now, somewhere between 30 and 45, up to 50 years old. They have young families. They're on the sidelines at soccer games and softball games on the weekends. They're going to farmers' markets. They have jobs. Both parents are working. They travel for both work and pleasure. There are millions and millions and millions of these people that we don't need to slice it very thinly. There are tons of use occasions in this casual lifestyle footwear space that we can harvest. We haven't even begun to scratch the surface of all the different possible use occasions and opportunities we have to meet them. The really nice thing about our proposition as a brand is we don't just have to introduce a product and a silhouette in a particular material or a particular color. We've been known for materialization and color. We haven't even begun to really deliver that to the consumer. You're going to see that really come through in the back half of this year. We have one shoe that we'll be introducing that will be available in over 20 colorways. When you walk into a store, you'll really see this impact. We've been known for delivering color. Of course, we don't expect all those edge colors to get purchased, but it really makes a visual impact and gives people a little more courage to show off, to express themselves. There was a time for men, and I think it's still happening, where men used to express themselves through their socks. They would be very conservative, but they would have this little sock moment that showed. In the old days, it used to be a tie. It turned into a sock. We think that a little bit brighter, happier, less serious footwear is something people can express themselves with. You can see the marketing campaign that's already going to be coming to life. We use Stanley Tucci in our advertising that we did in the beginning of the year. If any of you have not seen Cards on the Table, I encourage you, even if you're not interested in our brand or anything, it's very entertaining. We created content for a 20-minute series. Stanley Tucci hosted these dinners, and we curated a set of questions, and we introduced and curated the dialogue. It's evergreen content that continues to gain views every single week. It continues to grow and grow and grow in popularity because of the wide variety of people. We have Formula 1 drivers. We have chefs. We have physicists all having a really interesting dialogue. Even though I've seen these many times, I still go back and re-watch them because you get little tidbits and insights into these people that you'd never heard before. The idea behind all that content is to create our team. When you're a lifestyle brand, you have to associate yourself with people so that the consumer, I'm getting back to the consumer, the consumer sees their reflection in your brand. That's really important and can be really nuanced in a lifestyle brand. Sometimes you will anchor yourselves to one famous movie star. We don't believe in that. We believe that we need a variety of people to express all the different dimensions of our brand. That's excellent. Annie, let's jump back to the financials. You've done a great job managing working capital, inventory, and liquidity since you've joined. Thank you. How do we think about your current investment needs and the long-term margin profile of the business? Sure. You're right that we have really taken a strong look and managed through our balance sheet. We feel good about the inventory position. We cleaned it up in 2023 and have kept it at healthy levels ever since. That means we have the space in our open to buy to invest in this new product that's coming. We have the cash to be able to invest in the product and the marketing. Importantly, and I'm glad you asked about margin, it's actually the operating improvements that we've made across both our product COGS as well as our SG&A that have reduced the overall cost of the business, which is starting to show up now in our cash flows. As we position the company for growth, specifically in Q4 of this year and going into 2026, again, supported by that customer experience, the new product, and the investments that we're making in marketing, these are the things that will help us to grow. Following growth is when we get to profitability and cash flow positivity. Between now and then, we feel confident that we have the runway to be able to deliver against this plan that we feel very confident about. That's excellent. Joe, shifting back to you. Channels of distribution focus balancing DTC and wholesale and distributor markets. Can you talk to that? Yeah. Yeah, so in the US, we believe in a balanced marketplace. We need our own e-commerce business, and that's the core of our business today. We need retail. We don't need a lot of retail, but we need a core group of retail. We believe it's important today to have an analog version of your brand out there in key cities telling your story and using them to activate your brand. There is wholesale. You need more points of distribution to grow significantly. In order to do wholesale well, you have to have a product engine that is producing a flow of product in a variety and on a timeline and with a pace that you can sell in and deliver to those retailers. We've just built that engine. Spring 2026 is our first season of we've just signed five US sales agencies with sales reps to start to sell into US specialty. That will be slow. That will take time. You have to get in with some tests. It takes two, three, four seasons. Once the rest of the product is flowing and our e-commerce business starts to grow again, the wholesale business will really, really inflect. It allows us to grow this business disproportionately because we get pre-season orders. It is a lot less inventory and financially risky to grow disproportionately there versus in your own e-commerce business that you have to be very thoughtful with inventory. This business is really an inventory management business. The very first thing Annie and I did when we started this was to clean up the inventory. We are so laser-focused on making sure the inventory stays healthy. It is the path to profitability, which is keeping the inventory healthy. Underneath all of this is our international markets. We were direct in a bunch of markets, six markets, that we have transitioned to distributors. If you do not understand the distributor market, how it works, basically there are companies that do business with authority in all of these countries that have a multitude of brands. They leverage all of their infrastructure to bring on new brands so that they can grow. They know all the wholesale accounts. They know all the landlords. They are running e-commerce. They have already got a distribution center. We were doing all of that direct. Annie and I have transitioned all of those except for the U.K. We will be transitioning Europe in June. The minute we flip a market from being direct to being a distributor, it is profitable. We are now profitable in all of these markets. We have 14 international distributors. They just came in last week for our spring sales meeting. These are people who are running businesses for sometimes 40, 50, 60 years in these countries. They are serious and earnest and have a really good eye. I am happy to say that they were floored by what they saw, what is coming, both what they saw last fall, but also what they are going to see in spring 2026. The momentum just continues. This is a product business. Nothing else matters, right? I say this to our team constantly. Nothing matters except for product until the product is there. Once the product is there, everything else matters. We have been product, product-focused for the last 12 to 14 months. That product is going to start to deliver here in the back half of the year. It is why we are here now because this is the time we are done talking about all of the transitions and this and the math and the complication of how to look at things. Look, the product is coming. The marketing is coming. The experience is coming. Between Annie and I, if you combine just our years, we have been making and selling shoes for 50 years. This is not a new concept for us. We know how to do this, and we know what it looks like when it works. It is coming. It's all about product in this industry. I just got out of a meeting with a footwear industry expert at the conference, Matt Powell, who thinks performance is driving lifestyle now and that lifestyle shoes without a performance angle are not resonating. How do you play in that game? I mean, I love Matt. I've known Matt for 100 years, it feels like. It depends on how you define performance. Our performance angle is our shoes are wildly comfortable. That is our performance angle. It does not need to be, you do not need to carve giant holes in your midsoles. You do not need to win a foam fight with everybody out-teching them. In a lifestyle situation, they simply need to put the shoe on and go, "Oh, damn, that thing's comfortable." I just was in our SoHo store yesterday. I sat there for three hours just watching people. I just sat in the corner, and I just observed people. Every single time somebody put on a shoe, they were like, "Wow, that's comfortable." There were three or four women over the three hours trying on our flats. They would try on our ballet flat and say, "How did they make this thing so comfortable?" That is the magic. That is what it comes down to. That is our performance angle. You layer on top of that our sustainability proposition and the materials and the consideration. It is not the thing why people purchase, but it is a reason why people purchase. It is part of the proposition. People want to feel good about their purchase, and they want to know that we thought about that for them. We almost think of it as a gift with purchase that you can come in and feel good about your purchase at Allbirds. I would love to see Matt. I have not seen him in a couple of years. I need to shake him a little bit. I love him. Annie, product and marketing go hand in hand. How are you thinking about marketing as a dollars, marketing rate, and where are you investing? Great. Let me take you down a little bit of history. When we kicked off our transformation at the beginning of 2023, we knew that cleaning up that inventory and getting out of certain product lines was important. Many of you might know that Allbirds went from this lifestyle footwear where we certainly belong to performance running. We started going into apparel. With that, when we did the transformation, kicked it off, we wanted to get back to our core product that we were known for and loved for. With that, we had to get rid of this excess inventory. In addition to clearing that product, putting our mark down on our own site and our own retail stores as well as traditional liquidation partners, we also cut back on our marketing in a really meaningful way because we did not want to introduce ourselves to new consumers with product that was on sale and not really who we were going to be going forward. Really, for 2023 and 2024, we dramatically pulled back on marketing dollar spend, especially when we look at upper funnel or brand awareness driving. Now that we have a marketing platform that we really believe in, it is Allbirds by nature. We have the Cards on the Table series that we invested in in Q1. That was a big investment for us. If you look at our marketing spend in Q1, it looks a lot more like what a Q4 marketing spend would be. This is just the beginning of us reintroducing ourselves. We believe or we plan to spend more in marketing this year, both as a dollar and as a rate of sales compared to what we've done in the past two years. The intention of that is to, again, reintroduce ourselves to people who might not have heard from us for a while, introduce ourselves to new people who are not aware of Allbirds. You might know that our aided awareness is only 15%. Lots of opportunity to grow from there. We're willing to do that now, again, because we have the brand platform. Most importantly, like you said, hand in hand, we now have the product that we're excited about. We stand behind. It is completely in line with our product architecture strategy going forward. Now is exactly the right time to be investing in marketing. Understood. That makes a lot of sense. Joe, back to you. The international piece of the business, how do you build brand awareness there? There are distributor markets. You said they're profitable right away. How do you build on that momentum internationally? Yeah. I mean, you first have to make sure that you've got world-class distributors. If you take a look at our portfolio of distributors, we have a company in Japan called Goldwin, which is the premier distributor in all of Japan. We have Baili, depending on how you pronounce it, in China, who's managing the business for us there. I mean, they're world-class retailers. They manage all aspects of marketing and sales and marketplace management for us. They are very respectful of the brand. I think a lot of times people have a perception that, "Oh, boy, you're using distributors. Do they do harm to your brand?" If you hire and you bring on and partner with world-class distributors, they are brand builders. They actually do a better job of representing our brand sometimes than we do. You go into a market and you're like, "Wow, the brand looks amazing in this market." The key is the right partners. They're experts at what they do. They have a portfolio of brands that they are able to leverage. Most of our distributors do not have another footwear brand. They might have had one. Or if they do, it's a very adjacent one and not conflicting. It is really important that our business works for them. I think the combination of their expertise and our value to their portfolio and their ability to really understand that it's a brand and not just an object that they're selling is really powerful. Again, I mean, they were just in. We had over 100 people in, rented out the ballroom, just gave our big presentations. You could just feel the energy in the room. You ask a distributor one question, and you tend to do it after a few drinks when they're a little more willing to tell you the truth. You ask them one question, "Do you have enough to do the business?" To every single distributor, they were like, "There's more than enough here for me to do business in my country." You just need to make sure that you're taking care of them and that they have enough product and enough variety to manage across all those markets, right? There are 14 distributors representing over 70 countries if you actually look at every flag. It is a big business. The beautiful part about our distributor business right now is it is profitable and it is growing. Those are two very good qualities. Ooh. All right. There we go. That's all right. Earlier, you talked about product, marketing, customer experience as three focus initiatives. That is going to return you to top-line growth in the back half of the year, potentially. Can you talk about which is the biggest driver? Is it product? Is it marketing and customer experience? How does it all? Yes, yes, and yes. I mean, I think I said product is the most important thing. But as soon as a good product is there, you've got to tell a good story. It's got to have a good name. It's got to be in context. You have to explain the use occasions. You have to explain what problem it's solving for people. It might be a technical problem. Matt Powell will always want to talk about technical and performance. That's his world. But you also have problems in your everyday life. We believe that consumers are looking for sneaker-level comfort in every possible occasion in their life. If they can get away with wearing a sneaker or a flat at a wedding, they will. One of the capsules that we'll be introducing this fall, we're calling Elevated. It is taking sneakers and sneaker-level comfort and bringing it into a slightly more elevated use occasion. The sneakers, every man in this room would probably look at these sneakers and go, "Oh, I can wear this. I could wear this with a pair of slacks. I could wear it with khakis. I could even potentially wear it with a suit and not look out of place." We will be introducing a new bio-leather that has never been used in footwear before. I tend to pride myself on materials and textile knowledge. It is kind of where I started in this business way back when. I was a product developer at the very, very early stages of this. I cannot tell the difference. If you put leather down and you put our material that we are calling Terraluxe on the table, I cannot tell the difference. The only way I can tell the difference is I have to light it on fire to see how it melts and how it changes. It is all bio-based and recycled material, and it is beautiful. You couple that with the consumer and the use occasion, that is real. It is a real problem that people are trying to solve. They are solving them with white sneakers. Maybe there is a handful of shoes, but they are very expensive. In this sweet spot between $80-$130, if we can deliver on that proposition, we just think there is hundreds of millions of dollars to be had in this space. That's excellent. Annie, last question. With all these initiatives in place, what are you most excited about in the financial model as we get into the back half of the year in 2026? To build on what Joe was just talking about, product. In simple terms, we took almost two years off from product, as he mentioned a moment ago, only introducing four new products a season, et cetera. We took those two years to really restructure the company. We talked about the international transition to the distributor model. We closed unprofitable retail doors. We shrunk the size of our offices, our workforce, et cetera, really to get down to a much smaller overall structure, wireframe of the company, and importantly, cost of the company. The interest in doing that was to basically make sure that when we grow again, as we've been working on this product in the background for a year and a half, we would then become profitable. I feel like the hard work is behind us, right? Those tough things that you have to do when you're restructuring a company, we've done that. We couldn't be more excited about what's in front of us. The fun work's in front of us, which is bringing this product to market. That's the tip of the spear, supported by these new marketing, not just campaigns, but the content, reintroducing ourselves, and then making sure that those customers have a fantastic experience if they come to our store, if they come to one of our international distributor stores around the world, or if they come to our website. We know after our 50 years in the industry, most of those are Joe's years, that product is absolutely the thing that makes or breaks a company. What we've done to do is try to make sure everything behind that and underneath that product is going to set us up for profitability going forward and to be cash flow positive. As I mentioned before, we're so excited and confident in this plan and just can't wait for all of you to get a chance to check out the product. The first drops come in July and really builds over July through December and then continues into 2026. We're well positioned for growth. We have the team that knows how to deliver it. Now we feel like we have the right product to really bring to life the most potent version of Allbirds, what people initially fell in love with. That's excellent. Joe, Annie, thank you. That was great. Congrats on the challenge. Thank you. I just have one last thing to say. We are super excited about extel voting launching this week. 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