Smartbird, Inc

Third quarter net revenue was $33 million, at the low end of guidance. Gross margin was 43.2% versus 44.4% in Q3 2024. SG&A was $22 million, down $9 million or 30% year over year, and marketing expense was $12 million, up 19%. Adjusted EBITDA loss was $15.7 million versus a loss of $16.2 million a year ago. Cash and cash equivalents ended at $24 million, with $12 million of borrowings on the $50 million asset-backed revolver; inventories were $43 million, down 25% year over year, and operating cash use was $15.2 million. For the full year, net revenue is now expected to be $161 million to $166 million, including about $23 million to $25 million of impact from international distributor transitions and retail store closures. Q4 net revenue is guided to $56 million to $61 million, flat to up 9% year over year. Full-year adjusted EBITDA guidance was tightened to negative $63 million to negative $57 million, and Q4 adjusted EBITDA loss is expected to be $16 million to $10 million.

Joe Vernachio emphasized that product is the center of the turnaround, saying the company is focused on “Comfort, Style and Sustainability” and on rebuilding the brand through multiple product cycles. He highlighted strong reception to the Wool Cruiser, waterproof collection, slippers, and the new Kiwi line, while acknowledging that some foundational franchises, especially the runner, are still slow to recover. His tone was optimistic but measured, with repeated references to disciplined execution, a more brand-centric website, a renewed wholesale strategy, and a competitive holiday plan.

Annie Mitchell said Q3 results were slightly ahead of bottom-line expectations despite revenue landing at the low end of guidance. She attributed the 43.2% gross margin to channel mix and higher duties, but said full-year margin should remain in the low 40s; she also noted Q3 SG&A fell to $22 million, down $9 million or 30%, while marketing rose to $12 million as the company invested behind new products. She closed with a liquidity focus, noting $24 million of cash, $12 million of revolver borrowings, $43 million of inventory, and $15.2 million of operating cash use, and said the company is exploring options to improve liquidity while taking immediate expense-saving actions.

Analysts focused on why sales came in at the low end, what supports the Q4 inflection, inventory composition, and how the company plans to handle Black Friday/Cyber Monday. Joe said the shortfall reflected three factors: newer products still ramping, the original runner franchise not yet recovering, and a tough macro environment with consumer distraction. Annie said Q4 should improve as more new product reaches market and structural drags from distributor transitions and store closures shrink, while Joe said the holiday plan will be promotional and competitive because the company does not want to lose share.