Good afternoon, everyone and thank you for joining us. With me on the call today are Joe Zwillinger and Tim Brown, Allbirds' Co-Founders And Co-CEOs, and Mike Bufano, Allbirds' Chief Financial Officer. Before we start, I'd like to remind you that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about our financial outlook, including cash flow and adjusted EBITDA expectations, Q1 guidance targets, impact and duration of external headwinds, simplification initiatives, strategic transformation plan and related planned efforts, go-to-market strategy, expected profitability and cost savings, product plans and expectations and other matters referenced in our earnings release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please also note that these forward-looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise any statements to reflect changes that occur after this call. Please refer to our SEC filings including our quarterly report on Form 10-Q for the quarter ended September 30 2022 for a more detailed description of the risk factors that may affect our results. Also during this call, we will discuss non-GAAP financial measures that adjust our GAAP results to eliminate the impact of certain items. These non-GAAP items should be used in addition to and not as a substitute for any GAAP results. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures to the extent reasonably available in today's earnings release. During today's call, we will also be referring to our active customers. Active customers are defined as the total number of unique customers who have made at least one purchase in the preceding 12-month period, measured from the last date of such period. The supplemental slide presentation is also available in the Investors section of Allbirds' website. Now I'll turn the call over to Joey to begin the formal remarks.

Thanks Katina, and good afternoon everyone. 2022 came to a challenging close as we ended the year below our guidance range, ending the year with nearly $300 million in net revenue, representing 7% year-over-year growth or 10% excluding $8 million impact related to FX. Our adjusted EBITDA for the year was negative $60 million, which includes a $17 million impact primarily associated with the previously announced discontinuation of certain first-generation apparel. Like the industry, we were impacted by weak consumer demand but we also made some strategic and executional missteps that impacted results. The most important thing we want you to hear from us today is that we know we need to improve performance in particular our path towards elevated and sustained operating margins and the set of actions we will outline today strive to do just that. We're announcing new transformation initiatives designed to get the business back on track with an emphasis on profitable growth. But before we talk about where we're going, let's talk about how we got here. In our first full year as a public company, we made important progress. We launched new materials innovations such as SwiftFoam and Plant Leather; built third-party selling relationships with Nordstrom REI, Shield and DICK'S Sporting Goods; executed on our simplification initiative, and added key leadership at the management and Board level. And we did all of this, while remaining true to the sustainability principles upon, which we were founded. These achievements will be important to our future success. However, in this journey we also made some missteps. First, we overemphasized products that extended beyond our core DNA. And as a result, some products and colors have had narrower appeal than expected. Because we were spending significant time and resources on these new products that did not resonate well,…

Thanks, Joe, both for the kind words and your partnership over the last two years. Allbirds is a special company with a unique mission, so this was not an easy decision on my part. I appreciate how you, Tim and the Board have been working closely with me in a highly collaborative way to facilitate a seamless transition. Before walking through the P&L, I would like to highlight that we have added both a restructuring and an impairment line in the income statement. In 2022, in restructuring, we are capturing costs associated with our previously announced simplification initiatives. In impairment, we are reflecting a charge related to store assets in China that were impacted by COVID-related closures. Going forward, we plan to use the restructuring and impairment lines in the income statement to reflect costs associated with our strategic transformation. Also, in light of the strategic transformation and in order to align with views expressed by members of the staff of the SEC following the receipt of a routine comment letter in December, we are no longer excluding from our non-GAAP measures the revenue and cost of revenue associated with the previously announced discontinuation of our first-generation apparel business. Our guidance targets for Q4 net revenue and adjusted EBITDA loss did exclude these items. The impact of this change compared to our guidance targets was an increase to Q4 revenue of $1.5 million, a decrease to Q4 gross profit of $3.5 million and an increase to Q4 adjusted EBITDA loss of $3.5 million. After factoring in the impact of this change, Q4 adjusted EBITDA was only slightly below guidance on an apples-to-apples basis. And that's a good transition to Q4, where the headline is that sales were disappointing, but we were able to offset most of that decline in the…

Thanks, Mike and thank you for your partnership and contributions to Allbirds. You've heard us share today a clear plan for reigniting growth across our company. We are an innovative organization. And in many ways this effort is not dissimilar to how we think about innovation itself. Innovation is the search for new solutions. Sometimes these solutions are unique. Other times there are a reconstitution of things that we already know. But in all cases, they require taking a step back and looking at things differently. And that's what we're doing as we launch Allbirds' strategic transformation plan. This plan is about taking a fresh look at how we deliver on our commitment to develop premium, differentiated and sustainably build products, so that we can better connect with our core consumer and reignite growth. A key role I am playing in this work is getting back to my roots evangelizing our brand. We have always believed that serving as a force for good for the planet is not only the right thing to do but it also makes Allbirds a more enduring business for the long-term. As we enter this next chapter, I am deeply passionate about helping to define the future of our approach to sustainable innovation in footwear and raising the standards for others across the retail industry. I'm equally focused on building a thriving culture at Allbirds. As you all know, Joey and I founded this company with a mission to create better products in a better way, and we did that by bringing a group of incredibly talented and passionate people together. Our shared commitment to our values has unified our team as we've grown and evolved the business over the years, and will continue to serve as our North Star as we work to refine our operations and strategy. We've learned a lot over the last year, and we're confident that the initiatives we announced today are the right ones to get Allbirds back on track. We are still in the early innings of our journey, but I firmly believe that the core foundation of this 100-year brand is as strong as it has ever been and our mission has never been more relevant. I know that the strategy outlined today is the right one for us, and I'm thankful that our team has embraced this pivotal moment with such enthusiasm. With that, I'll hand it back to the operator for Q&A.

Thank you. [Operator Instructions] Our first question comes from the line of Mark Altschwager with Baird. Your line is open.

Good afternoon. Thank you for taking my question. I guess just first I wanted to ask on the product strategy. As you retrench and focus on the core, I guess which silhouette and fabrics are you planning to pull back on or discontinue if any, or is the retrenching and refocusing here more related to the marketing decision and how you're going after your core consumer? Thanks and then I have a follow-up.

Hey, Mark. Thanks for the question. Yes. And this is Joey for everyone's sake. So it's a little bit of a combination. It's not just the market positioning. It also is really down to the core silhouette. And I'll say that the couple of examples we gave around the Pacer and the Flyer specifically, are good examples for you to, I guess clear out the picture there. So first on the Pacer that was both the product execution and a marketing campaign that was really oriented around a younger consumer really outside the sweet spot of the group of people who have really fell in love with us and love the core franchise for what we do. And similarly with the Flyer that was a product that was really marketed with heavy orientation around the technical running performance that that item delivers. And it's a great product. We just found out that the customers that were -- that are really in our sweet spot aren't resonating with a core technical performance messaging. And some of that missed execution by us. I think boils down to us having a little bit of difficulty with signal and noise as we launched the DASH and saw really tremendous success. And so as we dug in and did a bunch of consumer insight work here what we have found is that, this active lifestyle and the central space that really bridges those two kind of separate categories of lifestyle and performance really requires a focused effort around product development and it also requires a more focused effort with marketing. And we need to align those two in a really integrated fashion. And the Dasher, as I noted is a great example of a franchise that we think embellishes this story and this message to our consumers in exactly the way that we know it's going to resonate.

Thank you for that. And then a follow-up Mike a lot of changes to the P&L that you talked about today. As the changes take hold, is there a framework we should use to think about contribution margin as growth resumes? I believe you also said, you don't see the need for additional liquidity beyond the actions you discussed today. So what is the implicit view there on the time line to hit positive free cash flow? Thank you.

Yeah. Thanks, Mark. On the second part of that question, we talked about in Joey's comments earlier about getting to EBITDA positive in 2025. So I think you could follow that along on the cash flow side, especially this new model is going to be much more OpEx light and much more CapEx light for us. It's going to be higher quality revenues that flow through down to the bottom line. So in terms of contribution margin, I'd say, let us follow up with you on that in future quarters how we're thinking about like the right shape of the P&L. I think the reality is we have to get these international transformation, these potential international transformations done. And that, the P&L takes shape we'll walk everybody through that later on.

That's great. Thank you, and best of luck.

Thanks, Mark.

Thank you. Please standby for our next question. Our next question comes from the line of Alex Straton with Morgan Stanley. Your line is open.

Hi. This is Keezel [ph] on for Alex Straton. Thank you for taking my question. I was wondering, it sounds like you're kind of pulling back from appealing to that younger consumer and more tenable performance. So I was wondering, how you're viewing your TAM, and if you think it might be lower than it was maybe when you IPO-ed? Thank you.

Thanks for the question. Really, not at all different actually. What we looked at – when we last showed a really comprehensive set of consumer data, largely mirrors what we're describing here. So I would describe the core consumer. This is a largely affluent set. It's pretty balanced between gender. So currently, it's about 55% women in the SKUs that we sell. But what we've heard from the consumer in that study is that, we have even a bigger opportunity with women than we understood. And to the previous comments around product calibration, having a really tightly gender-differentiated color strategy and silhouette strategy, will offer us a significant opportunity going forward. The geography is really dispersed, so there's not really any big concentration's in any part of the country. And so this demographic and even the psychographic really spreads across the country, so we continue to estimate this core demo that represents around a-third of the population, and a really sizable and attractive group of customers, for which we think this message is going to resonate very strongly. And I'll say this white space around the active lifestyle urban exploration are territories that are really wide open and we think we have a unique position to be able to capitalize on that.

Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Edward Yruma with Piper Sandler. Your line is open.

Hi guys. Thanks for taking my questions. And Joe it's been great working with you. I guess first on technical performance. I'd assume that there are other products in the pipeline maybe Flyer 2.0. Is there expectation that other products maybe get liquidated over time? And then, I guess, if I zoom out from that, in terms of liquidation strategy can you help us understand, how you can kind of protect the core brand we've seen some liquidity products end up on like Walmart.com through marketplace vendor or another? So can you maybe talk about your disposition philosophies kind of broadly speaking? Thank you.

Yeah. Thanks Ed. So in terms of -- I guess, I'll do the second one first, because I think we can bleed into the specific example of things like the Tree Flyer. Overall, what we're looking to do, as I noted, we're going to do a little bit more elevated markdown than you'd typically see from our brand. And those are going to be targeted at truly end of season or end of silhouette when we're going to either sunset that style completely or generationally update it. So this is about making sure that we protect what the core is. And that will be our continued strategy. And selectively around that some promotion to invite new customers in that are just looking for a deal and what is continuing to be a heavy inventory industry and consumer environment that we think we need to be -- remain competitive with. So in general, while it's going to be elevated, that's in-part due to a bit of a mixed miss in terms of what we've outlined here. It's also just in-part due to the overall volume and the miss in Q4 that we're going to need to catch up with. So those two things are going to be thoughtful and measured, and we expect to be able to enter 2024 with a clean inventory with a great mix and with the appropriate size of inventory. And I'll also say that as we go through the rest of the year we'll give you some updates on how inventory plays with these, international transition should those be executed. And so lastly, just on that first part of your question Ed, around technical performance and I know you've loved that product before as you've used it on runs. So it is a great product for running. But as I said I think our consumers just weren't ready to have us enter that space and play that role in their lives. And so one of the elements there is, if we continue to even upgrade a product like that, make sure that it meets a really nice lifestyle moment and an active lifestyle and we can realign market positioning and marketing around that kind of territory. We think that will be a lot more successful. And of course we're going to have to couple that with more measured buys given what happened with the TF1.

Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Jim Duffy with Stifel. Your line is open.

Thank you. Good afternoon. Mike thanks for all the help, through these past quarters and so forth. We're going to be sorry to see you go. I wanted to start by asking about the change in go-to-market strategy for the international markets. That seems particularly compelling. Under a distributor structure, do you feel there are clear sight lines to that international business becoming profitable? And then I guess the question that goes along with that is what's the cost associated with exiting the direct footprint in international markets before you can get there? And then is it realistic to expect the change in go-to-market strategies will fully influence the P&L and balance sheet in 2024?

Yes. Thanks for the question Jim. I'll take the kind of first part of that in terms of how we're thinking about the overall structure and transition and maybe Mike can tackle some of the implications on the financials and how we see that shaping. So, in terms -- first of all, we are fairly early in the evaluation process. We went through a period of diligence where we really sought to understand what the overall impact of a strategy like that and a shift like that could make on the business and the financials. And so what we found from that which we now after we've gone into the market and started some conversations continue to believe is that while we're going to shrink the revenue on an apples-to-apples basis, as Mike noted, we are going to immediately see solid flow-through to the bottom-line. And once we manage to get over the threshold where we can reduce the complexity inside of HQ to couple with that, that entire part of the business should flip to something profitable and meaningful quite quickly after those transitions are made. And I'll note that we've not made investments in our third-party -- in our international business for third-party. And so while we have with great partners here in the US like Nordstrom, REI, ESG, and Shields, we have not done that in any material form in international markets. And when we look at some of these distribution partnerships, there's an opportunity to plug in quite quickly to an infrastructure that can support third-party distribution and build a really healthy marketplace with higher market awareness in those geographies. And so it's still a bit early on this journey and we're out ahead of this and talking to you guys about it transparently now Jim. But we would, of course, we'll update you as this goes. But we would expect this to be a really positive transition as it relates to having profitability as our core mindset here. And lastly, I'll just say that as we have shifted into starting to explore these conversations, I'll say it's very encouraging that there's quite a bit of options out there in all of the regions that we might consider for this strategy. So, positive early signs and we'll give you more detail as we go.

All right. And I'll just add on -- and thanks Jim by the way. It's been great to work with you as well. So, in terms of like when we'll see this in the balance sheet and the P&L, I think to Joey's point, it will be the pace of the transitions that they occur that will really dictate that. Given some of the earlier demand if we do go forward on some of this we'll hopefully see it as early as 2024 and that will be a really positive impact for us clearly. The first part of your question I think was then what are the costs associated with exiting, I think the reality is going to be there will be obviously some costs around discontinued operations or assets that are held for sale if distributors are going to end up buying stores from us. Our guess though is the inventory that we're going to sell them as they kind of ramp up and fill the channel asserting those markets, the cash we're going to receive from that and the revenue we're going to receive from that should more than offset any of the exit cost. But obviously every deal is a little bit unique. Every transaction is a little bit unique. So, if we do proceed with the transaction, we'll obviously give a lot more visibility around that and let you know how that's working out over time. But our hope that we go into these deals and if we view them, they're going to be cash neutral if not cash positive.

It makes good sense. I realize you still have much to explore, but that does seem a very logical structure. Question for Joey and Tim and I'll just be direct here. Are the two of you open to exploring the idea that the best future for Allbirds may not be as an independent entity?

Yeah. Look, we are always open-minded. We have a belief and have for some time that the opportunity for this brand is really substantial. And I think we've more than validated in fact surprised ourselves when we ran this most recent and deep consumer insight study that we did with some external partners. So we continue to believe in the long-term opportunity here as having an incredibly high ceiling and we want to pursue that with the best path that we possibly can for our shareholders. And at this moment as we look around and of course had discussions with all the right people that you'd expect us to be having, it continues to be our belief and the Board's belief that the best opportunity is as a public company that's seeking an independent future and that's in the best interest of shareholders, Tim and myself being some of the most significant ones.

Thank you very much for that.

Thank you. Please standby for our next question. Our next question comes from the line of John Kernan with Cowen. Your line is open.

Good afternoon guys, thanks for taking my question. And Mike it's been good working with you.

Thanks John.

So, Mike maybe just on OpEx and within operating expenses, the two buckets SG&A and marketing, I think in your prepared remarks, Joey, I think you said marketing dollars would be up again this year. So how do we think about SG&A and overall operating expense dollars and rates as we go into 2023?

Yeah. We're not giving guidance for the full year John like Joey said in the call. And, obviously, the pace that would happen with the international transitions if those do happen that's going to have a pretty big impact both on the marketing spend and on the OpEx. So unfortunately that's a really hard question to give a lot more clarity on. As you all work through your model, I mean, Katina and I are happy to answer some follow-up questions over the next few days as you look at the model. I will tell you that over time as you balance this out when we talk about getting to like EBITDA positive in 2025, you'd be looking at a business that obviously has a lot less marketing dollars because they'd be primarily focused on the US and a lot less OpEx dollars, because again it'll be a much smaller and simpler go-to-market structure and a lot less CapEx required to grow that business. So I focus a little bit less John on just the 2023 piece and a little bit more about the destination of 2025 and why some of these potential changes make a lot of sense for us.

Understood. A lot of helpful commentary on the product strategy and the margin profile. I guess, what about the balance sheet and working capital as we get into 2023 inventory dollars and other areas where you can conserve cash?

Yeah. So I think a couple of pieces there. I think you've already seen some of the benefits of the work we've put into place around -- like definitely inventory management being a lot more judicious about, the rate of our cash burn and that has come down every quarter and our inventory growth has come down every quarter. So we feel like we're making a lot of progress there. Joey and I both said earlier during the prepared remarks I think the reality is we are sitting on a little bit more inventory than we would want right now. A lot of that is some product that comes from the second half of 2022 and those are the ones we talked about that we're going to be a bit more aggressive within our own channels around markdown and moving some of that out. And at the same time, we've been a lot tighter on the inventory buy clearly for 2023 and into the early part of 2024. And then in terms of working capital, the reality is that once the business is a little bit more third-party oriented and distribution-oriented over time, that's certainly going to change how we think about working capital. We want more levers for us to pull around working capital. Then the last thing, I'd say, is when we think about what would happen with cash in 2023 again, to kind of follow up on what we were just saying to Jim's question, we expect any of those transitions if they happen, to be cash flow neutral or cash flow positive. As you get closer to those potential transactions, you're obviously, not going to be buying inventory for the market so that will start to come down over time. There's lots of levers, we have within there. It's just because of the pace of the potential transitions internationally John, it's hard to give you a very precise answer, but those are the factors we think about as we have confidence in the liquidity position and with inventory coming down over 2023.

Perfect. Thanks for all color there

Thank you. Please standby for next question. Our next question comes from the line of Janine Stichter with BTIG. Your line is open.

Hi, Thanks for taking my question and for all the color. I was hoping you could elaborate a bit more on what you're seeing on the wholesale side. Curious, how effective you've seen these partnerships be in acquiring new customers, if you're seeing any differences there in terms of sell-through versus what you're seeing in your own stores. And then, how much would you or could you accelerate it if you think it's the right strategy to go more wholesale route?

Yes. Thanks for the question. The -- we've only selected just a handful of accounts so far and they're really premium. And we went into these relationships understanding that we were going to fill a real need for their consumer, that is walking in their doors. That was differentiated and was accretive to our overall ecosystem, being that we expect some of those customers to come back to our direct channel and of course, just add aided awareness in the regions that we may not be able to hit with our stores, or can best hit with multiple touch points. So, far that's working. That seems to be working decently here, but we're still so small. It's hard to really clear out the noise and understand, what the impact on aided awareness growth has been related to that channel. And I'll say, as it relates to product, we've seen a good deal of consistency across all our channels. So the sell-through being really strong on the core franchises, that we kind of have described is, what is most resonant with our core consumer. And in some of the more technical performance areas, some of those being at elevated price points. Those are -- that's been a little bit weaker. And so, we're recalibrating that. And the overall, approach here is, we want to have really strong sell-through to support our partners and customers here. And as we have really strong sell-through, we're going to be able to do that by recalibrating and focusing on, not just like the sweet spot of core but also these embellishments that we make around the core franchises. Drive sell-through there, which goes into better sell-in in the next season. We can add doors in these accounts because they all have substantial number of doors that can reach a great consumer. And then finally, we will consider selectively evaluating some additional partners whether that be on the physical brick-and-mortar side of the wholesale marketplace, or even in digital. So we're looking at that. We're looking at it from a clean marketplace perspective, and trying to grow this in a very healthy way and don't want to just go extremely quickly. Because theoretically the numbers would pencil out to be higher flow-through to EBITDA for that, but really want to make sure we have a clean marketplace and give our consumer, a great experience as they come into our company's ecosystem.

Great. Makes sense. And then one more. On the retail side, as you've become more of a retail business, more wholesale than you were initially I'm curious -- I noticed you mentioned that you didn't promote as much as maybe you thought you could have in the fourth quarter. So as your sales base shifts more to stores and wholesale from online, are you finding that you need to compete more with the traditional retail calendar? I'm just curious how that changes your approach to promotions and ultimately the gross margin structure.

Yes. I think if the wholesale becomes -- the wholesale channel becomes much more significant I think there's probably some constraints that we are going to have to work with in terms of promotion calendar and markdowns. I would also expect that we would be able to differentiate our assortment across channel really effectively. And then it's important to also understand the role that each of these wholesale partners our stores and our digital ecosystem play. And we found in our retail stores these are consumers who are much less price resistant and have a very high purchase intent and so they're coming in. And we want to make sure they have the best experience, the best product and items that we don't expect to mark down quite as much or quite as quickly as we work through this inventory and well into the future. So that's sort of how we're thinking about the flow across each of these segments of the omnichannel offering within the US. And so far pretty good. I think some of the lessons we've learned in this in Q4 we're working through in Q1 to make sure everyone is cleaned up in an effective way so that we march through the rest of this year in a very healthy and deliberate manner.

Right. Thanks so much and best of luck.

Right. So I think we have -- we're a little bit over time since we have a long prepared remarks. So we'll take one more question and then we'll catch anybody else in the follow-up call. So thank you all for your patience. Let’s take one last question operator.

Thank you. Our final question comes from the line of Blake Anderson with Jefferies. Your line is open.

Hi, guys. Thanks for fitting us in. Just wanted to ask on slowdown in the core customer, it sounds like that was mainly product launches in the second half. So I just want to make sure it sounds like you guys saw a step down in Q4. It's not like this was such a gradual realization and kind of took a step down in Q4 with some products like the Flyer. So how much of the slowdown do you think is macro-related? I don't know if you could size that out. And then just secondly on getting back the focus to the core customer. I was just wondering how we should think about the pace of innovation. Are you going to try to innovate more products for the core customer, or is just shifting your attention and marketing back to the core customer kind of good enough to improve that part? Thank you.

Thanks, Blake. So the turn down was actually most pronounced in the very end of the quarter which is unique, and frankly we didn't have as much of an opportunity to react even if we wanted to in terms of increasing some of the promotion or markdown cadence there. That was one element that we saw. In general the comments around our core customers that's really what we found in particular when we dig into the research and this is a multi-thousand consumer study that we ran has shown us that what we became famous for early on those are things like the Wool Runner, the Tree Runner, the Tree Dasher. Those are still resonating very strongly. What I alluded to earlier is that we put some of these newer products out there and we did that at the expense of what in the footwear industry is so much more dimensionality we still have yet to offer on the core franchise. That can be in a gender-differentiated color strategy. It can be with trim. It can be with things that are really specifically oriented hitting consumer needs and some trend-based things that are very wearable and compelling for her, but for both genders in particular. So I'd say that's a bit more of where we're headed and those are things that we can impact a little bit more quickly than we can in overall silhouette differences. So in terms of the innovation that you should see coming forward or should expect from us going forward, you're going to see a lot more embellishment and emphasis from the marketing side as well around core franchise development. And then secondly, as I noted, newness is still really important. And when we sharpen our focus and we focus on what the consumer is telling us, what her needs are, then we should be able to introduce some really interesting new silhouettes and new styles that will branch off of these franchises that we know are a little bit closer to those core products and core consumer needs. So that's generally the sequence that you should expect. And I'm now talking from changes that we can do in the core product mix in 2023 with colors and trim things like that, smaller variables and then greater things on silhouettes in 2024. So that's generally the pace. Newness is still really important. It's just directing that newness in a way that's listening really deeply to these consumer insights that we picked up.

Thank you. I would now like to turn the call back to Joe for closing remarks.

Thank you very much. And thank you everyone for joining us today. I just want to say that our team is really energized and aligned where we need to go and how to get there. The changes we announced today are substantial and much of that work will take time, but we are committed to getting this right to create value for shareholders. And on behalf of the entire Allbirds team, I want to thank the investors and the analyst community who believe in the foundation of this brand. We look forward to updating you all on progress in the next quarters.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.