NASDAQ:BRLT Brilliant Earth Group Q1 2024 Earnings Report $1.55 0.00 (0.00%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$1.54 -0.01 (-0.65%) As of 04/25/2025 05:21 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Brilliant Earth Group EPS ResultsActual EPS$0.02Consensus EPS -$0.02Beat/MissBeat by +$0.04One Year Ago EPS$0.01Brilliant Earth Group Revenue ResultsActual Revenue$97.34 millionExpected Revenue$97.73 millionBeat/MissMissed by -$390.00 thousandYoY Revenue GrowthN/ABrilliant Earth Group Announcement DetailsQuarterQ1 2024Date5/9/2024TimeAfter Market ClosesConference Call DateThursday, May 9, 2024Conference Call Time5:00PM ETUpcoming EarningsBrilliant Earth Group's Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Brilliant Earth Group Q1 2024 Earnings Call TranscriptProvided by QuartrMay 9, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Brilliant Earth First Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Session. Operator00:00:19Please be advised that this conference is being recorded. I would now like to hand the conference over to your speaker today, Allison Malkin of ICR. Please go ahead. Speaker 100:00:30Thank you, and good afternoon, everyone. Welcome to Brilliant Earth's Q1 2024 Earnings Conference Call. Joining me today are Beth Gerstein, our Chief Executive Officer and Jeff Kuo, our Chief Financial Officer. During the call today, management will make certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Speaker 100:01:01Please refer to our SEC filings for a description of the risks that could cause our actual performance and results to differ materially from those expressed or implied in these forward looking statements. These forward looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events unless required by law. Also, during this call, management will refer to certain non GAAP financial measures. A reconciliation of Brilliant Earth's non GAAP measures to the comparable GAAP measures is available in today's earnings release, which can be found on the Brilliant Earth Investor Relations website. I'll now turn the call over to Beth. Speaker 200:01:53Good afternoon, and thank you for joining us today. I'm excited to report that we started this fiscal year driving continued success on our strategic initiatives and delivering our 11th consecutive quarter of profitability as a public company. By driving strong order growth, further expanding gross margin and delivering strong marketing efficiency, we far exceeded our profitability expectations for this quarter. I'm proud of our consistent record of gaining share and delivering profitability through many environments, and this quarter's outperformance is another example of both our focus and our agility. Our results continue to show increasing resonance of our brand and the success with which we execute and gain share in the still normalizing $300,000,000,000 global jewelry industry. Speaker 200:02:46We're beginning the year with positive momentum and we believe we are in a great position to deliver on our goals for the full fiscal year. Here are a few noteworthy performance highlights from Q1. Net sales were approximately flat year over year at $97,300,000 and within our revenue guidance range. Total orders increased by 13.7% and repeat order volume increased by more than 20% year over year. Average selling price, or ASP, grew year over year across our product assortment, including engagement rings, wedding bands and fine jewelry. Speaker 200:03:25Gross margin was 59.9% or a 500 basis point increase year over year. Q1 adjusted EBITDA of $5,100,000 or a 5.2 percent margin was ahead of our expectations. Our outperformance on profitability serves as another testament to our premium brand positioning and to our ability to manage the business nimbly, including highly disciplined management of our marketing spend. I'm incredibly grateful for and impressed by our team and their execution to deliver consistent and sustainable profitability. I'd like to touch briefly on a few first quarter success drivers, including brand, product and our omnichannel experience. Speaker 200:04:11As you know, we continually focus on elevating and expanding the Brilliant Earth brand and Q1 was no exception. For the biggest gifting holiday of the quarter, Valentine's Day, we launched our Real Love campaign featuring the love stories of Brilliant Earth customers to a resounding response, including strong social and media engagement with prominent spots on Good Morning America and with Jenna and Hoda on the Today Show, resulting in over 50,000,000 media impressions. Additionally, following on this year's earlier red carpet success where we were the brand of choice for some of today's brightest young stars, we were thrilled to have Sydney Sweeney dress head to toe in Brilliant Earth Jewelry for the 35th Annual GLAAD Media Awards. The Q1 was also a big moment for us on social media with our strongest ever social engagement. With a combination of organic and influencer driven content, we saw overall social media engagement grow 100% quarter over quarter. Speaker 200:05:17On Instagram alone, we saw impressions and video views grow approximately 100% 258% quarter over quarter respectively. And finally, we had the amazing opportunity to launch our partnership with legendary conservationist, Doctor. Jane Goodall, in support of the Jane Goodall Institute. We are honored to partner with Jane to advance our mutual goals of sustainability and social responsibility. As champions of ethical practices and environmentalism, both Brilliant Earth and the Jane Goodall Institute are committed to creating a positive impact on the planet and its inhabitants. Speaker 200:05:58Not only is it a tremendous honor to have Jane's support, but also a strong validation of our nearly 20 year mission to transform the jewelry industry. I look forward to sharing more about the partnership, including a fine jewelry collection in the coming months. Our strong brand performance amplified the carefully crafted and distinctive product for which Brilliant Earth is known. We had spectacular performance in our fine jewelry assortment with a particularly strong Valentine's Day. In the 2 weeks leading up to Valentine's Day, fine jewelry grew 45% year over year, highlighting our continued momentum in this space. Speaker 200:06:38Our customers are coming to us for both timeless styles such as tennis bracelets and diamond stud earrings, as well as trend leading designs. Throughout the quarter, we expanded on the success of our tube collection drop mentioned in our previous call by launching additional trend leading collections, like our hearts and clover collections to great success. We saw heart shaped jewelry sales grow 182% year over year in the quarter. We continue to see robust performance in our wedding and anniversary ring assortments, resulting in another quarter of double digit growth year over year. Furthermore, we're driving outsized growth in our men's wedding ring collection, including strong demand for our textured and accented rings. Speaker 200:07:24We also see more and more customers purchase our rings for occasions outside of weddings. For example, we believe that more and more of our eternity ring sales are self purchases. We also see impressive performance in our fashion rings assortment with 75% growth year over year in Q1. And finally, in engagement rings, we believe we had strong performance despite ongoing industry challenges and a heavy discount oriented promotional environment, which we choose not to follow. Our premium brand and curated proprietary assortments continue to resonate with engagement ring consumers, and we saw another quarter of year over year ASP growth in engagement rings, with particular strength in areas such as our signature collections that are exclusive to us. Speaker 200:08:11We also continue to assert our leadership in offering transparency into the origin of our natural diamonds through blockchain, with more than 10,000 blockchain enabled diamonds on our site today. We believe we are on a multi year path to recovery and engagements starting this year, and we are confident in our ability to continue to grow market share as we are increasingly recognized as the go to brand for premium distinctive bridal jewelry. As you know, over the last 2 years, we've been expanding our showroom density within existing metros, including San Francisco, Los Angeles and Washington D. C. And we continue to see positive incremental growth as we add multiple showrooms in metros. Speaker 200:08:55I'm incredibly proud of this result, which shows the impact of our prudent and measured approach to new showroom launches. With that said, we continue to build our pipeline for future showroom locations and remain on track to achieve our goal of 2 to 4 new locations this year. We will be opening 3 premium outdoor locations with 2 showrooms in Boston, in Seaport and Chestnut Hill, as well as our 1st street level location in New York City, in Noliva. In March, I told you that this year we expect to continue making investments that will set the stage for long term sustainable growth. As a technology driven company, our teams have been hard at work over the last few months deploying and improving new platforms and systems to improve both customer satisfaction and operational efficiencies. Speaker 200:09:43One great example is the significant enhancements to our CRM platform to improve our ability to manage the customer journey and drive improved customer economics. As jewelry is a highly considered high value purchase, our continued innovation in customer engagement further differentiates us from the industry. As you saw in our release, we've reiterated our full year guidance, and Jeff will walk you through our Q2 expectations in more detail. In Q2 to date, we continue to drive strong order growth and repeat purchase behavior and have strong momentum in wedding bands and fine jewelry, offset with a softer start to engagement rings. As I have previously mentioned, we do expect that this year will be the beginning of a multiyear path to normalization in engagements. Speaker 200:10:31We recognize that there are puts and takes in any given quarter, but I am confident that we are well positioned to gain share and drive profitability as we nimbly adapt in this environment. In closing, I'd like to note how pleased we are with the start of the year, especially with our outperformance and profitability amidst headwinds in the industry and macro environment. I have high confidence that we will continue to gain share with our premium, approachable brands, elevated omni channel customer experience, our differentiated product and excellence in execution. Finally, I'd like to introduce a member of our team. Colin Borland is our VP of Strategy and Business Development and will be taking on a larger role including Investor Relations. Speaker 200:11:16Colin has been with Brilliant Earth since 2020 and brings a wealth of knowledge about our strategy, operations and financials. We are thrilled to have him take on a broader role and we're looking forward to you getting to know him in the coming months. With that, I'll now turn the call over to Jeff. Speaker 300:11:34Thanks, Beth, and good afternoon, everyone. As Beth mentioned, we're pleased to report a quarter where we continue to successfully drive our strategic initiatives, gain market share, meet our top line growth expectations and far exceed our profitability expectations even in the face of industry headwinds. Let me take you through the details. Q1 net sales were $97,300,000 approximately flat year over year, which was within our guidance range and reflected strong market share gains. We drove a 13.7% increase in total orders year over year. Speaker 300:12:13Additionally, we drove over 20% growth in repeat orders year over year. This performance demonstrates the effectiveness of our customer acquisition and retention efforts, including the resonance of our brand with consumers as well as strong performance across our products. Average order value or AOV declined 12.4% year over year as we continue to drive outperformance in our fine jewelry collection, which as you know has lower price points than engagement rings. We saw strength in average selling price or ASP across our product collections. The ASP for our engagement rings, wedding rings and fine jewelry increased year over year in Q1. Speaker 300:13:00Q1 gross margin was 59.9%, which is a 500 basis point expansion over Q1 last year. The ongoing strength in our gross margin continues to be driven by our premium brand and proprietary products, our price optimization engine, procurement efficiencies and our enhanced extended warranty program. This strength in our gross margin is particularly rewarding as we maintain our focus on our premium brand positioning in an environment where others lean into discounting. We delivered a Q1 adjusted EBITDA of $5,100,000 or a 5.2 percent adjusted EBITDA margin, significantly exceeding our expectation. Our strong gross margin performance together with prudent management of our marketing spend and other operating expenses contributed to our strong profitability results this quarter. Speaker 300:13:58Q1 SG and A was 59% of net sales compared to 55% of net sales in Q1 2023, as we continue to balance making investments to drive long term growth with discipline and expense management to deliver profitability. Q1 adjusted SG and A was 54.7 percent of net sales compared to 49.3 percent of net sales in Q1 2023. Adjusted SG and A does not include items such as equity based compensation, depreciation and amortization, showroom preopening expenses and other nonrecurring expenses. We maintained a disciplined approach to our Q1 marketing spend as a percentage of net sales, with a slight deleverage of approximately 60 basis points compared to Q1 last year as we continue to make strategic investments in driving brand awareness and supporting key initiatives such as growth in fine jewelry. As I pointed out during our last earnings call, we aim to keep quarterly marketing spend for the year at a similar percentage of net sales compared to the 2023 average, and Q1 outperformed that expectation, while still driving robust market share gains. Speaker 300:15:17As a growth company, we believe building brand awareness is one of our largest areas of opportunity, and we are leaning into this with a well designed and intentional marketing strategy that supports both near term opportunities and long term goals, all while maintaining overall profitability. For the Q1, employee costs as a percentage of net sales were higher by approximately 2.90 basis points as adjusted year over year, principally driven by the annualization and addition of both showroom and corporate employees to support our growth. These employee investments have contributed to the strong uplift that we see in showroom metros and our outperformance compared to the overall jewelry industry. We continue to manage these expenses in a disciplined and responsible manner. Other G and A as a percentage of net sales increased by approximately 200 basis points as adjusted year over year as we continue to prudently invest in our business. Speaker 300:16:19This includes increased rent and other costs to support our growth as well as investments in technology. Our data driven, capital efficient and inventory light operating model continues to provide competitive advantages. We have been able to leverage this model to keep our year over year inventory increase to less than 3% despite the expansion of our showroom footprint and our significant growth in fine jewelry. Our lower risk, agile inventory model and strong balance sheet continue to differentiate us from the rest of the industry. We ended the Q1 with approximately $147,500,000 in cash, which reflects a year over year increase of approximately $1,500,000 even after expanding our showroom footprint by over 30% and paying down over $3,000,000 in principal balance on our term loan. Speaker 300:17:18Our ability to generate cash differentiates us from many others in the industry and highlights the benefits of our asset light, data driven business model. In addition, we continue to maintain a strong balance sheet with no net debt. Our financial strength allows us to continue to make prudent investments in the business to drive long term growth. In Q1, we repurchased $100,000 of our common stock. As I mentioned in our last earnings call, our strong balance sheet provides the ability to strategically see value creation opportunities, including when we see an opportunity to buy back our common stock. Speaker 300:17:58We intend to continue using this program strategically, while balancing our overall investment decisions, including consideration of factors such as trading volumes and our public float. As we look ahead to the rest of the year, we are reiterating the annual guidance that we provided in March as we continue to be well positioned to drive share gains, maintain strong gross margins and manage operating expenses in a disciplined fashion. For Q2, as Beth mentioned, we continue to drive robust order growth and have strong momentum in fine jewelry and wedding and anniversary bands, offset with a softer start in engagement range as the industry continues to face some headwinds along the gradual path to normalization. For Q2, we expect net sales to be down in the lowtomidsingledigit percent year over year. We expect to continue making investments in Q2 to set the stage for long term growth, while still delivering profitability and sequential revenue growth. Speaker 300:19:06We expect Q2 adjusted EBITDA margin to be in the low single digit range as a percentage of net sales as we dynamically manage operating expenses, including marketing spend to deliver profitability while making strategic investments in the business. We expect our growth rate to increase as we progress through the year as we anticipate that engagements will continue to normalize. We also expect other key drivers will include realizing uplift from the opening and growth in new showrooms, the continued strong performance of fine jewelry and the fact that seasonally Q4 is the biggest quarter for fine jewelry sales. For the second half, we expect that growth will be Q4 weighted with a low single digit percent net sales year over year growth rate in Q3 and a higher year over year growth rate in Q4. In closing, our premium brand and differentiated business model, including our data driven decision making, seamless omnichannel platform and asset light structure demonstrate our ability to gain share, deliver profitability and achieve our strategic and financial objectives in a variety of different environments. Speaker 300:20:24Our performance in the Q1 reinforces our ability to execute and capitalize on the opportunities that drive long term sustainable and profitable growth. With that, I will turn the call back over to the operator for questions. Operator00:20:40Thank Our first question comes from Oliver Chen with TD Cowen. Your line is open. Speaker 400:21:09Hi, thank you. Regarding engagement and what you're seeing there, it sounded like it was a bit of a softer start, but you do foresee a recovery. Just would love your take on what you're seeing in the environment and what's embedded in your forecast. Also, you had really robust gross margins, but the environment in terms of competitors in the industry has been fairly What's happening in terms of what you're seeing in your ability to compete there? And lastly, on Fine Jewelry, you made a lot of great progress. Speaker 400:21:41Just what's ahead in terms of what you think you need to do to continue to drive momentum there as you think about platforms and branding and inventory management as well? Thank you. Speaker 200:21:53Hi, Oliver. Thanks for the question. I can start with just what we're seeing in the overall environment. So we had mentioned that we're really proud of the positive indicators that we've seen at the overall business that the brand has a lot of momentum overall outside of bridal. And within bridal, we are seeing industry headwinds overall, but we do expect that that will continue to normalize and we've been talking about that normalization. Speaker 200:22:18So I don't think that would be a big surprise for you. As it relates to the promotional environment, we are seeing, especially within the engagement ring segment that it is heavily promotional. And as we've kind of done in the past, we really choose not to participate in these very discount heavy promotions that we see from our competitors. And I think that's part of the reason that our brand continues to be seen as a premium brand and why we're seeing great results like our ASPs continue to increase within the engagement ring assortment. Overall, we take a very balanced approach when it comes to gross margin. Speaker 200:23:00I'm sure Jeff can talk to that more specifically. But the idea that we're really investing in quality revenue and not chasing unprofitable growth is something that is, I think, important for the long term of the company. As it relates to fine jewelry, and Jeff feel free at the end maybe to talk about gross margin, we're really excited that we are increasingly seen as the destination for our millennial Gen Z consumer for fine jewelry. And we've invested a lot in our branding efforts on social where we're seeing record high engagement. We're seeing really great response to the product drops that we have and we continue to invest in the assortment overall. Speaker 200:23:46And I think part of the reason we are so successful is we're seen as a trend leading option as well as really the key wardrobe staple where you need to go to get your diamond studs and your tennis bracelets. And so balancing that diamond essentials with the trend, I think it's something we've been really successful at and just making sure we're continuing to invest in the brand. And I think it's working really well. We're seeing great success with repeat. We're seeing great success with self purchase and all of that I think is a testament to all of the efforts Speaker 300:24:22that we're doing within fine jewelry. Speaker 200:24:22So Jeff, I don't know if you have more on the gross margin side. Speaker 300:24:25Sure. So just to recap on some of the points on gross margin, Oliver, as we've talked about before, it really starts from the strength of our brand and the premium nature of the brand, our proprietary products, we amplify that operationally with our price optimization engine, procurement efficiencies and the warranty program. And then maybe just to double click a little bit more into the price optimization engine that involves really continual price testing to optimize the right mix of top line growth and gross margin percent with the idea to maximize gross profit dollars. And I think we've been able to manage those levers very nimbly and agilely in this environment to really drive that optimization to preserve the premium positioning that we have, and we're glad to be able to deliver the results that we did for Q1. Speaker 400:25:22Thanks. Very helpful. Operator00:25:24One moment for our next question. Our next question comes from Ashley Owens with KeyBanc Capital Markets. Your line is open. Speaker 100:25:36Hi. Thanks for taking the question. I just wanted to focus on the New Street location. First, I guess, has anything evolved in your approach to showrooms and how you'll be formatting that store in terms of inventory on hand or just security given it is street location? And then also, I think this is the 3rd NYC story you're counting with the Brooklyn one. Speaker 100:25:58And your expansion plans have focused kind of on density in existing metros. So just curious on thoughts and wondering where you find the right number of stores to meet demand in some of these bigger highly populated cities without risking cannibalization? Speaker 200:26:13Yes. Great question. And really the way we think about our stores is all about incrementality, which is why we're really pleased to see the fact that we're driving incremental growth in the clusters that we're operating in. In terms of how we think about the right number of stores, we're taking a very ROI driven approach as we're launching new showrooms. And we have a lot of data at this point in terms of what we're seeing in terms for incrementality for 4 wall overall and we are seeing a lot of success there. Speaker 200:26:44So I think as we continue to get more data and iterate on that approach, you can expect to see that we will take a measured approach. But at this point, we do have a number of different formats, a number of different geographies and we are seeing widespread success across all of this variety. As it relates to street locations, we have a number of ground floor locations. A lot of them are in outdoor centers. I think we have over 10 at this point. Speaker 200:27:13So we're pretty experienced at this point at how we balance, A, the appointment driven approach that we are really known for in driving that more curated personalized experience with really making sure that we are catering to a more walk in browsing type of customer. And our inventory approach is also very test and learn, making sure that we're driving very strong sell through. And the fact that we've launched a number of ground floor locations and we've only increased our inventory 3% just shows you it's a very disciplined approach within the company. Speaker 100:27:55Okay, great. Thanks. And then just 2 on terms of kind of the it was really high impressive gross margins this quarter, right? And so I'm just wondering in terms of the cadence moving throughout the year, do you expect this to be relatively consistent moving from here? Speaker 300:28:13Yes, I can speak to that. So our gross margin performance, we are pleased to see in Q1. And then in terms of our medium term gross margin target that does remain in that high 50s percent range through 2027. And the price optimization that I spoke of in the previous question really does involve us looking continually at what's that right mix to capture either top line growth or gross margin percentage. And there are going to be puts and takes and ebbs and flows, and that's part of our dynamic model that couples well with our inventory light model where we can adapt and capture demand, capture margin and that coupled with our premium positioning and not being discount oriented give us confidence in that medium term gross margin target and we're glad to see the performance that we did in Q1 there. Speaker 100:29:22Great. Thank you. Operator00:29:35And I'm not showing any further questions at this time. I'd like to turn the call back over to Beth for any closing remarks. Speaker 200:29:41Thank you everyone for joining us on our Q1 2024 earnings call and we look forward to talking to you next quarter. Operator00:29:49Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBrilliant Earth Group Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Brilliant Earth Group Earnings HeadlinesBrilliant Earth to Report First Quarter 2025 Financial Results on May 6thApril 15, 2025 | markets.businessinsider.comBrilliant Earth Announces Participation in JP Morgan Retail Round UpMarch 25, 2025 | globenewswire.comM.A.G.A. is Finished – This Could be even BetterYou’ve no doubt heard Trump’s rally cry: Make America Great Again. But recently the President made a big change. Make America Wealthy Again (M.A.W.A).April 26, 2025 | Paradigm Press (Ad)Brilliant Earth Announces Participation in Sidoti Small Cap ConferenceMarch 17, 2025 | globenewswire.comBRILLIANT EARTH GROUP Earnings Results: $BRLT Reports Quarterly EarningsMarch 14, 2025 | nasdaq.comTelsey Advisory Remains a Hold on Brilliant Earth Group (BRLT)March 13, 2025 | markets.businessinsider.comSee More Brilliant Earth Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Brilliant Earth Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Brilliant Earth Group and other key companies, straight to your email. Email Address About Brilliant Earth GroupBrilliant Earth Group (NASDAQ:BRLT) designs, procures, and sells diamonds, gemstones, and jewelry in the United States and internationally. The company's product assortment and merchandise include a collection of diamond engagement rings, wedding and anniversary rings, gemstone rings, and fine jewelry. It sells directly to consumers through its omnichannel sales platform, including e-commerce and showrooms. 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There are 5 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Brilliant Earth First Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Session. Operator00:00:19Please be advised that this conference is being recorded. I would now like to hand the conference over to your speaker today, Allison Malkin of ICR. Please go ahead. Speaker 100:00:30Thank you, and good afternoon, everyone. Welcome to Brilliant Earth's Q1 2024 Earnings Conference Call. Joining me today are Beth Gerstein, our Chief Executive Officer and Jeff Kuo, our Chief Financial Officer. During the call today, management will make certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Speaker 100:01:01Please refer to our SEC filings for a description of the risks that could cause our actual performance and results to differ materially from those expressed or implied in these forward looking statements. These forward looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events unless required by law. Also, during this call, management will refer to certain non GAAP financial measures. A reconciliation of Brilliant Earth's non GAAP measures to the comparable GAAP measures is available in today's earnings release, which can be found on the Brilliant Earth Investor Relations website. I'll now turn the call over to Beth. Speaker 200:01:53Good afternoon, and thank you for joining us today. I'm excited to report that we started this fiscal year driving continued success on our strategic initiatives and delivering our 11th consecutive quarter of profitability as a public company. By driving strong order growth, further expanding gross margin and delivering strong marketing efficiency, we far exceeded our profitability expectations for this quarter. I'm proud of our consistent record of gaining share and delivering profitability through many environments, and this quarter's outperformance is another example of both our focus and our agility. Our results continue to show increasing resonance of our brand and the success with which we execute and gain share in the still normalizing $300,000,000,000 global jewelry industry. Speaker 200:02:46We're beginning the year with positive momentum and we believe we are in a great position to deliver on our goals for the full fiscal year. Here are a few noteworthy performance highlights from Q1. Net sales were approximately flat year over year at $97,300,000 and within our revenue guidance range. Total orders increased by 13.7% and repeat order volume increased by more than 20% year over year. Average selling price, or ASP, grew year over year across our product assortment, including engagement rings, wedding bands and fine jewelry. Speaker 200:03:25Gross margin was 59.9% or a 500 basis point increase year over year. Q1 adjusted EBITDA of $5,100,000 or a 5.2 percent margin was ahead of our expectations. Our outperformance on profitability serves as another testament to our premium brand positioning and to our ability to manage the business nimbly, including highly disciplined management of our marketing spend. I'm incredibly grateful for and impressed by our team and their execution to deliver consistent and sustainable profitability. I'd like to touch briefly on a few first quarter success drivers, including brand, product and our omnichannel experience. Speaker 200:04:11As you know, we continually focus on elevating and expanding the Brilliant Earth brand and Q1 was no exception. For the biggest gifting holiday of the quarter, Valentine's Day, we launched our Real Love campaign featuring the love stories of Brilliant Earth customers to a resounding response, including strong social and media engagement with prominent spots on Good Morning America and with Jenna and Hoda on the Today Show, resulting in over 50,000,000 media impressions. Additionally, following on this year's earlier red carpet success where we were the brand of choice for some of today's brightest young stars, we were thrilled to have Sydney Sweeney dress head to toe in Brilliant Earth Jewelry for the 35th Annual GLAAD Media Awards. The Q1 was also a big moment for us on social media with our strongest ever social engagement. With a combination of organic and influencer driven content, we saw overall social media engagement grow 100% quarter over quarter. Speaker 200:05:17On Instagram alone, we saw impressions and video views grow approximately 100% 258% quarter over quarter respectively. And finally, we had the amazing opportunity to launch our partnership with legendary conservationist, Doctor. Jane Goodall, in support of the Jane Goodall Institute. We are honored to partner with Jane to advance our mutual goals of sustainability and social responsibility. As champions of ethical practices and environmentalism, both Brilliant Earth and the Jane Goodall Institute are committed to creating a positive impact on the planet and its inhabitants. Speaker 200:05:58Not only is it a tremendous honor to have Jane's support, but also a strong validation of our nearly 20 year mission to transform the jewelry industry. I look forward to sharing more about the partnership, including a fine jewelry collection in the coming months. Our strong brand performance amplified the carefully crafted and distinctive product for which Brilliant Earth is known. We had spectacular performance in our fine jewelry assortment with a particularly strong Valentine's Day. In the 2 weeks leading up to Valentine's Day, fine jewelry grew 45% year over year, highlighting our continued momentum in this space. Speaker 200:06:38Our customers are coming to us for both timeless styles such as tennis bracelets and diamond stud earrings, as well as trend leading designs. Throughout the quarter, we expanded on the success of our tube collection drop mentioned in our previous call by launching additional trend leading collections, like our hearts and clover collections to great success. We saw heart shaped jewelry sales grow 182% year over year in the quarter. We continue to see robust performance in our wedding and anniversary ring assortments, resulting in another quarter of double digit growth year over year. Furthermore, we're driving outsized growth in our men's wedding ring collection, including strong demand for our textured and accented rings. Speaker 200:07:24We also see more and more customers purchase our rings for occasions outside of weddings. For example, we believe that more and more of our eternity ring sales are self purchases. We also see impressive performance in our fashion rings assortment with 75% growth year over year in Q1. And finally, in engagement rings, we believe we had strong performance despite ongoing industry challenges and a heavy discount oriented promotional environment, which we choose not to follow. Our premium brand and curated proprietary assortments continue to resonate with engagement ring consumers, and we saw another quarter of year over year ASP growth in engagement rings, with particular strength in areas such as our signature collections that are exclusive to us. Speaker 200:08:11We also continue to assert our leadership in offering transparency into the origin of our natural diamonds through blockchain, with more than 10,000 blockchain enabled diamonds on our site today. We believe we are on a multi year path to recovery and engagements starting this year, and we are confident in our ability to continue to grow market share as we are increasingly recognized as the go to brand for premium distinctive bridal jewelry. As you know, over the last 2 years, we've been expanding our showroom density within existing metros, including San Francisco, Los Angeles and Washington D. C. And we continue to see positive incremental growth as we add multiple showrooms in metros. Speaker 200:08:55I'm incredibly proud of this result, which shows the impact of our prudent and measured approach to new showroom launches. With that said, we continue to build our pipeline for future showroom locations and remain on track to achieve our goal of 2 to 4 new locations this year. We will be opening 3 premium outdoor locations with 2 showrooms in Boston, in Seaport and Chestnut Hill, as well as our 1st street level location in New York City, in Noliva. In March, I told you that this year we expect to continue making investments that will set the stage for long term sustainable growth. As a technology driven company, our teams have been hard at work over the last few months deploying and improving new platforms and systems to improve both customer satisfaction and operational efficiencies. Speaker 200:09:43One great example is the significant enhancements to our CRM platform to improve our ability to manage the customer journey and drive improved customer economics. As jewelry is a highly considered high value purchase, our continued innovation in customer engagement further differentiates us from the industry. As you saw in our release, we've reiterated our full year guidance, and Jeff will walk you through our Q2 expectations in more detail. In Q2 to date, we continue to drive strong order growth and repeat purchase behavior and have strong momentum in wedding bands and fine jewelry, offset with a softer start to engagement rings. As I have previously mentioned, we do expect that this year will be the beginning of a multiyear path to normalization in engagements. Speaker 200:10:31We recognize that there are puts and takes in any given quarter, but I am confident that we are well positioned to gain share and drive profitability as we nimbly adapt in this environment. In closing, I'd like to note how pleased we are with the start of the year, especially with our outperformance and profitability amidst headwinds in the industry and macro environment. I have high confidence that we will continue to gain share with our premium, approachable brands, elevated omni channel customer experience, our differentiated product and excellence in execution. Finally, I'd like to introduce a member of our team. Colin Borland is our VP of Strategy and Business Development and will be taking on a larger role including Investor Relations. Speaker 200:11:16Colin has been with Brilliant Earth since 2020 and brings a wealth of knowledge about our strategy, operations and financials. We are thrilled to have him take on a broader role and we're looking forward to you getting to know him in the coming months. With that, I'll now turn the call over to Jeff. Speaker 300:11:34Thanks, Beth, and good afternoon, everyone. As Beth mentioned, we're pleased to report a quarter where we continue to successfully drive our strategic initiatives, gain market share, meet our top line growth expectations and far exceed our profitability expectations even in the face of industry headwinds. Let me take you through the details. Q1 net sales were $97,300,000 approximately flat year over year, which was within our guidance range and reflected strong market share gains. We drove a 13.7% increase in total orders year over year. Speaker 300:12:13Additionally, we drove over 20% growth in repeat orders year over year. This performance demonstrates the effectiveness of our customer acquisition and retention efforts, including the resonance of our brand with consumers as well as strong performance across our products. Average order value or AOV declined 12.4% year over year as we continue to drive outperformance in our fine jewelry collection, which as you know has lower price points than engagement rings. We saw strength in average selling price or ASP across our product collections. The ASP for our engagement rings, wedding rings and fine jewelry increased year over year in Q1. Speaker 300:13:00Q1 gross margin was 59.9%, which is a 500 basis point expansion over Q1 last year. The ongoing strength in our gross margin continues to be driven by our premium brand and proprietary products, our price optimization engine, procurement efficiencies and our enhanced extended warranty program. This strength in our gross margin is particularly rewarding as we maintain our focus on our premium brand positioning in an environment where others lean into discounting. We delivered a Q1 adjusted EBITDA of $5,100,000 or a 5.2 percent adjusted EBITDA margin, significantly exceeding our expectation. Our strong gross margin performance together with prudent management of our marketing spend and other operating expenses contributed to our strong profitability results this quarter. Speaker 300:13:58Q1 SG and A was 59% of net sales compared to 55% of net sales in Q1 2023, as we continue to balance making investments to drive long term growth with discipline and expense management to deliver profitability. Q1 adjusted SG and A was 54.7 percent of net sales compared to 49.3 percent of net sales in Q1 2023. Adjusted SG and A does not include items such as equity based compensation, depreciation and amortization, showroom preopening expenses and other nonrecurring expenses. We maintained a disciplined approach to our Q1 marketing spend as a percentage of net sales, with a slight deleverage of approximately 60 basis points compared to Q1 last year as we continue to make strategic investments in driving brand awareness and supporting key initiatives such as growth in fine jewelry. As I pointed out during our last earnings call, we aim to keep quarterly marketing spend for the year at a similar percentage of net sales compared to the 2023 average, and Q1 outperformed that expectation, while still driving robust market share gains. Speaker 300:15:17As a growth company, we believe building brand awareness is one of our largest areas of opportunity, and we are leaning into this with a well designed and intentional marketing strategy that supports both near term opportunities and long term goals, all while maintaining overall profitability. For the Q1, employee costs as a percentage of net sales were higher by approximately 2.90 basis points as adjusted year over year, principally driven by the annualization and addition of both showroom and corporate employees to support our growth. These employee investments have contributed to the strong uplift that we see in showroom metros and our outperformance compared to the overall jewelry industry. We continue to manage these expenses in a disciplined and responsible manner. Other G and A as a percentage of net sales increased by approximately 200 basis points as adjusted year over year as we continue to prudently invest in our business. Speaker 300:16:19This includes increased rent and other costs to support our growth as well as investments in technology. Our data driven, capital efficient and inventory light operating model continues to provide competitive advantages. We have been able to leverage this model to keep our year over year inventory increase to less than 3% despite the expansion of our showroom footprint and our significant growth in fine jewelry. Our lower risk, agile inventory model and strong balance sheet continue to differentiate us from the rest of the industry. We ended the Q1 with approximately $147,500,000 in cash, which reflects a year over year increase of approximately $1,500,000 even after expanding our showroom footprint by over 30% and paying down over $3,000,000 in principal balance on our term loan. Speaker 300:17:18Our ability to generate cash differentiates us from many others in the industry and highlights the benefits of our asset light, data driven business model. In addition, we continue to maintain a strong balance sheet with no net debt. Our financial strength allows us to continue to make prudent investments in the business to drive long term growth. In Q1, we repurchased $100,000 of our common stock. As I mentioned in our last earnings call, our strong balance sheet provides the ability to strategically see value creation opportunities, including when we see an opportunity to buy back our common stock. Speaker 300:17:58We intend to continue using this program strategically, while balancing our overall investment decisions, including consideration of factors such as trading volumes and our public float. As we look ahead to the rest of the year, we are reiterating the annual guidance that we provided in March as we continue to be well positioned to drive share gains, maintain strong gross margins and manage operating expenses in a disciplined fashion. For Q2, as Beth mentioned, we continue to drive robust order growth and have strong momentum in fine jewelry and wedding and anniversary bands, offset with a softer start in engagement range as the industry continues to face some headwinds along the gradual path to normalization. For Q2, we expect net sales to be down in the lowtomidsingledigit percent year over year. We expect to continue making investments in Q2 to set the stage for long term growth, while still delivering profitability and sequential revenue growth. Speaker 300:19:06We expect Q2 adjusted EBITDA margin to be in the low single digit range as a percentage of net sales as we dynamically manage operating expenses, including marketing spend to deliver profitability while making strategic investments in the business. We expect our growth rate to increase as we progress through the year as we anticipate that engagements will continue to normalize. We also expect other key drivers will include realizing uplift from the opening and growth in new showrooms, the continued strong performance of fine jewelry and the fact that seasonally Q4 is the biggest quarter for fine jewelry sales. For the second half, we expect that growth will be Q4 weighted with a low single digit percent net sales year over year growth rate in Q3 and a higher year over year growth rate in Q4. In closing, our premium brand and differentiated business model, including our data driven decision making, seamless omnichannel platform and asset light structure demonstrate our ability to gain share, deliver profitability and achieve our strategic and financial objectives in a variety of different environments. Speaker 300:20:24Our performance in the Q1 reinforces our ability to execute and capitalize on the opportunities that drive long term sustainable and profitable growth. With that, I will turn the call back over to the operator for questions. Operator00:20:40Thank Our first question comes from Oliver Chen with TD Cowen. Your line is open. Speaker 400:21:09Hi, thank you. Regarding engagement and what you're seeing there, it sounded like it was a bit of a softer start, but you do foresee a recovery. Just would love your take on what you're seeing in the environment and what's embedded in your forecast. Also, you had really robust gross margins, but the environment in terms of competitors in the industry has been fairly What's happening in terms of what you're seeing in your ability to compete there? And lastly, on Fine Jewelry, you made a lot of great progress. Speaker 400:21:41Just what's ahead in terms of what you think you need to do to continue to drive momentum there as you think about platforms and branding and inventory management as well? Thank you. Speaker 200:21:53Hi, Oliver. Thanks for the question. I can start with just what we're seeing in the overall environment. So we had mentioned that we're really proud of the positive indicators that we've seen at the overall business that the brand has a lot of momentum overall outside of bridal. And within bridal, we are seeing industry headwinds overall, but we do expect that that will continue to normalize and we've been talking about that normalization. Speaker 200:22:18So I don't think that would be a big surprise for you. As it relates to the promotional environment, we are seeing, especially within the engagement ring segment that it is heavily promotional. And as we've kind of done in the past, we really choose not to participate in these very discount heavy promotions that we see from our competitors. And I think that's part of the reason that our brand continues to be seen as a premium brand and why we're seeing great results like our ASPs continue to increase within the engagement ring assortment. Overall, we take a very balanced approach when it comes to gross margin. Speaker 200:23:00I'm sure Jeff can talk to that more specifically. But the idea that we're really investing in quality revenue and not chasing unprofitable growth is something that is, I think, important for the long term of the company. As it relates to fine jewelry, and Jeff feel free at the end maybe to talk about gross margin, we're really excited that we are increasingly seen as the destination for our millennial Gen Z consumer for fine jewelry. And we've invested a lot in our branding efforts on social where we're seeing record high engagement. We're seeing really great response to the product drops that we have and we continue to invest in the assortment overall. Speaker 200:23:46And I think part of the reason we are so successful is we're seen as a trend leading option as well as really the key wardrobe staple where you need to go to get your diamond studs and your tennis bracelets. And so balancing that diamond essentials with the trend, I think it's something we've been really successful at and just making sure we're continuing to invest in the brand. And I think it's working really well. We're seeing great success with repeat. We're seeing great success with self purchase and all of that I think is a testament to all of the efforts Speaker 300:24:22that we're doing within fine jewelry. Speaker 200:24:22So Jeff, I don't know if you have more on the gross margin side. Speaker 300:24:25Sure. So just to recap on some of the points on gross margin, Oliver, as we've talked about before, it really starts from the strength of our brand and the premium nature of the brand, our proprietary products, we amplify that operationally with our price optimization engine, procurement efficiencies and the warranty program. And then maybe just to double click a little bit more into the price optimization engine that involves really continual price testing to optimize the right mix of top line growth and gross margin percent with the idea to maximize gross profit dollars. And I think we've been able to manage those levers very nimbly and agilely in this environment to really drive that optimization to preserve the premium positioning that we have, and we're glad to be able to deliver the results that we did for Q1. Speaker 400:25:22Thanks. Very helpful. Operator00:25:24One moment for our next question. Our next question comes from Ashley Owens with KeyBanc Capital Markets. Your line is open. Speaker 100:25:36Hi. Thanks for taking the question. I just wanted to focus on the New Street location. First, I guess, has anything evolved in your approach to showrooms and how you'll be formatting that store in terms of inventory on hand or just security given it is street location? And then also, I think this is the 3rd NYC story you're counting with the Brooklyn one. Speaker 100:25:58And your expansion plans have focused kind of on density in existing metros. So just curious on thoughts and wondering where you find the right number of stores to meet demand in some of these bigger highly populated cities without risking cannibalization? Speaker 200:26:13Yes. Great question. And really the way we think about our stores is all about incrementality, which is why we're really pleased to see the fact that we're driving incremental growth in the clusters that we're operating in. In terms of how we think about the right number of stores, we're taking a very ROI driven approach as we're launching new showrooms. And we have a lot of data at this point in terms of what we're seeing in terms for incrementality for 4 wall overall and we are seeing a lot of success there. Speaker 200:26:44So I think as we continue to get more data and iterate on that approach, you can expect to see that we will take a measured approach. But at this point, we do have a number of different formats, a number of different geographies and we are seeing widespread success across all of this variety. As it relates to street locations, we have a number of ground floor locations. A lot of them are in outdoor centers. I think we have over 10 at this point. Speaker 200:27:13So we're pretty experienced at this point at how we balance, A, the appointment driven approach that we are really known for in driving that more curated personalized experience with really making sure that we are catering to a more walk in browsing type of customer. And our inventory approach is also very test and learn, making sure that we're driving very strong sell through. And the fact that we've launched a number of ground floor locations and we've only increased our inventory 3% just shows you it's a very disciplined approach within the company. Speaker 100:27:55Okay, great. Thanks. And then just 2 on terms of kind of the it was really high impressive gross margins this quarter, right? And so I'm just wondering in terms of the cadence moving throughout the year, do you expect this to be relatively consistent moving from here? Speaker 300:28:13Yes, I can speak to that. So our gross margin performance, we are pleased to see in Q1. And then in terms of our medium term gross margin target that does remain in that high 50s percent range through 2027. And the price optimization that I spoke of in the previous question really does involve us looking continually at what's that right mix to capture either top line growth or gross margin percentage. And there are going to be puts and takes and ebbs and flows, and that's part of our dynamic model that couples well with our inventory light model where we can adapt and capture demand, capture margin and that coupled with our premium positioning and not being discount oriented give us confidence in that medium term gross margin target and we're glad to see the performance that we did in Q1 there. Speaker 100:29:22Great. Thank you. Operator00:29:35And I'm not showing any further questions at this time. I'd like to turn the call back over to Beth for any closing remarks. Speaker 200:29:41Thank you everyone for joining us on our Q1 2024 earnings call and we look forward to talking to you next quarter. Operator00:29:49Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.Read morePowered by