Brilliant Earth Group, Inc. Q1 FY2025 earnings call

• Delivered net sales of $93.9 million within guidance range, with total orders up 12% YOY and repeat orders up 13% YOY.
• Achieved adjusted EBITDA of $1.1 million, marking 15th consecutive quarter of profitability.
• Engagement rings had positive unit growth sequentially and YOY, with strength in those under $5,000. The signature engagement ring collection had double-digit bookings growth.
• Wedding and anniversary bands had year-over-year bookings growth, including success in men's and women's bands.
• Fine jewelry is a key growth area, with 14% of total bookings in Q1 and double-digit growth in Q1. Valentine's Day activation was successful, with fine jewelry bookings up over 40% in the two weeks leading up to Valentine's Day.
• Opened second Dallas Fort Worth showroom in February and on track to open 1-2 more showrooms this year, including one in Alpharetta, Georgia.

For the first quarter, net sales were $93.9 million, a 3.5% decline year-over-year. Total orders grew 12% YOY and repeat orders grew 13% YOY. Engagement rings saw positive YOY unit growth, with those priced under $5,000 showing strong growth. The signature engagement ring collection had double-digit year-over-year bookings growth. Wedding and anniversary bands had year-over-year bookings growth, including strength in men's wedding bands and women's eternity bands. Fine jewelry bookings represented 14% of total bookings in Q1, an approximate 350 basis point expansion over Q1 last year, with double-digit growth in Q1 far outpacing the industry.

• Q2 net sales expected to be between -3% to flat YOY, adjusted EBITDA between -$1.5 million and +$2 million.
• Full-year net sales guidance 1%-3% growth YOY, back half weighted with mid-to-high single digit growth in H2 driven by engagement rings, showroom growth, favorable comps, and strong fine jewelry performance, particularly in Q4.
• Adjusted EBITDA margin guidance 3%-4%.
• Plan to prepay $20 million of term loan in Q2, leaving ~$35 million of outstanding debt, resulting in net interest expense savings of ~$0.6 million annually.
• Working with lenders to amend debt covenants, including waiving SCCR covenants and adding a liquidity covenant through Q1 2026.

• Impact of gold costs on gross margin.
• Tariff uncertainties and their potential impact on gross margin.
• Macroeconomic conditions affecting consumer spending and purchasing behavior.

Q: Could you elaborate on engagement ring dynamics and if the trend continues into 2Q?

A: Encouraged by positive unit growth in Q1 and continuing in Q2, with brand and product resonating, especially the signature collection.

Q: Thoughts on AOVs being pressured by fine jewelry and achieving mid-single to high single digit growth?

A: Encouraged by fine jewelry growth (e.g., 40% growth around Valentine's Day, 14% of total bookings), with strong brand resonance and omnichannel experience driving growth. Continuation of strategic initiatives will drive growth.

Q: Strength of Valentine's Day, best sellers, and pricing going forward?

A: Valentine's Day performance reflects design advantages, with best sellers including heart collection, diamond essentials, and unique collections. Pricing is data-driven via optimization engine, with testing and learning to understand consumer appetite.

Q: Gross margin volatility with fine jewelry growth?

A: Gross margin was slightly lower YOY due to higher gold costs, but the brand is nimble in adjusting input costs. Fine jewelry is a smaller part of the business, and data-driven approach to pricing and sourcing continues to support gross margin management.