Investors in Brilliant Earth Group, Inc. (BRLT) need to pay close attention to the stock based on moves in the options market lately. That is because the Oct 17, 2025 $7.50 Put had some of the highest implied volatility of all equity options today.What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It c ...

Summary of Brilliant Earth Group (BRLT) FY Conference Call - August 27, 2025 Company Overview - **Company**: Brilliant Earth Group (BRLT) - **Industry**: Jewelry - **Market Size**: $350 billion global jewelry industry [5][10] Core Business Insights - **Mission**: To be the next generation fine jeweler, connecting with consumers through an authentic mission-driven brand [3][4] - **Target Audience**: Primarily consumers aged 25 to 44 with household incomes between $100,000 to $200,000 [6] - **Product Offerings**: Proprietary collections such as the Jane Goodall collection and the Soul collection, which are unique to Brilliant Earth [4][7] Business Model and Strategy - **Omnichannel Experience**: Seamless shopping experience across showrooms, website, and customer service [4][5] - **Data and Technology**: Capital-efficient model leveraging data and technology to adapt quickly to market trends [5][10] - **Supply Chain**: Globally diversified supply chain reducing dependence on any single geography [8][9] Financial Performance - **Growth Rate**: 16% CAGR from 2019 to 2024, with gross profit margin increasing from 42% in 2019 to 60% in 2024 [12][13] - **Q2 Performance**: - Net sales of $109 million, a 3% increase [14] - Average order value (AOV) of $2,074 [14] - 18% year-over-year growth in total orders and 11% in repeat orders [14] - Gross margin of 58.3% [14] - Adjusted EBITDA of $3.2 million, marking the sixteenth consecutive quarter of positive adjusted EBITDA [15] Inventory and Working Capital - **Inventory Turns**: Approximately four times, compared to the industry average of one to two times [11][23] - **Virtual Inventory Model**: Allows for a diverse product assortment while keeping balance sheet inventory low [23] Market Opportunities - **Fragmented Industry**: Two-thirds of the jewelry industry consists of smaller independent players, presenting an opportunity for market share capture [10] - **Fine Jewelry Growth**: Significant growth in fine jewelry bookings, up 38% year-over-year, indicating a strategic focus on this segment [16] Future Outlook - **Growth Targets**: Aiming for low teens year-over-year growth by 2027, supported by showroom expansion and brand awareness [29] - **Gross Margin Target**: Maintaining high 50s percentage gross margin through 2027 [30] - **Adjusted EBITDA Margin**: Targeting a double-digit margin by 2027 [30] Brand Highlights - **Celebrity Engagements**: Collaborations with celebrities like Beyoncé and Selena Gomez, enhancing brand visibility [21][22] - **Showroom Performance**: Strong double-digit metro uplift in sales post showroom openings, with 81% growth in orders from walk-in customers without appointments [25][27] Capital Structure - **Debt Management**: Paid off outstanding term loan balance of under $35 million, ending Q2 with $99 million in net cash [17][24] - **Share Buyback Program**: Executed share buybacks totaling $1 million [41] Conclusion - **Strategic Positioning**: Brilliant Earth is well-positioned to capture growth in the fragmented jewelry market through its unique brand, innovative product offerings, and efficient operational model [31]

Summary of Brilliant Earth Group (BRLT) Conference Call - August 19, 2025 Company Overview - **Company Name**: Brilliant Earth Group (BRLT) - **Founded**: February 2005 - **Mission**: To create a more transparent, sustainable, and compassionate jewelry industry - **Business Model**: Asset-light, data and technology-enabled, with a focus on omnichannel experience across 42 showrooms and digital platforms [3][4] Consumer Insights - **Typical Consumer Profile**: Ages 25 to 44, with an annual household income of $100,000 to $200,000 - **Shopping Behavior**: Consumers prioritize meaningful brand connections and seamless shopping experiences across various touchpoints [5][6] - **Bridal Jewelry**: This category remains resilient, with total orders growing 18% year-over-year [6] Omnichannel Strategy - **Retail Strategy**: Showrooms drive incremental revenue, with strong double-digit metro bookings uplift in the year after opening [9][10] - **Walk-in Purchases**: Q2 saw an 81% year-over-year order uplift for retail customers without scheduled appointments [10] Competitive Differentiators - **Brand Authenticity**: Focus on transparency and sustainability in sourcing [11] - **Product Offering**: Proprietary, beautifully designed products, including award-winning collections [12] - **Data Technology**: Strong data and AI-enabled model to enhance customer experience and operational efficiency [12] Marketing and Customer Acquisition - **Brand Awareness**: Gained through high-profile endorsements and social media, contributing to organic growth [14] - **Repeat Purchases**: Achieved 11% year-over-year growth in repeat orders in Q2, driven by the fine jewelry collection [15] Financial Performance - **Growth Metrics**: 16% five-year CAGR from 2019 to 2024, with gross margins expanding from 42% to 60% [17] - **EBITDA**: 16 consecutive quarters of positive adjusted EBITDA [17] - **Cash Position**: Ended Q2 with approximately $99 million in net cash, a 5% year-over-year increase [18] - **Dividend Declaration**: Announced a one-time dividend of approximately $25.3 million [18] Seasonality - **Sales Trends**: Q4 is the largest quarter due to gifting, but purchases occur throughout the year for various occasions [21] Strategic Levers for Success - **Key Strategies**: Premium brand positioning, differentiated business model, data-driven decision-making, and seamless omnichannel platform [22] Conclusion - **Outlook**: The company is well-positioned to continue growing and gaining market share in the jewelry industry while maintaining profitability and making long-term investments [19][22]

Core Insights - The article discusses strategies for revitalizing a growth company that has shown minimal growth but maintains stable free cash flow (FCF) and has accumulated significant cash reserves since its initial public offering (IPO) [1]. Group 1 - The company in question has been struggling with growth despite generating stable FCF, indicating potential inefficiencies or missed opportunities in its business model [1]. - The accumulation of cash since the IPO suggests that the company has not effectively reinvested its earnings into growth initiatives, which could be a point of concern for investors [1]. - The article implies that identifying the underlying issues and implementing strategic changes could unlock value and enhance growth prospects for the company [1].

SAN FRANCISCO, Aug. 14, 2025 (GLOBE NEWSWIRE) -- Brilliant Earth Group, Inc. (“Brilliant Earth” or the “Company”) (NASDAQ: BRLT), an innovative, global leader in ethically sourced fine jewelry, today announced that the Company will participate in several upcoming investor events. On August 19, 2025, the Company will participate in the Lytham Partners 2025 Consumer & Technology Investor Summit. The webcast will take place at 3:00pm ET and can be accessed by visiting the conference home page here or directly ...

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties, not guarantees of future performance - The report contains forward-looking statements about future results, strategy, and financial position, which are not guarantees of performance and are subject to difficult-to-predict risks, assumptions, and uncertainties[10](index=10&type=chunk) - Key risks include fluctuations in diamond/precious metal pricing, labor costs, economic downturns, ability to acquire/retain customers, managing growth, supply chain issues, competition, brand maintenance, inventory management, IT system reliance, and obligations under the Tax Receivable Agreement[11](index=11&type=chunk) [Basis of Presentation](index=4&type=section&id=BASIS%20OF%20PRESENTATION) This section defines key terms and entities used throughout the financial report, including the Company, Continuing Equity Owners, and the Tax Receivable Agreement - The terms 'we,' 'us,' 'our,' the 'Company,' and 'Brilliant Earth' refer to Brilliant Earth Group, Inc. and its subsidiaries, including Brilliant Earth, LLC[16](index=16&type=chunk) - 'Continuing Equity Owners' are holders of LLC Interests and Class B/C common stock, who can exchange their LLC Interests for cash or Class A/D common stock[16](index=16&type=chunk) - The 'TRA' (Tax Receivable Agreement) obligates Brilliant Earth Group, Inc. to pay Continuing Equity Owners **85% of realized tax benefits** from certain tax basis adjustments[16](index=16&type=chunk) [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements for Brilliant Earth Group, Inc., including balance sheets, statements of operations, statements of changes in stockholders' equity, and statements of cash flows, along with accompanying notes detailing significant accounting policies, earnings per share, revenue disaggregation, inventory, accrued expenses, leases, debt, equity-based compensation, income taxes, commitments, and subsequent events [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Total current assets | $191,227 | $211,413 | $(20,186) | (9.5%) | | Total assets | $260,875 | $281,245 | $(20,370) | (7.2%) | | Total current liabilities | $115,251 | $78,169 | $37,082 | 47.4% | | Current portion of long-term debt | $34,489 | $5,688 | $28,801 | 506.3% | | Total liabilities | $158,193 | $171,863 | $(13,670) | (7.9%) | | Total stockholders' equity | $102,682 | $109,382 | $(6,700) | (6.1%) | - Cash and cash equivalents decreased by **$28.31 million** from $161.93 million at December 31, 2024, to $133.62 million at June 30, 2025[19](index=19&type=chunk) - Inventories, net increased by **$9.06 million** from $38.29 million at December 31, 2024, to $47.35 million at June 30, 2025[19](index=19&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section outlines the company's financial performance over specific periods, including net sales, gross profit, and net income or loss Condensed Consolidated Statements of Operations Highlights (Dollars in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :------------- | :-------------- | :--------------------------- | :--------------------------- | :------------- | :-------------- | | Net sales | $108,936 | $105,426 | $3,510 | 3.3% | $202,820 | $202,763 | $57 | 0.0% | | Gross profit | $63,504 | $64,077 | $(573) | (0.9%) | $118,546 | $122,383 | $(3,837) | (3.1%) | | (Loss) income from operations | $(1,213) | $1,132 | $(2,345) | (207.2%) | $(4,736) | $2,009 | $(6,745) | (335.7%) | | Net (loss) income | $(1,113) | $1,375 | $(2,488) | (180.9%) | $(4,380) | $2,442 | $(6,822) | (279.4%) | | Net (loss) income allocable to Brilliant Earth Group, Inc. | $(166) | $185 | $(351) | (189.7%) | $(632) | $324 | $(956) | (295.1%) | | Basic EPS | $(0.01) | $0.01 | $(0.02) | (200.0%) | $(0.04) | $0.03 | $(0.07) | (233.3%) | | Diluted EPS | $(0.01) | $0.01 | $(0.02) | (200.0%) | $(0.04) | $0.02 | $(0.06) | (300.0%) | - Gross margin for the three months ended June 30, 2025, decreased by **2.5 percentage points** to **58.3%** from 60.8% in the prior year, and for the six months, it decreased by **2.0 percentage points** to **58.4%** from 60.4%[21](index=21&type=chunk) - Operating expenses for the three months ended June 30, 2025, increased by **$1.8 million (2.8%)** to $64.7 million, while for the six months, they increased by **$2.9 million (2.4%)** to $123.3 million[21](index=21&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) This section details the changes in the company's equity accounts over specific periods, including stock transactions and retained earnings Changes in Stockholders' Equity (Dollars in thousands) | Metric | Balance, January 1, 2025 | Balance, June 30, 2025 | Change | | :--------------------------------------- | :----------------------- | :--------------------- | :------- | | Class A Common Stock Amount | $1 | $1 | $0 | | Class B Common Stock Amount | $4 | $4 | $0 | | Class C Common Stock Amount | $5 | $5 | $0 | | Additional Paid-In Capital | $11,169 | $12,113 | $944 | | Treasury Stock | $(638) | $(998) | $(360) | | Retained Earnings | $4,788 | $4,156 | $(632) | | Stockholders' Equity attributable to Brilliant Earth Group, Inc. | $15,329 | $15,281 | $(48) | | Non-controlling interests attributable to Brilliant Earth, LLC | $94,053 | $87,401 | $(6,652) | | Total stockholders' equity | $109,382 | $102,682 | $(6,700) | - Repurchases of common stock amounted to **$(360) thousand** for the six months ended June 30, 2025[23](index=23&type=chunk) - Equity-based compensation contributed **$4.66 million** to additional paid-in capital for the six months ended June 30, 2025[23](index=23&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (Dollars in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :------------- | :-------------- | | Net cash provided by operating activities | $1,943 | $1,519 | $424 | 27.9% | | Net cash used in investing activities | $(1,882) | $(1,419) | $(463) | 32.6% | | Net cash used in financing activities | $(28,368) | $(3,697) | $(24,671) | 667.3% | | Net decrease in cash, cash equivalents and restricted cash | $(28,307) | $(3,597) | $(24,710) | 687.0% | | Cash, cash equivalents and restricted cash at end of period | $133,834 | $152,423 | $(18,589) | (12.2%) | - Payments on the SVB term loan significantly increased cash used in financing activities, from **$(1,625) thousand** in 2024 to **$(21,220) thousand** in 2025[26](index=26&type=chunk) - Tax distributions and TRA payments to members increased from **$(1,713) thousand** in 2024 to **$(6,657) thousand** in 2025[26](index=26&type=chunk) [Note 1. Description of Business and Summary of Significant Accounting Policies](index=11&type=section&id=Note%201.%20DESCRIPTION%20OF%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note provides an overview of the company's business operations and outlines the significant accounting policies applied in preparing the financial statements - Brilliant Earth Group, Inc. was formed in June 2021 for an IPO and to acquire Brilliant Earth, LLC, which was originally incorporated in 2005[27](index=27&type=chunk) - The Company designs, procures, and sells ethically sourced diamonds, gemstones, and jewelry online and through showrooms in the U.S., operating as one segment[28](index=28&type=chunk)[39](index=39&type=chunk) - As of June 30, 2025, the non-controlling interest was **85.1%**, representing the portion of earnings/loss and net assets attributable to the Continuing Equity Owners[33](index=33&type=chunk) [Note 2. Earnings Per Share](index=14&type=section&id=Note%202.%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share, including the impact of potentially dilutive securities Basic and Diluted EPS (Dollars in thousands, except share and per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income attributable to Brilliant Earth Group, Inc., BASIC | $(166) | $185 | $(632) | $324 | | Net (loss) income attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED | $(872) | $1,071 | $(3,427) | $1,901 | | BASIC earnings per share | $(0.01) | $0.01 | $(0.04) | $0.03 | | DILUTED earnings per share | $(0.01) | $0.01 | $(0.04) | $0.02 | - For the three and six months ended June 30, 2025, the dilutive impact of LLC Units and RSUs was anti-dilutive, resulting in basic and diluted EPS being the same[47](index=47&type=chunk)[48](index=48&type=chunk) - Securities excluded from diluted EPS calculation due to anti-dilutive effect for the three months ended June 30, 2025, included **84,961,455 vested LLC Units** and **4,328,224 RSUs**[48](index=48&type=chunk) [Note 3. Revenue](index=15&type=section&id=Note%203.%20REVENUE) This note disaggregates the company's net sales by geographic region and provides details on deferred revenue and refund liabilities Total Net Sales by Geography (Dollars in thousands) | Geography | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $105,326 | $101,621 | $195,957 | $195,274 | | International | $3,610 | $3,805 | $6,863 | $7,489 | | Total net sales | $108,936 | $105,426 | $202,820 | $202,763 | - Total deferred revenue increased to **$24.1 million** as of June 30, 2025, from $18.9 million as of December 31, 2024[50](index=50&type=chunk) - Refund liabilities decreased to **$1.5 million** as of June 30, 2025, from $2.9 million as of December 31, 2024[55](index=55&type=chunk) [Note 4. Inventories, Net](index=16&type=section&id=Note%204.%20INVENTORIES,%20NET) This note provides a breakdown of the company's inventory components and the allowance for inventory obsolescence Inventories, Net (Dollars in thousands) | Category | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Loose diamonds | $11,866 | $6,097 | $5,769 | 94.6% | | Fine jewelry and other | $36,168 | $32,732 | $3,436 | 10.5% | | Allowance for inventory obsolescence | $(686) | $(537) | $(149) | 27.7% | | Total inventories, net | $47,348 | $38,292 | $9,056 | 23.6% | - Consigned inventory held on behalf of suppliers decreased to **$14.5 million** as of June 30, 2025, from $15.6 million as of December 31, 2024[57](index=57&type=chunk) [Note 5. Accrued Expenses and Other Current Liabilities](index=17&type=section&id=Note%205.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) This note details the components of the company's accrued expenses and other current liabilities Accrued Expenses and Other Current Liabilities (Dollars in thousands) | Category | June 30, 2025 | December 31, 2024 | Change | % Change | | :--------------------------------------- | :------------ | :---------------- | :----- | :------- | | Vendor expenses | $11,714 | $12,609 | $(895) | (7.1%) | | Accrued payroll expenses | $6,624 | $6,191 | $433 | 7.0% | | Sales and other tax payable accrual | $2,961 | $4,276 | $(1,315) | (30.8%) | | Provision for sales returns and allowances | $1,545 | $2,869 | $(1,324) | (46.1%) | | Current portion of TRA | $93 | $0 | $93 | N/A | | Other | $5,983 | $5,769 | $214 | 3.7% | | Total accrued expenses and other current liabilities | $28,920 | $31,714 | $(2,794) | (8.8%) | - The provision for sales returns and allowances decreased by **$1.32 million** from December 31, 2024, to June 30, 2025[58](index=58&type=chunk) [Note 6. Leases](index=17&type=section&id=Note%206.%20LEASES) This note describes the company's lease arrangements, including lease costs and the weighted-average remaining lease term Total Lease Costs (Dollars in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease costs (G&A) | $2,196 | $1,928 | $4,350 | $3,783 | | Variable lease costs (G&A) | $519 | $489 | $951 | $818 | | Total lease costs | $2,785 | $2,483 | $5,429 | $4,769 | - The weighted-average remaining lease term for operating leases decreased from **6.8 years** at June 30, 2024, to **5.8 years** at June 30, 2025[62](index=62&type=chunk) - Cash paid for amounts included in the measurement of lease liabilities increased to **$4.8 million** for the six months ended June 30, 2025, from $4.0 million in the prior year[62](index=62&type=chunk) [Note 7. Debt](index=18&type=section&id=Note%207.%20DEBT) This note provides details on the company's outstanding debt, including current and long-term portions and significant repayment activities Outstanding Debt (Dollars in thousands) | Category | June 30, 2025 | December 31, 2024 | Change | % Change | | :--------------------------------------- | :------------ | :---------------- | :----- | :------- | | Current portion of long-term debt | $34,489 | $5,688 | $28,801 | 506.3% | | Long-term debt | $0 | $50,010 | $(50,010) | (100.0%) | | Total debt (net carrying amount) | $34,489 | $55,698 | $(21,209) | (38.1%) | - In May 2025, the Company made principal payments totaling **$20 million** on the SVB Term Loan[63](index=63&type=chunk) - Subsequent to June 30, 2025, on August 4, 2025, the Company prepaid the entire outstanding principal of **$34.8 million** under the SVB Term Loan and terminated the SVB Credit Agreement[68](index=68&type=chunk)[84](index=84&type=chunk) [Note 8. Equity-Based Compensation](index=20&type=section&id=Note%208.%20EQUITY-BASED%20COMPENSATION) This note describes the company's equity-based compensation plans, including RSU activity and unrecognized compensation cost Restricted Stock Units (RSUs) Activity | Metric | Number of RSUs (unvested) | Weighted average grant date fair value | | :--------------------------------------- | :------------------------ | :----------------------------------- | | Balance as of December 31, 2024 | 3,847,636 | $4.29 | | Granted | 1,765,939 | $1.56 | | Vested | (1,242,333) | $4.46 | | Forfeited | (80,720) | $4.16 | | Balance as of June 30, 2025 | 4,290,522 | $3.12 | - Total compensation expense for RSUs was **$4.5 million** for the six months ended June 30, 2025, compared to $4.6 million for the same period in 2024[71](index=71&type=chunk) - As of June 30, 2025, **$12.2 million** in compensation cost related to unvested RSUs remains unrecognized, expected to be expensed over approximately **2.0 years**[72](index=72&type=chunk) [Note 9. Income Taxes and Tax Receivable Agreement](index=20&type=section&id=Note%209.%20INCOME%20TAXES%20AND%20TAX%20RECEIVABLE%20AGREEMENT) This note explains the company's tax structure, effective tax rate, and obligations under the Tax Receivable Agreement - Brilliant Earth Group, Inc. is taxed as a C corporation, while its subsidiary Brilliant Earth, LLC is taxed as a partnership, passing taxable income/loss to its members[73](index=73&type=chunk)[74](index=74&type=chunk) - The Company's effective tax rate for the six months ended June 30, 2025, was **(0.27)%**, differing from the **21% U.S. federal statutory tax rate** primarily due to non-controlling interest income and state taxes[76](index=76&type=chunk) - As of June 30, 2025, the Company recorded a deferred tax asset of **$8.3 million** and a corresponding TRA liability of **$7.8 million**, representing **85% of projected tax benefits** to Continuing Equity Owners[80](index=80&type=chunk) [Note 10. Commitments and Contingencies](index=22&type=section&id=Note%2010.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's legal proceedings and other commitments, including a representative action lawsuit - The Company is involved in a representative action lawsuit under California's Private Attorneys General Act (PAGA), alleging various labor code violations related to wages, overtime, and breaks[83](index=83&type=chunk) - The Company intends to vigorously defend the PAGA claims, and as of the filing date, any liability related to these alleged claims is not currently probable or reasonably estimable[83](index=83&type=chunk) [Note 11. Subsequent Events](index=22&type=section&id=Note%2011.%20SUBSEQUENT%20EVENTS) This note reports on significant events that occurred after the reporting period, such as debt prepayment and dividend declarations - On August 4, 2025, the Company prepaid the entire **$34.8 million** outstanding principal of the SVB Term Loan and terminated the SVB Credit Agreement[84](index=84&type=chunk) - On August 7, 2025, the Board of Directors declared a one-time cash dividend of **$0.25 per share** for Class A common stock and LLC common units, totaling approximately **$25.3 million**, payable on September 8, 2025[85](index=85&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial condition and results of operations, discussing key performance drivers, a detailed comparison of financial results for the three and six months ended June 30, 2025 and 2024, key business metrics, non-GAAP financial measures, liquidity, capital resources, and critical accounting policies [Company Overview](index=24&type=section&id=Company%20Overview) This section provides a strategic overview of Brilliant Earth's business model, market position, and operational approach - Brilliant Earth is an innovative, digitally native omnichannel jewelry company, a global leader in ethically sourced fine jewelry, offering exclusive designs with supply chain transparency[89](index=89&type=chunk) - The company leverages technology for dynamic product visualization, augmented reality try-on, blockchain-verified transparency, and data-driven decision-making to enhance customer experience and operational efficiency[93](index=93&type=chunk) - For the three months ended June 30, 2025, net sales were **$108.9 million (up 3.3%)**, and net loss was **$1.1 million (down 180.9%)**; Adjusted EBITDA was **$3.2 million (down 41.9%)**; For the six months, net sales were **$202.8 million (flat)**, and net loss was **$4.4 million (down 279.4%)**; Adjusted EBITDA was **$4.3 million (down 59.7%)**[98](index=98&type=chunk) [Key Factors Affecting Our Performance](index=25&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) This section identifies the primary internal and external factors influencing the company's financial performance and strategic direction - Key factors include increasing brand awareness, cost-effective customer acquisition and retention, successful growth of the omnichannel presence, and the ability to introduce new products and expand internationally[97](index=97&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - Maintaining an asset-light operating model with capital-efficient showrooms and driving continued operational improvement are crucial for future success[105](index=105&type=chunk) - Macroeconomic trends (inflation, tariffs, consumer spending) and the significant costs of operating as a public company pose risks to financial results[106](index=106&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section provides a comprehensive analysis of the company's financial performance, detailing revenue, gross profit, and operating expenses - This section provides a detailed analysis of the company's financial performance for the three and six months ended June 30, 2025, compared to the prior year, covering net sales, gross profit, and operating expenses[112](index=112&type=chunk) [Comparison of Three Months Ended June 30, 2025 and 2024](index=29&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes the company's financial results for the three months ended June 30, 2025, compared to the same period in the prior year Financial Performance (3 Months Ended June 30, 2025 vs. 2024) (Amounts in thousands) | Metric | 2025 Amount | 2024 Amount | Change | % Change | | :-------------------------------- | :---------- | :---------- | :----- | :------- | | Net sales | $108,936 | $105,426 | $3,510 | 3.3% | | Cost of sales | $45,432 | $41,349 | $4,083 | 9.9% | | Gross profit | $63,504 | $64,077 | $(573) | (0.9%) | | Marketing and advertising | $26,271 | $27,346 | $(1,075) | (3.9%) | | General and administrative | $38,446 | $35,599 | $2,847 | 8.0% | | (Loss) income from operations | $(1,213) | $1,132 | $(2,345) | (207.2%) | | Net (loss) income | $(1,113) | $1,375 | $(2,488) | (180.9%) | - Net sales increased by **3.3%** due to an **18.3% increase in order volumes**, partially offset by a **12.6% decrease in Average Order Value (AOV)** driven by a higher mix of lower price point products[114](index=114&type=chunk)[115](index=115&type=chunk) - Gross margin decreased by **250 basis points**, primarily due to higher gold costs and the impact of tariffs[116](index=116&type=chunk) [Comparison of Six Months Ended June 30, 2025 and 2024](index=31&type=section&id=Comparison%20of%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes the company's financial results for the six months ended June 30, 2025, compared to the same period in the prior year Financial Performance (6 Months Ended June 30, 2025 vs. 2024) (Amounts in thousands) | Metric | 2025 Amount | 2024 Amount | Change | % Change | | :-------------------------------- | :---------- | :---------- | :----- | :------- | | Net sales | $202,820 | $202,763 | $57 | 0.0% | | Cost of sales | $84,274 | $80,380 | $3,894 | 4.8% | | Gross profit | $118,546 | $122,383 | $(3,837) | (3.1%) | | Marketing and advertising | $49,233 | $50,442 | $(1,209) | (2.4%) | | General and administrative | $74,049 | $69,932 | $4,117 | 5.9% | | (Loss) income from operations | $(4,736) | $2,009 | $(6,745) | (335.7%) | | Net (loss) income | $(4,380) | $2,442 | $(6,822) | (279.4%) | - Net sales remained flat, with a **15.5% increase in order volumes** largely offset by a **13.4% decrease in AOV**, driven by a higher mix of lower price point products[123](index=123&type=chunk)[124](index=124&type=chunk) - Gross profit declined by **3.1%**, and gross margin decreased by **190 basis points**, primarily due to higher gold costs[125](index=125&type=chunk)[126](index=126&type=chunk) [Key Metrics](index=32&type=section&id=Key%20Metrics) This section presents and discusses key operational performance indicators, including net sales, total orders, and average order value Key Performance Metrics | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :---------------- | :--------------------------- | :--------------------------- | :----- | :------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net Sales | $108,936 | $105,426 | $3,510 | 3.3% | $202,820 | $202,763 | $57 | 0.0% | | Total Orders | 52,535 | 44,404 | 8,131 | 18.3% | 98,070 | 84,929 | 13,141 | 15.5% | | AOV | $2,074 | $2,374 | $(300) | (12.6%) | $2,068 | $2,387 | $(319) | (13.4%) | - Total orders increased by **18.3%** for the three months and **15.5%** for the six months ended June 30, 2025, indicating strong product desirability and customer acquisition[132](index=132&type=chunk)[133](index=133&type=chunk) - Average Order Value (AOV) decreased by **12.6%** for the three months and **13.4%** for the six months ended June 30, 2025, primarily due to a higher mix of lower price point products[132](index=132&type=chunk)[134](index=134&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA margin Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation (Amounts in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income | $(1,113) | $1,375 | $(4,380) | $2,442 | | Adjusted EBITDA | $3,182 | $5,481 | $4,260 | $10,566 | | Net (loss) income margin | (1.0)% | 1.3% | (2.2)% | 1.2% | | Adjusted EBITDA margin | 2.9% | 5.2% | 2.1% | 5.2% | - Adjusted EBITDA decreased by **41.9%** for the three months and **59.7%** for the six months ended June 30, 2025, compared to the prior year[138](index=138&type=chunk) - Adjusted EBITDA margin decreased from **5.2% to 2.9%** for the three months and from **5.2% to 2.1%** for the six months ended June 30, 2025[138](index=138&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, and ability to meet its short-term and long-term financial obligations - As of June 30, 2025, the company had a cash balance of **$133.6 million** and negative working capital (excluding non-restricted cash) of **($57.6) million**[140](index=140&type=chunk) - The company believes it has sufficient liquidity to meet projected operating, debt service, and tax distribution requirements for at least the next 12 months[146](index=146&type=chunk) - Future liquidity needs include significant payments under the Tax Receivable Agreement (TRA), which are contingent on future taxable income and could reduce overall cash flow[148](index=148&type=chunk)[157](index=157&type=chunk) [Contractual Obligations and Commitments](index=38&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and commitments as of the reporting date - No material changes to contractual obligations and commitments were reported as of June 30, 2025, compared to the 2024 Form 10-K[162](index=162&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section describes the accounting policies and estimates that require significant judgment and can materially impact the financial statements - No changes to critical accounting policies and estimates were reported as of June 30, 2025, compared to the 2024 Form 10-K[163](index=163&type=chunk) [Recent Accounting Pronouncements](index=38&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the potential impact of recently issued accounting pronouncements on the company's financial statements and disclosures - The company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Income Statement-Reporting Comprehensive Income) on its financial statements and disclosures[41](index=41&type=chunk)[42](index=42&type=chunk)[164](index=164&type=chunk) [JOBS Act](index=38&type=section&id=JOBS%20Act) This section explains the company's status as an "emerging growth company" under the JOBS Act and its implications for financial reporting - Brilliant Earth Group, Inc. qualifies as an 'emerging growth company' under the JOBS Act, allowing it to delay the adoption of new accounting standards[165](index=165&type=chunk) - The company will remain an emerging growth company until the earlier of December 31, 2026, achieving **$1.235 billion** in annual gross revenue, becoming a large accelerated filer, or issuing over **$1.0 billion** in non-convertible debt[166](index=166&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Brilliant Earth Group, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing market risk disclosures as it qualifies as a smaller reporting company[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to a previously identified material weakness related to ineffective information technology general controls (ITGCs). The company is actively implementing remediation plans, including hiring ITGC management, enhancing training, and strengthening access and change management procedures [Evaluation of Disclosure Controls and Procedures](index=39&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) This section assesses the effectiveness of the company's disclosure controls and procedures as of the reporting period - Management concluded that disclosure controls and procedures were **not effective** as of June 30, 2025[168](index=168&type=chunk) [Material Weakness](index=39&type=section&id=Material%20Weakness) This section identifies and describes a material weakness in the company's internal control over financial reporting - A material weakness exists due to **ineffective ITGCs** in change management, user access, and segregation of duties related to IT systems supporting financial reporting[169](index=169&type=chunk) - The material weakness did not result in identified misstatements in consolidated financial statements or changes to previously issued financial results[170](index=170&type=chunk) [Remediation](index=39&type=section&id=Remediation) This section outlines the company's plans and ongoing efforts to remediate the identified material weakness in internal controls - Remediation efforts include hiring a director of ITGC, implementing training, enhancing privileged access and segregation of duties procedures, and strengthening change management[171](index=171&type=chunk) - The material weakness will not be considered remediated until controls operate effectively for a sufficient period and are tested by management[172](index=172&type=chunk) [Changes in Internal Control over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the quarter - No other material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, apart from ongoing remediation efforts[173](index=173&type=chunk) [Part II - Other Information](index=41&type=section&id=Part%20II%20-%20Other%20Information) This part includes additional information not covered in the financial statements, such as legal proceedings, risk factors, and equity security sales [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings.) The company is periodically involved in legal claims in the ordinary course of business, none of which are currently expected to have a material effect on its financial condition. A specific representative action under California's PAGA, alleging labor code violations, is ongoing, with the company intending to vigorously defend the claims - The company does not believe any current legal claims will have a material effect on its business or financial condition[175](index=175&type=chunk) - A representative action under California's PAGA, filed by a former employee, alleges various labor code violations, but liability is not currently probable or reasonably estimable[176](index=176&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors.) This section refers to the company's 2024 Form 10-K for a comprehensive description of risk factors, stating that there have been no material changes to these risks as previously disclosed - No material changes to the company's risk factors have occurred since their disclosure in the 2024 Form 10-K[177](index=177&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the company's repurchases of Class A common stock during the three months ended June 30, 2025, under a publicly announced share repurchase program Issuer Repurchases of Class A Common Stock (3 Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per share | Total Number of shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | | :---------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | April 1 - April 30 | 41,842 | $1.52 | 41,842 | $19.1 million | | May 1 - May 31 | 41,825 | $1.49 | 41,825 | $19.1 million | | June 1 - June 30 | 48,457 | $1.34 | 48,457 | $19.0 million | - The company has an authorized share repurchase program of up to **$20.0 million** of Class A common stock, approved on December 8, 2023, expiring December 8, 2026[179](index=179&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) This section states that there are no defaults upon senior securities - No defaults upon senior securities were reported[180](index=180&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - This item is not applicable[181](index=181&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information.) This section reports on Rule 10b5-1 trading arrangements, specifically noting the termination of a plan by the Chief Financial Officer, Jeffrey Kuo, on May 14, 2025 - Jeffrey Kuo, the Company's CFO, terminated an existing Rule 10b5-1 trading arrangement on May 14, 2025[183](index=183&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, certifications, and XBRL-related files - The report includes certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[184](index=184&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section formally attests to the accuracy and completeness of the report, signed by an authorized officer - The report was signed by Jeffrey Kuo, Chief Financial Officer, on August 7, 2025[188](index=188&type=chunk)

Financial Data and Key Metrics Changes - Q2 net sales reached $108.9 million, representing a year-over-year increase of 3.3%, exceeding the high end of guidance by 330 basis points [17] - Total orders grew 18% year-over-year, while repeat orders increased by 11% [17] - Adjusted EBITDA for Q2 was $3.2 million, marking a 2.9% adjusted EBITDA margin, significantly surpassing guidance [18] - Average order value (AOV) declined by 12.6% year-over-year to $2,074, attributed to the growth in fine jewelry, which has a lower price point compared to bridal collections [18] - Gross margin was 58.3%, a decrease of 250 basis points year-over-year, primarily due to higher gold costs and tariffs [18] Business Line Data and Key Metrics Changes - Fine jewelry bookings grew 38% year-over-year, contributing significantly to overall sales growth [8] - Engagement rings and wedding bands experienced high single-digit unit growth year-over-year [11] - The average order value decline was influenced by the strong performance in fine jewelry, which is generally lower-priced than bridal assortments [10] Market Data and Key Metrics Changes - Customer demand for Brilliant Earth jewelry remained strong, with total orders growing 18% year-over-year [10] - The company noted a rebound in engagement ring customers, particularly in the under $5,000 price range [10] - Showroom orders from retail customers without scheduled appointments grew 81% year-over-year, indicating increased walk-in traffic [12] Company Strategy and Development Direction - The company aims to become the world's most loved and trusted jewelry brand, focusing on increasing brand awareness and providing a seamless omnichannel experience [7] - Strategic investments are being made in technology, data analytics, and showroom expansion to drive long-term growth [8] - The company is leveraging AI and machine learning to enhance marketing efficiency and operational effectiveness [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment, including the impact of new tariffs on imports from India [6][25] - The company raised its annual net sales guidance, expecting growth of 2.5% to 4% year-over-year [24] - Management highlighted the importance of strategic investments in brand building and showroom expansion to sustain growth [35] Other Important Information - The company announced a one-time cash dividend of approximately $25.3 million, reflecting its strong cash position and commitment to shareholder returns [22] - The company ended Q2 with approximately $134 million in cash, having paid off its term loan, leaving no outstanding debt [23] Q&A Session Summary Question: Insights on fine jewelry growth relative to margins - Management noted that consumers are discerning and gravitating towards high-quality fine jewelry, which is positively impacting overall AOV [30][32] Question: Thoughts on debt payment and future investments - Management emphasized the strong balance sheet and cash position, allowing for continued strategic investments in brand and showroom growth [34][36] Question: Consumer health and spending habits - Management observed that consumers are discerning but are spending on high-quality jewelry, with strong performance in engagement rings and wedding bands [41][42]

Core Insights - Brilliant Earth Group, Inc. (BRLT) reported quarterly earnings of $0.01 per share, exceeding the Zacks Consensus Estimate of a loss of $0.01 per share, representing an earnings surprise of +200.00% [1] - The company posted revenues of $108.94 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.09% and showing an increase from $105.43 million year-over-year [2] - The stock has underperformed, losing about 34.3% since the beginning of the year compared to the S&P 500's gain of 7.9% [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.02 on revenues of $106.64 million, and for the current fiscal year, it is $0.05 on revenues of $429.01 million [7] - The estimate revisions trend for Brilliant Earth Group was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Retail - Jewelry industry, to which Brilliant Earth Group belongs, is currently in the top 41% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Movado (MOV), another company in the same industry, is expected to report quarterly earnings of $0.57 per share, reflecting a year-over-year change of +256.3% [9]

Financial Performance - Net sales reached $108.9 million, a 3% year-over-year increase[27] - Average Order Value (AOV) was $2,074[22] - Total orders increased by 18% year-over-year[22] - Repeat orders grew by 11% year-over-year[22] - Gross margin was 58.3%[22] - Adjusted EBITDA was $3.2 million, representing a 2.9% margin[22] - Net cash ended the period at $98.8 million, a 5% year-over-year increase[22, 27] Strategic Initiatives - The company opened one new showroom in Alpharetta, Georgia, bringing the total to 42 showrooms[27] - The company paid off its outstanding term loan balance of $34.8 million, resulting in zero debt[27] Future Outlook - The company projects third-quarter net sales growth of 8% to 10% year-over-year and adjusted EBITDA of $3 million to $4.5 million[51] - The company anticipates full-year net sales growth of 2.5% to 4% year-over-year and an adjusted EBITDA margin of 3% to 4%[51]

Brilliant Earth Reports Strong Q2 Exceeding High End of Net Sales and Profitability Guidance; Announces One- Dividend and Distribution The Company also announced today that its Board of Directors has declared a one-time cash dividend and distribution of $0.25 per share to holders of its Class A Common Stock and holders of common units of Brilliant Earth, LLC, respectively. The distribution from Brilliant Earth, LLC will total approximately $25.3 million, of which a pro rata portion will be used by the Compa ...