[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]

[Executive Summary & Key Announcements](index=1&type=section&id=Brilliant%20Earth%20Reports%20Strong%20Q2%20Exceeding%20High%20End%20of%20Net%20Sales%20and%20Profitability%20Guidance%3B%20Announces%20One-Time%20Dividend%20and%20Distribution) Brilliant Earth reported strong Q2 2025 results, exceeding guidance, announced a one-time dividend, and paid off its debt facility, reflecting robust financial health and commitment to shareholder returns [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Brilliant Earth reported strong Q2 2025 results, exceeding guidance with 3.3% Y/Y net sales growth and 18% Y/Y total order growth. The company achieved a gross margin of 58.3% and an Adjusted EBITDA of $3.2 million, while expanding its retail showroom portfolio and ending the quarter with $98.8 million in net cash Q2 2025 Key Performance Indicators | Metric | Q2 2025 | Y/Y Change | | :----- | :------ | :--------- | | Net Sales | $108.9 million | +3.3% | | Total Orders | 52,535 | +18% | | Fine Jewelry Bookings | - | +38% | | Gross Margin | 58.3% | Consistent with target | | GAAP Net Loss | $1.1 million | - | | Adjusted EBITDA | $3.2 million | - | | Net Cash | $98.8 million | +5% | - Expanded retail showroom portfolio to **42 locations** with a new opening in Alpharetta, Atlanta metro area[6](index=6&type=chunk) [Strategic Announcements](index=1&type=section&id=Strategic%20Announcements) Brilliant Earth announced a one-time cash dividend of $0.25 per share and successfully paid off the remaining $34.8 million of its term loan, terminating its debt facility [Dividend and Distribution](index=1&type=section&id=Dividend%20and%20Distribution) The company's Board of Directors declared a one-time cash dividend of **$0.25 per share**, totaling approximately **$25.3 million**, payable on September 8, 2025 - Board of Directors declared a one-time cash dividend and distribution of **$0.25 per share**[3](index=3&type=chunk) - The distribution from Brilliant Earth, LLC will total approximately **$25.3 million**[3](index=3&type=chunk) - Payment date is September 8, 2025, to holders of record as of August 22, 2025[3](index=3&type=chunk) [Debt Facility Payoff](index=1&type=section&id=Payoff%20of%20Debt%20Facility) Brilliant Earth successfully paid off its remaining **$34.8 million** term loan, terminating its debt facility and achieving a zero-debt position - The company paid off the remaining **$34.8 million** of its term loan[4](index=4&type=chunk) - Debt facility terminated as of August 4, 2025, leaving the Company with **zero debt**[4](index=4&type=chunk)[6](index=6&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Beth Gerstein expressed satisfaction with Q2 results, highlighting market outperformance, share gains, and validation of the company's strategic vision. She noted strong growth in engagement rings, wedding bands, and fine jewelry, attributing success to brand momentum and a diversified supply chain. The dividend reflects commitment to shareholder returns and a strong financial position - Q2 results represent the strongest year-over-year topline growth in a year and a half, significantly exceeding Net Sales and Adjusted EBITDA expectations[5](index=5&type=chunk) - Drove high-single digit year-over-year unit growth in both engagement rings and wedding and anniversary bands[5](index=5&type=chunk) - Grew fine jewelry bookings **38% year-over-year** in Q2[5](index=5&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) This section details Brilliant Earth's financial results for Q2 and the first six months of 2025, highlighting net sales, profitability, and key operational metrics [Second Quarter 2025 Results](index=2&type=section&id=Second%20Quarter%20Results) In Q2 2025, Brilliant Earth reported net sales of $108.9 million, a 3.3% increase year-over-year, driven by an 18.3% rise in total orders. However, Average Order Value (AOV) decreased by 12.6%. The company experienced a GAAP net loss of $1.1 million, a significant decline from a $1.4 million net income in Q2 2024, and Adjusted EBITDA also decreased by 41.9% to $3.2 million Q2 2025 vs Q2 2024 Financial Performance | Metric | Q2 2025 | Q2 2024 | % Change | | :----------------------------------- | :------ | :------ | :------- | | Total Orders | 52,535 | 44,404 | 18.3% | | AOV | $2,074 | $2,374 | (12.6)% | | Net Sales | $108.9M | $105.4M | 3.3% | | Gross Profit | $63.5M | $64.1M | (0.9)% | | Gross Margin | 58.3% | 60.8% | (250)bps | | Net (loss) income, as reported | $(1.1)M | $1.4M | (180.9)% | | Net (loss) income margin | (1.0)% | 1.3% | (230)bps | | Adjusted EBITDA | $3.2M | $5.5M | (41.9)% | | Adjusted EBITDA margin | 2.9% | 5.2% | (230)bps | | GAAP Diluted EPS | $(0.01) | $0.01 | (200.0)% | | Adjusted Diluted EPS | $0.01 | $0.03 | (66.7)% | [Six Month Results](index=2&type=section&id=Six%20Month%20Results) For the six months ended June 30, 2025, Net Sales remained flat year-over-year at $202.8 million, despite a 15.5% increase in total orders. AOV declined by 13.4%. The company reported a GAAP net loss of $4.4 million, a significant decrease from a $2.4 million net income in the prior year period, and Adjusted EBITDA fell by 59.7% to $4.3 million YTD June 2025 vs YTD June 2024 Financial Performance | Metric | YTD June 2025 | YTD June 2024 | % Change | | :----------------------------------- | :------------ | :------------ | :------- | | Total Orders | 98,070 | 84,929 | 15.5% | | AOV | $2,068 | $2,387 | (13.4)% | | Net Sales | $202.8M | $202.8M | —% | | Gross Profit | $118.5M | $122.4M | (3.2)% | | Gross Margin | 58.4% | 60.4% | (200)bps | | Net (loss) income, as reported | $(4.4)M | $2.4M | (279.4)% | | Net (loss) income margin | (2.2)% | 1.2% | (340)bps | | Adjusted EBITDA | $4.3M | $10.6M | (59.7)% | | Adjusted EBITDA margin | 2.1% | 5.2% | (310)bps | | GAAP Diluted EPS | $(0.04) | $0.02 | (300.0)% | | Adjusted Diluted EPS | $0.01 | $0.06 | (83.3)% | [Business Outlook & Company Information](index=4&type=section&id=Business%20Outlook%20%26%20Company%20Information) This section provides Brilliant Earth's 2025 financial outlook, company overview, non-GAAP disclosures, dividend policy, and forward-looking statements [2025 Outlook](index=4&type=section&id=2025%20Outlook) Brilliant Earth has raised its annual net sales guidance for 2025, projecting a year-over-year growth of 2.5% to 4%, with an Adjusted EBITDA margin of 3% to 4%. For the third quarter, the company anticipates net sales growth of 8% to 10% year-over-year and Adjusted EBITDA between $3 million and $4.5 million 2025 Financial Outlook | Period | Metric | Guidance | | :------- | :---------- | :-------------------- | | Third Quarter | Net Sales | +8% to 10% Y/Y | | | Adjusted EBITDA | $3M to $4.5M | | Full Year | Net Sales | +2.5% to 4% Y/Y | | | Adjusted EBITDA | 3% to 4% Margin | - Outlook reflects metal prices and tariffs as of August 5, 2025, and does not include impacts from subsequent tariff announcements or metal price fluctuations[11](index=11&type=chunk) [About Brilliant Earth](index=4&type=section&id=About%20Brilliant%20Earth) Brilliant Earth is an industry-disrupting global leader in ethically sourced fine jewelry, founded in 2005 with a mission for transparency and sustainability. The company operates with a premium brand, curated products, an omnichannel experience, and a data-driven business model, serving customers in over 50 countries with 42 showrooms - Founded in 2005, mission is to create a more transparent, sustainable, and compassionate jewelry industry[13](index=13&type=chunk) - Operates with a premium brand, curated proprietary product assortment, seamless omnichannel shopping experience, and asset-light, data-driven business model[13](index=13&type=chunk) - 2024 full year Net Sales were **$422 million** and has reported positive Adjusted EBITDA for **16 consecutive quarters** since going public in 2021[13](index=13&type=chunk) [Non-GAAP Financial Measures and Key Metrics Disclosure](index=4&type=section&id=Disclosure%20Regarding%20Non-GAAP%20Financial%20Measures%20and%20Key%20Metrics) This section defines non-GAAP financial measures like Adjusted EBITDA, Adjusted Net (loss) income, and Adjusted Diluted EPS, explaining their exclusion of certain variable or non-core items to provide a clearer view of underlying business performance. It also outlines key business metrics such as net cash, bookings, total orders, average order value (AOV), and average selling price (ASP, detailing how these are calculated and their utility in evaluating business trends and operational efficiency - Non-GAAP measures (Adjusted EBITDA, Adjusted Net (loss) income, Adjusted Diluted EPS) are used to evaluate operating performance by excluding items that vary substantially in frequency and magnitude[14](index=14&type=chunk) - Key business metrics defined include: * **Net cash**: Cash and cash equivalents less the total principal balance of outstanding debt * **Bookings**: Dollar value of confirmed orders, representing gross sales and potential future Net Sales * **Total orders**: Total number of customer orders delivered less total orders returned (excluding repairs/resizes) * **AOV (Average Order Value)**: Net sales in a given period divided by total orders * **ASP (Average Selling Price)**: Total retail sales price of products sold divided by total product units sold[20](index=20&type=chunk) [Dividend Policy](index=5&type=section&id=Dividend%20Policy) Future dividend declarations are at the discretion of the Board of Directors, subject to legal requirements, contractual restrictions, and the company's business prospects, financial condition, cash requirements, industry trends, and other relevant factors - Any future dividend declaration and payment are at the discretion of the Company's Board of Directors[21](index=21&type=chunk) - Subject to the requirements of applicable law, compliance with contractual restrictions, and covenants in debt agreements[21](index=21&type=chunk) - Dependent on business prospects, results of operations, financial condition, cash requirements and availability, industry trends, and other factors[21](index=21&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This section contains a standard legal disclaimer regarding forward-looking statements, indicating that they are not guarantees of future performance and are subject to various risks, assumptions, and uncertainties. These include fluctuations in material pricing, economic conditions, customer acquisition, growth management, supply chain issues, competition, brand maintenance, IT systems, and regulatory impacts. The company disclaims any obligation to update these statements - Forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict[22](index=22&type=chunk) - Risks include fluctuations in pricing and supply of diamonds/precious metals, overall economic health, consumer spending, trade policy changes (tariffs), ability to acquire/retain customers, managing rapid growth, supply chain issues, competition, brand maintenance, reliance on IT systems, ESG matters, and obligations under the Tax Receivable Agreement[22](index=22&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements unless required by applicable law[22](index=22&type=chunk) [Unaudited Consolidated Financial Statements](index=7&type=section&id=BRILLIANT%20EARTH%20GROUP%2C%20INC.%20UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents Brilliant Earth's unaudited consolidated statements of operations and balance sheets for Q2 and YTD June 30, 2025, and comparative periods [Consolidated Statements of Operations](index=7&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The unaudited consolidated statements of operations detail the company's financial performance for the three and six months ended June 30, 2025 and 2024, showing net sales, cost of sales, gross profit, operating expenses, and ultimately net (loss) income and earnings per share Consolidated Statements of Operations (Q2 & YTD June 30) | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Net sales | $108,936 | $105,426 | $202,820 | $202,763 | | Cost of sales | $45,432 | $41,349 | $84,274 | $80,380 | | Gross profit | $63,504 | $64,077 | $118,546 | $122,383 | | Total operating expenses | $64,717 | $62,945 | $123,282 | $120,374 | | (Loss) income from operations | $(1,213) | $1,132 | $(4,736) | $2,009 | | Net (loss) income | $(1,113) | $1,375 | $(4,380) | $2,442 | | Diluted EPS | $(0.01) | $0.01 | $(0.04) | $0.02 | [Consolidated Balance Sheets](index=8&type=section&id=UNAUDITED%20CONSOLIDATED%20BALANCE%20SHEETS) The unaudited consolidated balance sheets present the company's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity. Key changes include a decrease in cash and cash equivalents and the elimination of long-term debt Consolidated Balance Sheets (June 30, 2025 vs Dec 31, 2024) | Metric (in thousands) | June 30, 2025 | Dec 31, 2024 | | :-------------------- | :------------ | :----------- | | Total assets | $260,875 | $281,245 | | Cash and cash equivalents | $133,615 | $161,925 | | Inventories, net | $47,348 | $38,292 | | Total current liabilities | $115,251 | $78,169 | | Long-term debt, net | — | $50,010 | | Total liabilities | $158,193 | $171,863 | | Total stockholders' equity | $102,682 | $109,382 | [GAAP to Non-GAAP Reconciliations](index=10&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP net (loss) income to Adjusted EBITDA and Adjusted Net Income, along with Adjusted Diluted EPS, for Q2 and YTD June 30, 2025, and 2024 [Adjusted EBITDA and Adjusted EBITDA Margin](index=10&type=section&id=ADJUSTED%20EBITDA%20AND%20ADJUSTED%20EBITDA%20MARGIN) This section provides a reconciliation of GAAP net (loss) income to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, detailing adjustments for interest, taxes, depreciation, amortization, showroom pre-opening expenses, equity-based compensation, and other income Adjusted EBITDA Reconciliation (Q2 & YTD June 30) | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----------------------------------- | :------ | :------ | :------- | :------- | | Net (loss) income | $(1,113) | $1,375 | $(4,380) | $2,442 | | Interest expense | $895 | $1,293 | $2,010 | $2,507 | | Income tax expense (benefit) | $143 | $(62) | $12 | $11 | | Depreciation expense | $1,544 | $1,302 | $3,032 | $2,505 | | Amortization of cloud-based software | $204 | $213 | $366 | $418 | | Showroom pre-opening expense | $319 | $409 | $901 | $622 | | Equity-based compensation expense | $2,328 | $2,425 | $4,697 | $5,012 | | Other income, net | $(1,138) | $(1,474) | $(2,378) | $(2,951) | | **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 Net (Loss) Income and Adjusted Diluted Earnings Per Share](index=11&type=section&id=ADJUSTED%20NET%20(LOSS)%20INCOME%20AND%20ADJUSTED%20DILUTED%20EARNINGS%20PER%20SHARE) This section reconciles GAAP net (loss) income attributable to Brilliant Earth Group, Inc. to Adjusted Net Income and Adjusted Diluted EPS, accounting for the impact of assumed redemption of LLC Units, income tax benefits/expenses, equity-based compensation, showroom pre-opening expenses, and their tax impacts Adjusted Net Income & Diluted EPS Reconciliation (Q2 & YTD June 30) | Metric (in thousands, except EPS) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------------ | :------ | :------ | :------- | :------- | | Net (loss) income attributable to BRLT, as reported | $(166) | $185 | $(632) | $324 | | Net (loss) income, as reported | $(1,113) | $1,375 | $(4,380) | $2,442 | | Tax effected net (loss) income after assumed conversion | $(872) | $1,071 | $(3,427) | $1,901 | | Equity-based compensation expense | $2,328 | $2,425 | $4,697 | $5,012 | | Showroom pre-opening expense | $319 | $409 | $901 | $622 | | Tax impact of adjustments | $(673) | $(723) | $(1,424) | $(1,438) | | **Adjusted Net Income** | **$1,102** | **$3,182** | **$747** | **$6,097** | | Diluted EPS, As reported | $(0.01) | $0.01 | $(0.04) | $0.02 | | **Diluted EPS, As adjusted** | **$0.01** | **$0.03** | **$0.01** | **$0.06** |

Company Overview - Brilliant Earth Group, Inc. is a global leader in ethically sourced fine jewelry, founded in 2005 with a mission to create a more transparent, sustainable, and compassionate jewelry industry [3] - The company operates with a premium brand and a curated proprietary product assortment, offering a seamless omnichannel shopping experience [3] - Brilliant Earth has reported positive Adjusted EBITDA for 15 consecutive quarters since going public in 2021 [3] - In 2024, the company achieved net sales of $422 million [3] - The company is headquartered in San Francisco, CA, and Denver, CO, with 42 showrooms across the United States and customers in over 50 countries [3] Upcoming Financial Results - Brilliant Earth will report its second quarter 2025 earnings results before the market opens on August 7, 2025 [1] - An investor conference call and webcast will be held on the same day at 8:30 am ET/5:30 am PT to review the financial results and business outlook [2] - The webcast and conference call details can be accessed through the company's investor relations website [2]

Core Insights - Brilliant Earth has announced a partnership with tennis star Madison Keys, marking its entry into professional sports with its first athlete ambassador [1][3] - The collaboration aims to highlight both Keys' pursuit of excellence in tennis and Brilliant Earth's mission to transform the jewelry industry [1][3] Company Overview - Brilliant Earth is a global leader in ethically sourced fine jewelry, founded in 2005, with a mission to create a more transparent, sustainable, and compassionate jewelry industry [4] - The company reported net sales of $422 million for the full year of 2024 and has achieved positive Adjusted EBITDA for 15 consecutive quarters since going public in 2021 [4] - Brilliant Earth operates 42 showrooms across the United States and serves customers in over 50 countries worldwide [4] Partnership Details - Madison Keys, currently ranked World No. 6 and the 2025 Australian Open champion, will collaborate with Brilliant Earth on a limited-edition medallion necklace set to debut in August [2][5] - The necklace will reflect Brilliant Earth's artistry and craftsmanship, resonating with cultural icons, similar to the recent success of a Bee pendant necklace inspired by Beyoncé [2] - The partnership will also promote Keys' advocacy for kindness through her Kindness Wins foundation, aligning with Brilliant Earth's commitment to inclusivity and social responsibility [3]

Financial Performance - First quarter 2025 net sales reached $93.9 million[30], a decrease of 3.5% year-over-year[36] - The company achieved a gross margin of 58.6% in Q1 2025[30], compared to 59.9% in Q1 2024[36] - Adjusted EBITDA for Q1 2025 was $1.1 million[30], representing 1.1% of net sales[30] - The average order value (AOV) in Q1 2025 was $2,062[30], down from $2,402 in Q1 2024[39] - Total orders increased by 12% year-over-year in Q1 2025[30] Growth and Strategy - The company experienced a 13% year-over-year growth in repeat orders in Q1 2025[30] - Fine jewelry bookings contributed 14% of total bookings, reflecting a year-over-year expansion of approximately 350 basis points[34] - The company opened one new showroom in Southlake, Texas, bringing the total to 41 showrooms[34] - The company aims to accelerate net sales growth to a low teens percentage year-over-year by 2027[61] - The company targets a double-digit adjusted EBITDA margin by 2027[61] Assets - The company ended Q1 2025 with $92.5 million in net cash, a 5% increase year-over-year[30]

Summary of Brilliant Earth Group (BRLT) FY Conference Call Company Overview - **Company**: Brilliant Earth Group (BRLT) - **Industry**: Jewelry - **Market Position**: Positioned as a next-generation jeweler catering to millennial and Gen Z consumers with a focus on authenticity and mission-driven branding [2][4] Core Insights and Arguments - **Business Model**: The company operates an asset-light, data-driven model that allows for agility in responding to market trends, which is advantageous in the fragmented jewelry industry [3][8] - **Customer Demographics**: The primary customer base consists of millennials and Gen Z with household incomes between $100,000 and $200,000, who value a seamless and personalized shopping experience [4][5] - **Market Size**: The global jewelry industry is valued at approximately $350 billion, with two-thirds comprised of smaller independent retailers, presenting an opportunity for Brilliant Earth to gain market share [8] - **Sales Growth**: The company achieved a 16% compound annual growth rate (CAGR) in net sales from 2019 to 2024, while gross profit margins increased from the low 40s to 60% [9][10] - **Q1 2025 Performance**: Reported net sales of $94 million with an average order value of over $2,000, and a gross margin of 58.6% [11][12] Financial Highlights - **Adjusted EBITDA**: Achieved $1.1 million in adjusted EBITDA for Q1 2025, marking consecutive quarters of positive adjusted EBITDA since going public [11] - **Cash Position**: Ended Q1 2025 with $92.5 million in net cash, reflecting a year-over-year growth of 5% [12][16] - **Inventory Efficiency**: The company reported inventory turns of four times, significantly higher than the industry average of one to two times, indicating efficient working capital management [15][19] Strategic Initiatives - **Product Expansion**: Focus on increasing the share of fine jewelry, which contributed 14% of total bookings in Q1, representing a growth opportunity beyond engagement and wedding rings [13][14] - **Showroom Growth**: Opened new showrooms, bringing the total to 42, which are expected to drive incremental bookings and enhance customer engagement [20][21] - **Innovation and Technology**: Emphasis on investing in data, systems, and processes to drive operational efficiencies and sustainable growth [21][22] Long-term Goals - **Sales Growth Target**: Aiming for low teens year-over-year growth in net sales by 2027, driven by improvements in engagement rings and fine jewelry sales [22][23] - **Gross Margin Target**: Targeting high 50s gross margin percentage through 2027 by focusing on premium brand positioning and procurement efficiencies [23] - **Adjusted EBITDA Margin**: Aiming for a double-digit adjusted EBITDA margin by 2027 [24] Additional Noteworthy Points - **Celebrity Engagement**: Highlighted a collaboration with Beyoncé, which included a unique jewelry piece, showcasing the brand's appeal to influencers and celebrities [18] - **Omnichannel Experience**: Commitment to creating a seamless omnichannel experience for customers, integrating digital and physical touchpoints [20][24] This summary encapsulates the key points from the Brilliant Earth Group's FY conference call, highlighting the company's strategic positioning, financial performance, and future growth initiatives.

Summary of Brilliant Earth Group (BRLT) FY Conference Call Company Overview - **Brilliant Earth** is a digital-first jewelry company focused on ethically sourced and transparent diamonds, known for exclusive designs and a highly personalized omnichannel experience. [3][6] - **Sales Composition**: 70% of sales come from custom diamond rings. [3] Key Points and Arguments Unique Selling Proposition - The company combines an authentic mission-driven brand with proprietary products and a seamless omnichannel experience, catering to customer preferences across various shopping methods. [6][7] Growth Projections - **Medium-Term Growth**: Expected to accelerate to a low teens growth rate year-over-year by 2027, maintaining a gross margin in the high 50s percent and achieving a double-digit adjusted EBITDA margin. [9][28] - **Showroom Impact**: Opening new showrooms has led to uplift in sales across entire metro areas, with 42 showrooms currently operational. [10][11] Bridal Market Trends - Engagement levels in the bridal market have fluctuated, with a decline in 2023 after higher levels in 2021 and 2022. However, there are signs of improvement, including year-over-year unit growth in engagement rings. [13][14] - The company focuses on premium positioning and has seen strong performance in the sub $5,000 engagement ring segment. [16][17] Customer Loyalty and Repeat Purchases - Repeat order growth has outpaced total order growth, driven by success in fine jewelry, which accounted for 14% of bookings in Q1. [18][19] Fine Jewelry Strategy - The company aims to expand its fine jewelry offerings, which represent a significant growth opportunity. [19][20] Pricing Strategy - A dynamic pricing algorithm allows the company to adjust prices based on various factors, ensuring optimal top-line growth and gross margin capture. [24][25] Gross Margin Management - The company has faced challenges with rising gold prices but is well-positioned to navigate these through a diversified supply chain and agile pricing strategies. [29][30] Diamond Procurement - Brilliant Earth has a long-standing history of selling both natural and lab diamonds, leveraging trusted supplier relationships and an asset-light model for effective inventory management. [33][35] Marketing and Brand Awareness - Marketing spend was around 26% last year, with expectations to continue leveraging this as a percentage of sales while increasing brand awareness. [40][41] Consumer Health and Trends - The health of the consumer is rated at a 7 out of 10, consistent with previous assessments. Key consumer behavior shifts include a demand for authenticity and a preference for seamless omnichannel shopping experiences. [56][59][60] Product Highlights - Notable collections include the Jane collection, Diamond Essentials, and Signature collections, which have shown strong sales performance. [61] Additional Important Insights - The company emphasizes a capital-efficient approach to showroom expansion and inventory management, maintaining inventory turns above the industry average. [52][53] - CapEx is primarily focused on expanding the showroom fleet while ensuring strong returns on investments. [54][55] - The company has successfully engaged with social media platforms, enhancing brand visibility through viral moments, such as celebrity endorsements. [44][49] This summary encapsulates the key insights and strategic directions discussed during the Brilliant Earth Group FY Conference Call, highlighting the company's growth potential and market positioning.