Brilliant Earth (US:BRLT)2025-11-05 21:03Financial Performance - Net sales for Q3 2025 reached $110,252,000, a 10.4% increase from $99,873,000 in Q3 2024[22] - The company reported a net loss of $672,000 for Q3 2025, compared to a net loss of $1,075,000 in Q3 2024[22] - For the nine months ended September 30, 2025, the company reported a net loss of $5,052,000 compared to a net income of $1,367,000 for the same period in 2024[29] - The net loss attributable to Brilliant Earth Group, Inc. for the three months ended September 30, 2025, was $(528) thousand, compared to a net loss of $(836) thousand in 2024[49] - Net loss for the three months ended September 30, 2025, was $0.7 million, a decrease of 37.5% compared to a net loss of $1.1 million for the same period in 2024[114] - Adjusted EBITDA for the three months ended September 30, 2025, was $3.6 million, unchanged from the same period in 2024[114] - Adjusted EBITDA for the nine months ended September 30, 2025, was $7.821 million, with an Adjusted EBITDA margin of 2.5%[141] Revenue and Sales - Net sales for the three months ended September 30, 2025, were $110.3 million, an increase of 10.4% compared to $99.9 million for the same period in 2024[114] - Net sales for the nine months ended September 30, 2025, increased by $10.4 million, or 3.4%, compared to the same period in 2024, driven by a 15.9% increase in order volumes[126] - The increase in net sales was driven by a 16.8% rise in order volumes, partially offset by a 5.5% decrease in average order value (AOV)[115] - The average order value (AOV) decreased by 10.7% to $2,116 for the nine months ended September 30, 2025, primarily due to a higher mix of lower price point products[136] Expenses and Liabilities - Operating expenses for the nine months ended September 30, 2025, totaled $187,353,000, up from $182,213,000 in the same period of 2024[22] - Operating expenses for the three months ended September 30, 2025, increased by $2.2 million, or 3.6%, compared to the same period in 2024[120] - Interest expense decreased by $1.0 million, or 79.4%, for the three months ended September 30, 2025, primarily due to the prepayment of $34.8 million under the SVB Term Loan[122] - Interest expense decreased by $1.5 million, or 40.4%, for the nine months ended September 30, 2025, due to principal payments made on the SVB Term Loan[132] - The total accrued expenses and other current liabilities as of September 30, 2025, were $29.3 million, a decrease from $31.7 million at the end of 2024[60] Assets and Equity - Total current assets decreased to $135,651,000 as of September 30, 2025, from $211,413,000 at December 31, 2024, representing a decline of 35.8%[20] - Cash and cash equivalents decreased to $73,429,000 as of September 30, 2025, from $161,925,000 at December 31, 2024, a decline of 54.7%[20] - Stockholders' equity attributable to Brilliant Earth Group, Inc. decreased to $11,979,000 as of September 30, 2025, from $15,329,000 at December 31, 2024[20] - As of September 30, 2025, Brilliant Earth Group, Inc. reported total stockholders' equity of $67,075,000[24] - The company had $15.2 million in consigned inventory held on behalf of suppliers as of September 30, 2025[59] Shareholder Activities - The company repurchased common stock amounting to $58,112,000 during the period[24] - The Board of Directors declared a one-time cash dividend of $0.25 per share, totaling approximately $25.0 million, with $3.8 million paid to Class A common stockholders[145] - The Company repurchased a total of 41,112 shares of Class A common stock in July 2025 at an average price of $1.53 per share, and 17,000 shares in August 2025 at an average price of $1.76 per share[178] - The total value of shares that may yet be purchased under the repurchase program is approximately $18.9 million as of September 30, 2025[178] Market and Strategic Initiatives - The company operates in one segment, focusing on the retail sale of ethically sourced diamonds, gemstones, and jewelry[42] - The company is evaluating the impact of new accounting standards issued by FASB, which may affect future disclosures but not the consolidated financial statements[46][47] - The company plans to continue expanding its showroom presence and enhancing its omnichannel strategy to drive growth[99] - The company is focused on cost-effective customer acquisition and retention strategies to support future growth[98] - The company is in the early stages of international expansion, with plans to localize its website and open new showrooms in overseas markets[102] Tax and Compliance - The Company has recorded a corresponding estimated liability of $7.8 million representing 85% of the projected tax benefits to the Continuing Equity Owners[82] - The Company expects significant cash payments under the Tax Receivable Agreement (TRA), which will reduce overall cash flow available[149] - The total amount of tax distributions to members was $50 million during the third quarter of 2024, indicating ongoing compliance with tax obligations[27] Legal and Risk Factors - The Company intends to vigorously defend against the claims made in the lawsuit filed by a former employee, with any liability currently not probable or reasonably estimable[176] - There have been no material changes to the Company's risk factors as previously disclosed in the 2024 Form 10-K[177] - The Company has stipulated to the filing of an amended complaint in the ongoing lawsuit, which may include class claims[176] Internal Controls and Governance - A material weakness in internal control over financial reporting was identified, related to ineffective IT general controls[168] - The Company plans to raise additional funds if current liquidity is insufficient, which may involve issuing equity securities or debt financing[150]