Brilliant Earth (BRLT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q4 net sales were $119.5 million, representing a 4% decline year-over-year, while full-year net sales reached$ 422.2 million, a 5% decline year-over-year [7][30] - Total orders grew by 10% year-over-year in Q4 and 7% year-over-year for the full year, with repeat orders increasing by 18% in Q4 and 17% for the full year [8][30] - Gross margin expanded by 90 basis points year-over-year in Q4 to 59.6%, and for the full year, it was 60.3%, a 270 basis point increase [9][32] - Adjusted EBITDA for Q4 was $6.9 million, with a 5.8% margin, significantly exceeding guidance, while full-year adjusted EBITDA was$ 21.1 million, or a 5% margin [11][33] Business Line Data and Key Metrics Changes - Engagement rings showed improved year-over-year unit comps in Q4, with strong performance in price ranges under $5,000 [13][14] - The fine jewelry segment recorded strong double-digit bookings growth in Q4, contributing 27% of total bookings, a 600 basis point increase year-over-year [17][21] - The company launched the Flawless Collection, which has performed strongly, indicating customer trust in the brand [15] Market Data and Key Metrics Changes - The company opened new showroom locations in New York City and Boston, enhancing its physical presence and customer engagement [20] - The fine jewelry assortment saw significant growth, particularly during the holiday season, indicating strong consumer demand [18][21] Company Strategy and Development Direction - The company aims to drive sustainable long-term growth by enhancing the omnichannel experience, offering premium products, and investing in brand amplification [23][24] - Plans for 2025 include expanding showroom locations and continuing to innovate in product design and marketing strategies [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong repeat order growth and effective marketing strategies [22][23] - The company anticipates a slight decline in Q1 net sales year-over-year but expects overall growth for the full year [26][27] Other Important Information - The company ended Q4 with approximately$ 162 million in cash, reflecting a year-over-year increase, and a net cash position of approximately $106 million [39][40] - The company plans to continue stock repurchases strategically while balancing overall investment decisions [41][42] Q&A Session Summary Question: Gross margin guidance for 2025 - Management expects a high-50s gross margin for 2025, driven by brand strength and procurement efficiencies [48][49] Question: Strategies for driving repeat orders and attracting new customers - The company focuses on strong customer experience and compelling product assortments to drive repeat orders, while also optimizing marketing spend to attract new customers [51][56] Question: Engagement trends and average order value - Management noted improvements in engagement ring trends and expects average order value to moderate due to growth in fine jewelry, which typically has a lower average order value [63][67] Question: Margin profile of physical showroom rollouts - The company is strategically investing in physical locations while maintaining a strong digital presence, focusing on exceptional customer experiences [71][72] Question: Demographic shifts and attachment rates between fine jewelry and engagement - Management indicated that they have not seen significant demographic shifts but are pleased with the repeat purchases in fine jewelry, which contribute to overall growth [92][94] Question: Cadence of sales growth and operating profile - The company expects back-half weighted growth for the year, driven by showroom growth and favorable comparisons to previous quarters [98][99]