get started well thank you everyone for joining us today i had the pleasure of hosting brilliant management team beth gernstein the ceo and pam katlett chief brand officer and brilliant earth is a digitally native jewelry company folk and with the focus on mission to provide ethically sourced transparent diamonds to customer so with that i can kick off with a question for both of you actually brilliant earth aims to be the most loved and trusted jeweler for digitally native and value-driven customer how has the brand evolved since the founding and how do you position it today across both accessible luxury and premium we can start with Beth maybe yeah yeah well obviously the brand

something we're very passionate about the first thing that we like to do John is sort of reject the second half of that question about values driven only and because we really aspire to be a brand that is compelling and resonant with all. And I think what's really been exciting about the brand is we really established ourselves as a pioneer in natural diamonds 20 years ago, set a new standard for the industry, really became known as a mission-driven, purpose-driven company. And over time, we've really evolved as a brand and with the preferences of our consumer because what we know is while our mission is deeply valued and respected by our consumer, we know that more and more it's our artistry, craftsmanship, and experience that is what is really hooking them and building lifetime relationships with them.

I would just add that we continue to invest in brand. How do we drive awareness? How do we have cultural relevance, resonance? I think performance marketing has always been an area that we have done really well in, very data-driven company, very tech-driven company. And we've been building on the brand foundation more and more over the past few years and have seen tremendous results as customers recognize us more and more for our design, for our experience.

And, you know, Bridal is obviously an important part of your business. Can you just speak to the current environment and sort of the outlook for engagement and recovery there? And what is driving strength at the high end and what would it take to see broader unit recovery overall?

I think Bridal, you know, for us, bridal is an important part of the overall category it's typically the first purchase and um so as we get that bridal customer we can often retain the customer we think about how can we be the the jeweler for life there um that's why we invest a lot in the bridal category overall whether it's in our bridal collective which we talked about last quarter or in our proprietary signature designs that we're increasingly known for i think the environment is you know relatively normalized i think you'll always see a little bit up a little bit you know kind of puts and takes quarter by quarter but this is an enduring category where you know diamond engagement rings as of you know percent of engagements is just maintained for many many decades so we don't see that trend changing at all. And for us, the fact that we have natural, the fact that we have lab, like we're really well positioned with our assortment and, you know, for that customer coming in.

Yeah. And fine jewelry was a highlight last quarter, growing very strongly, and 17% of the mix now management. And then you outlined, obviously, the path to 100 million of fine jewelry.

How do you define the expansion strategy from here and where do you see the mix evolving over time and then maybe another question related to that is how should we think about sort of crossover across future engagement purchases and then fine jewelry purchases as well so maybe i can start in terms of just mix so we're really happy to see the growth that we have in fine jewelry last quarter grew 33 so very strong double digit growth 17 percent of mix is still relatively under penetrated versus the you know typically in most jewelers you're going to see more like a 50 50 split or even more than 50 so we have a ton of headroom there it's a 300 billion dollar market and increasingly customers

are coming to us because of our fine jewelry collection yeah and increasingly we're finding that it's their first experience with the brand as a fine jewelry uh purchaser and so that just represents tremendous opportunity for us along with obviously continuing to expand bridal yeah and then maybe we can shift to a little bit on the marketing side so you partner with high-profile talent you know celebrities how do you select your partners and how has a mix between organic placement versus paid partnership evolved well you know one of the remarkable things about brilliant on Earth is that we've really built the brand digitally and in the last 10 plus years added in our 42 showrooms, which is the size of our fleet today. So as an omnichannel brand, we've enjoyed tremendous growth over our tenure. But what's really interesting is it's been a performance-driven company in that regard. And so as we've become more and more efficient with our performance marketing, it has unlocked more opportunity for us from a brand investment, but we're still a small, scrappy brand, so we have to be very original and unexpected and authentic, which is often an overused word with brands. For us, the ability to attract partners ranging from Beyonce to Jane Goodall, from Ring Pop to Selena Gomez, people who've chosen to wear our product not for fee but truly organically in some of those examples, Beyonce and Selena Gomez, for example. Those are the opportunities we see along with just continuing to expand our network of creators. Many of those are organic. And then of course, you know, we work with stylists like others. But for us, it's really incumbent upon us to be much more unexpected because we know that we are not going to have the investment dollars of the luxury houses. And we also believe that the traditional celebrity face of is not always as aspirational for the consumer as some of the old models have been. They really want to believe there's a real relationship, a real lasting relationship. And that's what the power of a Jane Goodall partnership, which became our best-selling fine jewelry collection in history when we did it.

Very impressive. And then you mentioned you have 42 showrooms now. Obviously, it was started as a digitally native. What is the place for retail for you? Like, how is the productivity in stores, and how do you improve that? And how does that drive overall engagement in the markets you enter? just would love to hear more about sort of unit economics on the showroom front and how do you see that sort of store footprint evolving over time?

So I can start that. You know, we see Omnichannel as being the winning model in this category.

And actually, like, even very early on when we were launching our website, we had a very small, like, San Francisco showroom, and we saw the power of when we would open a new showroom how the entire metro lifts. so we recognize the importance of having that physical footprint and that's why we've been investing over time do you want to well I mean and remember the original format was showroom appointment only showroom and in the last five years we've really evolved we have more and more ground floor locations here in New York are no leader Elizabeth Street location was our first New York ground floor location it was also where we tested the expansion of fine jewelry presentation there. We just opened a flagship location in Beverly Hills on Beverly Drive right next to Erewhon. Incredible location, incredible foot traffic, and so far really positive early response. It's our largest presentation of fine jewelry and also a real statement for us as a brand. So how we learn from that and apply those learnings as we continue our expansion which as you know is a very surgical and strategic expansion. We have two showrooms planned for later this year and we hold ourselves to a very high ROI standard for all of our expansion plans. So we'll be applying the new concept in our future showrooms in the near term which will include just more and more balance between bridal and fine jewelry.

And I would just add, you know, one of the great parts of the physical footprint is just how it compounds the growth of fine jewelry. So we talked last quarter about a 48% growth in the showrooms that just over an 18-month time period, fine jewelry has actually doubled in our showroom location. So it's, I think, people will increasingly come to us. They browse as part of their experience. They see us more and more as a fine jewelry destination. And I continue to think that physical experiences, especially for a younger generation, are just so critical.

And, I mean, all the research that you read, all of you read about the desire for physical experience, experiences has only grown. We know that retail foot traffic has now returned and surpassed from pre-pandemic levels. We know that 86% of retail dollars are flowing through physical footprints on a macro basis. So we see that. And we also know in our category, touch, feel, try-on experience is two-thirds of customers tell us that they expect that access and experience.

So, yeah, we just want to make sure that the experience, whether you come to us online or in-store, is exceptional. and so and seamless right right and just on the fine jury going back a little bit obviously a lot of you could touch a lot of the younger consumer to try your brand how what's the sort of strategy to retain those customers um you know throughout their life and then you know move them up to engagement is there sort of a strategy to to retain those customers i mean absolutely we are you know we heavily invest in terms of crm capability we're increasing more and more in in terms of personalization capabilities that we have, as I said, very data and tech-driven. And I think that, obviously, AI unlocks a lot of potential there as it relates to how you communicate with your customer. Our jewelry specialists have very strong relationships with their customers. Typically, the customer comes in, they form these great relationships. Bridal is obviously a really important purchase. and then, you know, oftentimes the jewelry specialist is invited to their wedding. Like, that's how close the connection is. And so we just have to continue to cultivate. I mean, I think it's how do you introduce really innovative signature collections? How do you offer a really curated, personalized experience? And how do you use technology to enable that in the back end? That's what we're really focused on.

And you mentioned, obviously, innovation is a big part of newness to captivate the consumer. What is the right mix of innovation as you think about the entire portfolio? And how long does it usually take for you to launch something and go to market?

I think that you always want to have a balanced approach. that what we want to do is introduce curated beautiful design collections that we can reinforce with innovative marketing campaigns so if you have too much newness like how do you focus the consumer so we really try and take a balanced approach there we're also heavily investing in more proprietary styles so our sole collection which we launched you know several years ago grew 90 percent so we're investing in these collections building on them over time but we have a more focused effort with our consumer we really um we we really think about how we build franchises

in that regard in both bridal and fine jewelry and in our bridal category specifically our signature designs are some of our best selling it's what we're known for right And then we touched on this a little just in terms of like personalization, virtual, try on those sort of digital capabilities.

How do you sort of use that tool to engage more customer and where are the areas that you can continue to invest in in terms of sort of that digital engagement component?

I think it's a mixture of, you know, visualization has always been a really important aspect. our design your own experience is something that we really pioneered you know two decades ago so how people think about designing whether it is building their own ring creating their own ring or a piece of fine jewelry is I think there's a lot of opportunity overall there but you know digital experience I think is about what as much about you know that the tools and tricks as it is about the look and feel. And what does a customer feel as they're navigating? How do you create a very frictionless experience for the customer, whether they want to go into a store showroom or whether they want to shop online?

And moving on to your pricing engine, you have a proprietary pricing engine that has been a key lever in navigating picked metal prices while maintaining your strong margins. What is the algorithm telling you about the current pricing environment, and how are you balancing, you know, margin versus conversion, and then which price points are you showing the strongest demand?

So maybe I'll start with the latter part. We're certainly seeing customers mixed into higher value parts of our assortment. You know, the K-shape economy that others are commenting on, I think we've seen similar types of behavior there. um the pricing engine overall is just something that we have created over time and allows us to take a balanced approach between how do we optimize for margin unit growth conversion so we're really looking at a number of different signals to optimize ultimately and you know we're going to continue to optimize that um our pricing i think the advantage that we have is that we can react very fast so as metal prices are changing we're able to adapt very quickly and kind of optimize for based on a variety of different signals that we are measuring across

the board yeah and then in terms of just competitive dynamic obviously it's a highly fragmented category but what are you seeing in terms of competition and just overall category growth, and how do you think about capturing share from others in such a dynamic environment?

Do you want to take that or do you want me to? You go first. Yes, it's a competitive environment. We've been in it for two decades now. I think it's about how do you break through in a category? How do you create excitement? How do you have innovation? So it's about product, experience, and brand. And those are the three areas that we have invested in and where we excel.

I think it's also a good example of we think about both market share gains and market expansion gains in terms of, again, back to fine jewelry. You look at how nascent our fine jewelry business was just five years ago. That's a market expansion opportunity for us. So we look at it, and of course, we look at the entire landscape from pure play digital players to luxury players. We also like to look outside our category just to understand what is most compelling and attractive to consumers to help us be even better.

And I would just add, keep in mind that this is a category where two-thirds of the industry are local independents. And we have a lot of advantages based on our scale, our purchasing power, our social media presence, like all of the capabilities that we've invested in, the brand overall over these local independents. So I think that that's how we're thinking about competition. Yeah.

And do you have a target demographic, you know, for your brand in terms of which age cohort that, you know, is best for you? Is there a sort of strategy on specific demographic that you go after? And sort of what is, I guess, untapped opportunity in terms of demographic perspective?

Is there an age group that you want to penetrate more with? i would start with you know in terms of bridal you're always going to target that 25 to 40 year old so you know over our past 20 years our our customer has stayed that demographic so millennial and gen z is is kind of the core demographic fine jewelry i think is more expansive than that um certainly and i think has given us a chance to expand there yeah yeah and in terms of marketing we touched on it a little bit but how has your marketing strategy evolved over time i mean since the the founding and you know what is sort of the right level of spend for you in terms of marketing and how do you optimize sort of efficiency versus organic growth and just to spend um roi so maybe i can start with kind of what has stayed the same you know even from the beginning with social media we've always been very early there and we were just talking about how in our early days we would invest in facebook ads at 35 cents so we were very early adopters um back when facebook was called facebook um and so we've continued to invest in in social media have a really strong presence there we've always been full funnel in terms of our marketing efforts we have always been very

efficiency driven so we have invested in in-house capabilities to ensure that we're driving efficiency overall maybe you can talk and then just as a brand you know we're increasingly investing in the brand as we have more efficiency on the other side of the marketing engine and it's about how we are either triggering and or participating in cultural events and i think our ring pop collaboration is a great example for those who didn't see it if you remember your first ring it was probably a 35 cent ring pop candy ring and we launched a cocktail ring in five colors that sold out and then was so in such high demand from our community that we brought

it back for Valentine's Day and it's been a really really good example of how two brands that are beloved by many coming together can create something really fun and resonant and unexpected and so that's a really good example of how we think about brand building opportunities that money can't buy right right and then just one more financial question for you that you obviously reiterated the guide of miss single-digit sales growth what milestones sort of underpin that outlook and how do you think about the path to miss single digits for the year and to a more accelerated sort of algorithm what are some bridges um that could get to you uh in the

longer term i think we've been very consistent about the growth strategy and so maybe i can just reiterate what those are so starting with brand building and how do we drive awareness overall so that you know we are top of mind as customers are entering this purchasing cycle um second is the omni channel showroom footprint how do we how do we both make sure that we have exceptional digital and physical experience and we're innovating in terms of the new experiences for example with date night in our beverly hills and we can talk more about that and then the third area is with fine jewelry and you can see just how the mix has increased year over year and what kind of opportunity that brings especially like going into key four right where it's it's much more heavy fine jewelry um loaded as people are buying it for gifting around the holiday season So, you know, we've been consistent about the strategy. We continue to invest in those three areas, and, you know, that's what helped drive the 6% growth that we had in Q1 and what we see for the future as well.

Yeah, and on the supply chain side, obviously, you know, there has been some volatility in terms of the pricing. How are you sort of managing that in the current environment?

And then how are you approaching natural versus lab-grown sourcing today? and how does sort of detect tariff volatility impact any planning and how do you sort of leverage your asset light model in the current environment to mitigate some of the risks I think that the business model gives us inherent advantages so the fact that we're asset light the fact that we have geographic diversity with our supplier base we can react very quickly based on changing tariffs and we have a lot of flexibility. We own all of our styles. We have flexibility in terms of where we want to make sure that they're manufactured and produced. And you know obviously like there's things out of our control. But I think we have a lot in our control and we can adapt our prices based on what we're seeing in the metal environment for example. And you know we also have I think a nice amount of buyer power as it relates to our suppliers and we're very close relationships with our vendor base they're they're really extended parts of our team and so we're able to mitigate a lot of the the changing dynamics within different countries yeah yeah and this question is um for for both of you uh obviously you've talked about brand building what is sort of your goal as you think about over the five to ten years what does it look like like when what do you want your brand to be and like how do you benchmark your brand maybe that aspiration that you have a longer term in terms of brand that you want to become i think it's how you started off we want to be the most loved and trusted jewelry brand like we want to be global in nature i think we have a lot of aspirations overall and you know i are you know at the scale we have we still have a lot of opportunity we also as i said we really um we we aspire to redefine the category.

And so we look outside of the category for inspiration. And so my background in consumer, 15 years at Nike, other very prominent consumer brands, we keep our eyes on the horizon in that regard. And we look at brands that have reinvented their categories, whether it be Erewhon, the grocery store that we're next door to, or Restoration Hardware that retail as hospitality. So we really look to those outside to really think about how we can continue to evolve, be disruptive, be innovative, and always be relevant to the consumer.

And to your point, where else are your core customers shopping elsewhere in terms of apparel or other brands? Is there sort of a crossover between Brilliant Earth customer and others?

And other specific brands? You know, we haven't done that level of research on the consumer. So I couldn't speak to that.

But it's interesting you do look at outside. But we think about like Coach, for example, as a good parallel.

That, you know, certainly there are brands. Like we feel like we're in that accessible luxury. And for us, that's, you know, still a more premium type of consumer. We're a more premium brand. We are not discount oriented. We don't do discounts. Just kind of philosophically as a company.

Yeah.

So that's that's how we think about our positioning overall.

Yeah. And just on the pricing front and AOV obviously benefited from the mix going higher into the higher price items. Where do you see sort of your AOV evolving?

And especially as your your fine jewelry grows, how do you sort of see that being balanced between your like engagement side and fine jewelry? you know we we're happy to see that the average order value has been increasing overall i think we talked about last quarter for new customers in fine jewelry that we saw 40 new customer growth over 500 so we're investing more over that 500 price point in fine jewelry and we continue to we we do invest kind of to provide a variety of different options for our consumer for a variety of different budgets but i think as we continue to become more and more premium and develop that curated selection for our customers we have been successful at migrating our customers up yeah yeah yeah and then just on one point on the financial so obviously the you have a long-term model um how do you sort of bridge from today's 26 to your long-term financial of goals like what needs to happen um what are your sort of building blocks to get there i think it's the three that i mentioned where you look at brand awareness um we still have you know relatively low unaided awareness there so tons of opportunity fine jewelry if you just look at the growth that we have seen year after year as that business becomes more of a scale business as we get over a hundred million you're going to start to see that compound even more and the the showroom as i said is i think one of the ways that fine jewelry continues to compound and grows even stronger yeah and just on the fine jewelry side do you have data on how often your customers buy fine jewelry with you like is there room to i guess in terms of engagement level can you up that frequency of purchase with you? I think so. We've seen nice performance in repeat. We've also seen nice performance in self-purchase. And I think both of those have a lot of opportunity overall. So the way we think about the assortment is gifting, self-purchase. How do we drive repeat? How can we continue to break through to our customers? As long as you're introducing very innovative, trend-forward, design-oriented product, you're going to keep that customer engaged. And so I think a lot of opportunity continue to drive repeat, but we're really happy with the performance that we've seen to date there.

And for both of you, what do you think is the most sort of underappreciated factor about Brilliant Earth? And what do you want the audience to take away about the brand and the company?

I think that just that we are we have so much opportunity as it relates to our core customer, the brand that we have cultivated for so many years. Like there's a lot of love and trust in our brand that is going to help us propel forward.

Don't get nervous. She gave a brand answer. I'm going to give a financial answer. The discipline of the company. I mean, the model is a very unusual model, and the discipline with which the company executes is, I would say, best in class.

Yeah, and what are you most excited about in terms of, you know, out of all those various growth opportunities, what are you most excited about, and what is your favorite collection that you have? I can't actually choose any. It's like choosing your favorite child.

Yeah, it's difficult. The latest one is always my most favorite. I actually love our Pacific Green collection. That's like a recent favorite of mine. You know, we have a color that we have invested in that we've now expanded into other jewelry. It's really beautiful, and I encourage you all to look at it.

I can't answer that. I mean, that's the hard part of, again, you know I worked in sneakers, so of course I had a large sneaker supply, but that was at the employee discount of 50% off a $100 shoe or $200 shoe. It's a little different model in this category. So what I'm so proud of about Brilliant Earth is the freshness and the hunger to always be moving forward and innovating, which is not always new, new, new. It's often better. And so the fact that we introduced Soul, which was our first sort of iconic collection in October of 24, for which we have a patent and trademark on the design, and it was a big brand moment for us. We did billboards in Times Square, and it was a really great launch and learning. And we have stuck with it consistently in a very disciplined way, and it is just growing at a very impressive and steady rate as we bring more breadth to that particular collection as breadth from both price as well as design. And so I think that's just a really good model of how we approach the business. and that is an easy fine jewelry example that's true in our signature bridal designs as well in terms of how we really stick with success and then expand.

I think one more thing to add which I think I'd be remiss not to is you know Jane Goodall I think is just such a personal connection for me and being able to work with such a legend and have her really like validate all of the work that we've done over so many decades has been was really just personally a moment for me you know well I just I I can't I really treasure the time that you know we were with her in Tanzania and we were with her like 10 days before she passed and so you know obviously it's a big hole for the world to fill but we had the benefit of being able to work closely with her and that was I think just incredibly meaningful and that for a person who dedicated her life to the

environment and social equity that and she had spent her life not wearing or believing in jewelry because of the environmental and social ravages of mining and other practices for her to essentially endorse our brand that's a very unique credential that we're very, very proud of.

Yeah.

Well, thank you both of you for joining us today.

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