Brilliant Earth Group, Inc. (BRLT) August 2026 Conference Transcript

All righty. Up next, we have Brilliant Earth Group, trading on NASDAQ under symbol BRLT. On behalf of the company, we have Jeffrey Kuo, Chief Financial Officer.

Thanks, Cyril, and thanks, everyone, for joining us for the presentation. It's a pleasure to be here at the Ideas Investor Conference. Before we get in, we have our forward-looking statements and non-GAAP financial metrics disclosures, which can also be seen in this presentation, which will be on our Investor Relations website. So to provide a bit of introduction on Brilliant Earth, Brilliant Earth is really the next generation fine jewelry for today's consumer. And we're really founded on a mission to transform and modernize the jewelry industry and been successfully doing so over the last 21 years. And I think we've been able to do this through a variety of different factors. One is our sustained, authentic, mission-driven focus to really drive a sustainable, compassionate jewelry industry. I think another is with our beautifully crafted products and trend-leading designs. We've won many design awards in the industry, have done innovative collaborations ranging from our Jane Goodall collaboration, our soul collection, pieces that are worn by celebrities, so really known as leaders in design in the industry. We also underpin the customer experience with a really seamless omni-channel shopping experience. So whether you're shopping with us digitally or in one of our 43 showrooms, really providing an elevated premium experience that stands out from what you get in the rest of the industry. And then underpinning this, we have an asset-light, digitally and data-enabled model that has allowed us to move very nimbly through a variety of different environments and allowed us to grow and gain share in a very large industry. I mentioned a number of these before, but really wanted to focus on the brand and the product and the experience and really, with the brand side, fostering authentic and deep connections with our customers. Like today's jewelry customers, millennials and Gen Zs, they're really looking for authentic connections with the brands that they engage with, and we're able to do so. They're very selective in who they want to wear and who they want to be associated with And our authenticity really stands out in this space. Our distinctive products that I talked about before are just really notable for their design excellence and craftsmanship that really shines throughout our engagement ring, our wedding band, and our fine jewelry assortment. And then on the experience side, really just to bring together what I was just talking about, really setting new standards in luxury retail. And that's wherever you're engaging with us. That could be in our showrooms, digitally, calling in, really providing an integrated, seamless experience, however you want to get to know and shop with Brilliant Earth. And just touching a little bit more broadly about some of the opportunity for us. So the jewelry industry is massive. It's a $350 billion industry worldwide. It's also very fragmented. About two-thirds of the industry is comprised of smaller independents, and that level of fragmentation is unusual for a retail industry. So that's a lot of opportunity for us for gaining share. We have an agile business model that I described earlier that can really swiftly adapt to a variety of different conditions. We operate in an asset-light model that I'm going to go into more details on a bit later. We underpin all of this with data and technology, including the use of AI to inform our decision-making. We have that omni-channel experience that I described and a strong resonance with our customers. And then just a little bit more context on the industry. Besides the size, you know, the market is expected to grow at about a 5% kegger over the next five years from 25 to 2030. Bridal purchases are an enduring tradition and resilient tradition with about 2 million annual marriages just in the U.S. and we represent less than 1% of the market. So like while we are at scale, the opportunity to grow and scale is very significant and we're just at the starting point of the growth opportunity that we can capture at Brilliant Earth. The next page here just talks about some of the major milestones throughout our history. And so let you take a look at these, but I think what we highlighted here is beyond financial metrics, product leadership, expansion into different countries product innovations giving back to our communities and and many other moments and you can see just the trajectory of ongoing leadership in products in growing the top line opening showrooms giving back to the community innovative partnerships product leadership and i think that is really how we think about you know how how we continue to transform the industry. This has led to a history of net sales and order growth. So in the period between 2019 and 2025, we grew top line at a 14% CAGR during that period, and over the same period had an even bigger expansion in growth with a 23% six-year CAGR in total orders between 2019 and 2025. These are just a few examples of our trend-leading product assortment. You can see here highlighted some of our engagement rings, wedding and anniversary bands, some of our medallions on the right-hand side, and then also some of our proprietary collections on this next page, including some of the partnerships that I mentioned earlier, like the Jane Goodall collection, which we've done two different collections with her and her foundation, the soul collection, as well as some of our recent pieces in fine jewelry, like our keepsakes, our Pacific Green Lab diamonds. So in diamonds and gemstones, in jewelry, like really, we are known for design leadership, for innovating and creating unique products that you can only get at Brilliant Earth. This page talks a bit about our personalization capabilities. So we have an agile product development cycle and an innovative design-your-own model, which really allows personalization at scale for things like engagement and wedding and anniversary rings so you come to us and we'll we personalize the ring like it is the unique stone that you want you know built to your your specification with your choice of metal metal type size and you know how you want to stack an engagement and wedding band we can do this personalization at scale and at speed and that is very hard to do. And that has only come over time with working closely to develop capabilities with our partners, have technology integrations at the back end to be a trusted supplier to allow us to do this at scale. And then you can also go fully custom if you'd like to create a one-of-a-kind design with us. We have an asset light inventory model. So one of the things that you see here is that we have inventory turns of four times. So this is significantly higher than the rest of the industry. The industry average turns maybe one or two times. So this agility and asset light model allows us to stay nimble in terms of working capital, but we can still offer a breadth of assortment. So we've hundreds of thousands of diamonds available to our customers, but the vast majority of these are not on our balance sheet. We have the capability through our supplier relationships and integrations to bring them in quickly when they're ordered so you can get your product within two or three weeks, but we can keep our balance sheet light. And this is a major advantage for us in that we can offer that breadth, but also have the lightness of balance sheet that allows us to have very efficient working capital. Our supply chain is globally diversified. We have supply chain partners in the United States and across North America, as well as in countries as shown here. And that really allows us to have that breadth and reduces our dependence on any one given geography. And then this next page just highlights some of the technology-enabled and data-driven ways that we look at data, whether it is how we look at pricing, how we analyze the customer journey and customer sentiment, how we deploy marketing spend, how we place showrooms. it is deeply embedded in how we operate to use technology and data to inform those decisions and drive compelling ROI. And then just to take a moment on the omni-channel experience, we've highlighted here some aspects of both the showroom experience as well as the digital experience. So we have 43 showrooms as of right now that really provide a premium elevated experience whether you're scheduling an appointment or walking in and discovering us for the first time that day and we've continued to innovate on the showroom experience with some of the recent innovations including a try-on bar which allows you to more you know intimately access and style and get design ideas about how you want to wear your brilliant earth jewelry and so we've rolled that out in a number of different showrooms and that's been very successful uh we also for example in our beverly hills showroom most recently have introduced things like date night which is a very special experience often booked out weeks in advance where a couple shopping for an engagement ring can come in and have champagne and light bites while they shop for their engagement rings photography. So really making it a very special part of your purchase journey and your engagement experience. And beyond the experience, like we really look to drive compelling economics and performance. And you can see here that most showrooms deliver a strong double-digit Metro bookings uplift in the 12 months post-opening. So we're looking to drive an uplift across the entire Metro, not just taking what previously was purely online sales, crediting it to the showroom. We're looking to drive uplift across the entire metro, and that has been, you know, very successful for us in our 43 showrooms. On the digital side, no different. We continue to lead with digital capabilities that are ongoing, evolving. That includes things like virtual try-ons, interactive videos, skin tone visualizers, the ability to stack and see how rings look next to each other, personalizing recommendations, and then really tying this all together with an integrated CRM. So whether you're shopping with us in a showroom or digitally, we have one integrative view of the customer. And then this just takes a look at our customer base. So it's an affluent customer with $100,000 to $200,000 annual household income, 25 to 44 years old, their primary audience, millennial and Gen Zs. And importantly, really we're creating an experience to cater to couples shopping together because the couples increasingly are shopping together if you're talking about something like engagement or wedding. So it's not just the person that's making the purchase, it's the person who's receiving it. And we cater to make a strong experience for both. And that's an important part of how we're able to meet how our customers shop. these customers are very digitally savvy they're also sophisticated in in how they want to engage with brands when how and where they want and we can meet them there whether it's socially it's on our website in our showrooms talking with us you know on a phone call or a chat we're able to meet them there have that integrated point of view and create that seamless experience to meet them where they're shopping. And then, as I mentioned before, having that really authentic brand connection is very important. These customers are very selective and thoughtful about how and who they want to engage with, and the authenticity of our brand really helps us create these strong connections. These are a few of the media and social and celebrity moments that we've had recently. And you can see that we've had many very high profile celebrity placements. We designed a custom 20 carat bolo for Beyonce that she wore on her Cowboy Carter tour. We had hundreds and thousands of press mentions. And so we're really on the forefront of people's, you know, people's minds as they're thinking about who are the leading brands, the leading designers in jewelry. And that creates that brand connection and brand awareness. And then important to us throughout our history has been giving back to our communities, whether that is being responsible and transparent in how we source our products to giving back to the communities that are impacted by jewelry and where we operate. So this has been something that's been a very important part of how we operate. We created the Brilliant Earth Foundation to give back to our communities, and this is a very important part of how we operate and it's part of our DNA. Now just going through some of the highlights from our most recent quarter. So in Q2, we delivered $115 million of net sales, so that was up 6% year-over-year. That was above the high end of our guidance range, so we're really glad to be able to deliver that performance. A strong AOV of over $2,200. Orders were down year-over-year by about 2% in that quarter. But if you exclude sub-$500 orders that are just a few percent of our sales, our orders were actually up 5% year-over-year in Q2. So really, we've been focusing on that higher-end price point. We've been successfully doing so, successfully connecting with the higher-income consumers, and so our order performance really highlights that. We had a strong gross margin of just under 58%, and that was up more than 300 basis points sequentially versus the prior quarter. And we also drove significant marketing leverage year-over-year with 130 basis points of marketing expense leverage year-over-year in Q2. On the EBITDA side, FAR outperformed our guidance and delivered $5.8 million of adjusted EBITDA through a combination of the strong top-line performance, strong gross margin, and driving leverage across operating expenses, which I'll go into in a moment here. and then ended the quarter with $75 million in cash and no debt on the balance sheet, which is a really strong asset for us and allows us to continue to make the right investments in the medium and long term. And just a few other highlights here. One is the 32% year-over-year growth in fine jewelry bookings. So fine jewelry, which when we talk about is things like pendants, bracelets, and earrings, was about 18% of our total bookings in Q2. For the industry as a whole, it's a majority of the industry. So we're under-indexed in fine jewelry, and that's a massive opportunity for us given the outperformance that we've been able to deliver in that part of the market. We've talked about how fine jewelry is on a path. So just that part of the business alone is on a path to being a $100 million business. And so that is a very meaningful scale and opportunity, and we're just at the earlier stages of our journey. And so that's a very compelling opportunity for us in fine jewelry to expand from our engagement and wedding and anniversary heritage. We talked about the gross margin performance, and then on the operating expense side, just wanted to highlight how we drove leverage overall of 250 basis points year-over-year as a percentage of net sales in adjusted operating expense. So in addition to the leverage in marketing at 130 basis points year-over-year, we also drove 40 BIPs in adjusted employee expenses year-over-year and 80 BIPs of leverage in adjusted other G&A expenses. So really glad to be delivering that year-over-year leverage, even as we grew top line. So we're able to have that combination of growing top line and driving expense leverage with a strong gross margin and generate cash. And I think these are all very compelling aspects of the Brilliant Earth business model and opportunity. I think these next two slides are already covered before or in our earnings materials. So I'll go on to the page about our holiday and product and showroom performance in Q2. Mother's Day was another example of the success that we've had in delivering in holidays and special moments. So during the two-week gifting period leading up to Mother's Day, we had bookings growing 15% year-over-year during that period. so it's another example of how we're able to deliver and capture holiday holiday moments i've talked a bit about fine jewelry already there's another highlight here about fine jewelry bookings that are at the higher price points that we're focusing on the five hundred dollar plus price points those grew over 40 percent year-over-year in q2 and we drove a double-digit year-over-year bookings growth in wedding and anniversary bands. So really strength, you know, strength across many different areas of our product portfolio. And then this next figure about showroom bookings from customers without an appointment. So these are customers that didn't have a pre-scheduled appointment that purchased from a showroom. You know, that grew 47% year-over-year in second quarter. And that's exciting for us as we've diversified into more ground-level shopping, you know, shopping areas, outdoor centers. You know, I think this is, this really shows the power and success that we've been having with those models, being able to drive strong outperformance for people discovering us and coming in and purchasing, even if they don't have a previous appointment. And then the Beverly Hills flagship has been a nice, nice performer reel with some very compelling metrics like 40% up year-over-year in terms of the bookings versus the prior location from opening through the end of Q2, and then AOVs for appointments that were up in that same period 10% higher than typical appointments. And then we recently opened our 43rd showroom in San Antonio, which is the second iteration of our showroom of the future model, and an example of how we can also apply that showroom of the future experience to a smaller showroom format. And then just to recap on some of our 2026 priorities, if you haven't seen these before, really continuing on our path to become the world's most loved and trusted jeweler, uh continuing to create distinctive ownable collections that really blend trend trend leadership uh personalized design masterful craftsmanship and then delivering omni-channel experiences that are seamless integrated elevated and really setting standards for modern luxury retail. I think Forbes mentioned that our Beverly Hills showroom was like a blueprint for the future of like luxury retail. And I think we're really endeavoring to set new standards and have been successfully doing so. And then underlying all this, of course, is investment in people, in processes, in technology to allow for scalability, growth, with smart decision-making. That's something we've been doing throughout our history at Brilliant Earth and something that we continue to see a lot of compelling opportunity in. And then just going on to our outlook, which we discussed during our last earnings call, you know, for the third quarter, we are expecting approximately flat year-over-year growth, although this is on a two-year, you know, a two-year basis, you know, this is a 10 percent, And, you know, there's a 10% growth as last year during Q3, we had some pull forward behavior from consumers in advance of potential tariffs. And so that's something that is embedded in the last year comp, but still very healthy on a two-year basis. An adjusted EBITDA of $3 to $5 million, and then for the year as a whole, $459 to $462 million dollars in net sales and a 13 to 15 million dollar adjusted EBITDA so driving growth driving profitability um and you know this is an increased profitability for the year from where we were uh last year and uh for 2025 overall EBITDA so really i think this kind of encapsulates in some way the the brilliant earth model the ability to drive growth the ability to do so profitably. And this is underpinned by all the things that I've been talking about, the brand, product excellence, beautiful omni-channel premium experience, and a data technology-enabled asset light model. So that's it. So just to wrap things up, I think we are in the early parts of a journey to capture share in a massive fragmented market. Our performance recently really shows how things really can fit together with driving top-line growth, strong gross margin, compelling operating expense performance, generate EBITDA, generate cash. And I think that really, really highlights the power and strength of how Brilliant Earth operates. So thanks again for taking the time to speak. And if there are any questions, open it up. Great. Well, thank you again. It's a pleasure to be here. Hope I have the opportunity to talk to some of you one-on-one and hope everybody has a great rest of their conference and afternoon.