Brilliant Earth at Midwest Conference: Navigating Growth and Challenges

On Wednesday, 27 August 2025, Brilliant Earth (NASDAQ:BRLT) showcased its strategic direction at the 16th Annual Midwest Ideas Conference. Celebrating its 20th anniversary, the company highlighted its mission-driven brand, robust financial performance, and growth strategies. While it reported consistent growth, challenges such as a decline in average order value were also discussed.

Key Takeaways

• Brilliant Earth celebrated its 20th anniversary, emphasizing its mission-driven brand and proprietary products.
• Q2 2024 net sales reached $109 million, marking a 3% year-over-year increase.
• The company aims for a low teens growth rate in net sales by 2027, with a focus on high gross margins and increased EBITDA margins.
• Operational efficiency is supported by a seamless omnichannel experience and data-driven strategies.
• Brilliant Earth ended Q2 2024 with $99 million in net cash and no debt.

Financial Results

Brilliant Earth’s Q2 2024 financial performance reflected steady growth:

• Net sales of $109 million, up 3% from the previous year.
• An average order value (AOV) of $2,074, although there was a year-over-year decline due to diversification into fine jewelry.
• Total orders grew 18%, with repeat orders increasing by 11%.
• The gross margin reached 58.3%, with a medium-term target in the high 50s.
• Adjusted EBITDA stood at $3.2 million, maintaining positive results for sixteen consecutive quarters.
• The company ended the quarter with $99 million in net cash, a 5% increase year-over-year, and cleared its outstanding term loan balance.

Operational Updates

Brilliant Earth continues to enhance its operational capabilities:

• A new showroom opened in Alpharetta, bringing the total to 42, with most showrooms achieving strong double-digit metro uplift post-opening.
• Orders from retail customers without scheduled appointments surged 81% year-over-year.
• Inventory turns were approximately four times, surpassing the industry average.

Future Outlook

The company’s strategic priorities for 2025 and beyond include:

• Accelerating net sales growth to a low teens year-over-year rate by 2027.
• Maintaining high gross margins and increasing adjusted EBITDA margins to double digits.
• Reducing marketing expenses as a percentage of net sales.
• Investing in data, technology, AI, and people to drive operational efficiency.

Q&A Highlights

During the Q&A session, CFO Jeff Koh addressed several key points:

• Sales trends since 2022 reflect a normalization in engagement ring sales post-COVID and investments in long-term growth.
• Inventory is valued at cost, with continuous evaluation for excess and obsolescence.
• The company has a share buyback program, purchasing approximately $1 million in shares by the end of Q2.

In conclusion, Brilliant Earth remains committed to its growth trajectory and operational excellence. For more detailed insights, readers are encouraged to refer to the full conference call transcript below.

Full transcript - 16th Annual Midwest Ideas Conference:

Operator: Presenting next is Brilliant Earth listed on NASDAQ under the symbol BRLT. Representing the company today is Chief Financial Officer, Jeff Koh.

Jeff Koh, Chief Financial Officer, Brilliant Earth: Thanks so much. All right. Thanks everybody. It’s a pleasure to be here at the conference and appreciate you taking the time this morning to speak with us. So before I get in, just wanted to, you know, share some of the forward looking statement and GAAP financial measure disclosures which are also available on the presentation.

They’ll be on our Investor Relations website. So Brilliant Earth was founded twenty years ago. So we’re celebrating our twentieth anniversary now to really be the next generation fine jeweler for today’s consumer. And I think we’ve been able to successfully differentiate over time with a variety of different levers. One is our authentic mission driven brand that really connects with our consumers and people are resonating with.

Especially as consumers today are really looking for that authentic connection with brands and an expression of their own values personally. And I think we’ve been able to cultivate that connection in a very meaningful way over the last twenty years. Another is our collection of differentiated proprietary products that are, many of them, only available at Brilliant Earth including things like our Jane Goodall collection, our Soul collection and many others which we’ve won awards for that people are coming to Brilliant Earth for distinctive proprietary trend leading designs. I think another aspect is the seamless omnichannel experience. Today’s consumers are really looking to shop where they want, how they want, when they want, whether that’s visiting a showroom, whether it’s on our website, interacting with us through chat or on the phone.

And we provide that integrated seamless experience so that you can have one brilliant Earth experience however you’re interacting with us. And so that’s also differentiating for us. And then underlying all of this is a capital efficient data and technology enabled model that allows us to see and adapt to trends much more quickly than the typical player in the jewelry industry. And so that really all of these things together have made us successful and be able to grow and be profitable over our twenty years and really sets the foundation for continued success in the $350,000,000,000 jewelry industry. So a little bit of context on who our customer is.

So a lot of our customers are in the age range of about 25 to 44 years old. Higher household income of around 100,000 to $200,000 annually. And we’re addressing needs for couples that are shopping together, people that are giving gifts for loved ones, as well as people buying for themselves. And this audience that we’re serving is digital digitally native and they’re really masters of multimedia and culture. They’re expecting an integrated continuous experience across all their different touch points and a very personalized and exceptional experience when they’re shopping.

And that’s something that we’re really delivering across all the different channels and touch points that you might be engaging with Brilliant Earth. And then as I mentioned before, cultivating that authentic brand connection and being personally personally resonant with the brand is something that’s important to our consumer. And we’ve been able to deliver on that strongly. These are a few of the highlights over our last twenty years from our founding in 02/2005. And I think it highlights a number of different things, Our growth financially, you know, some of the major product milestones, including most recently things like our Jane Goodall collection, our Perfect and Flawless collection, you know, our Soul carbon capture and renewable collection.

So really a lot of distinctive proprietary and innovative products also highlights some of the things that we’ve done in terms of giving back to the communities that we’re involved in and our consistent commitment and track record of doing so over the last twenty years. I’ll also point out some of the highlights of how we operate and having a globally diversified supply chain. So we have a diversified supply chain across the globe including sourcing across North America, countries in Asia. And so that reduces our dependence on any one geography. That’s coupled with a broad and deep relationship with our suppliers.

So we are a trusted supplier that we’ve worked with many of these companies for years and developed trust as well as back end technology integrations that allow us to work very efficiently and effectively with those partners. And that’s, you know, you know, part of how we use technology to differentiate and move much more quickly than the typical player in the industry. And I think this is, you know, this supply chain produces designs that we have developed in house with our in house design studio with many of our styles being proprietary to us. And so the combination of proprietary design expertise and a globally diversified supply chain really allows us to meet our consumer base with a very compelling, continually evolving assortment that meets their needs. And then just taking a step back to some of the points that we think make the opportunity very compelling for us.

So it is a big industry, as I mentioned before, a $350,000,000,000 global industry that’s also very fragmented. So about two thirds of the industry is comprised of smaller independents. And so I think that’s a opportunity for us as a well capitalized branded player to really capture and gain share in this large industry. Talked about some of the aspects of our business model such as the data and technology enablement that allow us to quickly see trends and adapt to them much more quickly than the typical jeweler. We also have throughout our history used data technology and more recently things like AI to inform our decision making and allow us to again see and adapt to changes very quickly.

And this is supported by our asset light model. It’s not really burdened by holding excess inventory as a point of context. Our most recent inventory turns were about four times. That compares to the industry overall, which has one to two times turns. And so you can see how having that lighter inventory allows us to manage working capital to better align with consumer demands and things that are changing on the supply chain front compared to a typical jeweler.

The omnichannel model, I’ve talked about before, really meeting people when, how and where they want to shop and then the strong value alignment with our consumers. These are all parts of what make the opportunity compelling and what makes us well positioned to capture that opportunity. Just to provide a little bit of context about our recent financial highlights. So between 2019 and 2024, we grew at a sixteen percent five year CAGR. So we’re able to significantly grow over that time period as well as meaningfully expand our gross profit margin from 42% in 2019 getting to 60% in 2024.

And that gross profit margin growth, just to talk about some of the drivers there, then one, the strong cultivation of our premium brand and not being discount oriented. So that’s one of the underpinnings to our strong gross margin. Operationally, we’ve amplified that through things like our price optimization engine that allows us to continually test to see what’s that right combination of pricing to drive top line growth and gross strong gross margins. Also procurement efficiencies with our scale and ability to balance between different sources of supply. And then things like our enhanced extended warranty program that have also been accretive to our gross margin.

Just to walk through a few of our Q2 highlights. We were able to drive growth of about 3% in Q2, getting to $109,000,000 in net sales. We have a strong average order value of $2,074 in Q2, And we drove strong both repeat and overall total order growth in Q2 with 18% year over year growth in total orders and 11% year over year growth in repeat orders. We had a gross margin of 58.3% in Q2 and that was within our medium term target of being in the high 50s even in the face of things like gold prices being up and the tariff environment that was dynamic during Q2. And we delivered adjusted EBITDA of $3,200,000 or 2.9% and both the net sales and adjusted EBITDA were in excess meaningfully of the guidance range we had provided for Q2.

And that was our sixteenth consecutive quarter of delivering positive adjusted EBITDA. So that’s every quarter that we have been public since going public in 2021. We’ve delivered positive adjusted EBITDA. And we ended the quarter with $99,000,000 in net cash, which was up 5% year over year. So the business has been able to grow, be profitable and also generate cash.

A other highlights here, some of them that I’ve already covered, but one was that we delivered high single digit year over year growth in units for both engagement rings and wedding and anniversary bands for Q2. So that’s really an indicator of the connection that we’re having with our consumers to be able to drive that nice unit growth. And we also drove very outsized performance in fine jewelry bookings with that up 38% year over year. For context, fine jewelry is a small part of our business overall today, but it’s a majority of the industry overall. And so these are things like pendants, bracelets, earrings and really a meaningful growth opportunity for us to capture more opportunities for self purchase, for gifting, to capture more repeat customers.

And so we’re really glad to continue to drive that meaningful outperformance in fine jewelry. We opened a new showroom in Alpharetta, which took our showroom footprint to 42 total showrooms with that opening. And then also just for the last couple of items here, we announced a onetime dividend in distribution with total aggregate payments of a little over $25,000,000 And also we paid off our outstanding term loan balance of a little under $35,000,000 as of August 4. So we have no debt on the balance sheet. And we’re able to do that with a strong balance sheet, the cash generative ability of the business and we’re glad to be able to make these moves in terms of the capital structure.

Think I’ve covered most of the items here already in terms of the sales growth, the gross margin being within our medium term target and the adjusted EBITDA. But just briefly again, here’s the view for the three month and the six month period. And then here’s another view focusing on order value and total orders. And so I’d say a couple of things. The order growth we’re really pleased with and that really demonstrates how we’re connecting with our consumers, able to acquire and retain them efficiently and the strong performance across our product assortment.

And then just to comment briefly on the AOV trend. So we did have a decline in AOV year over year both for the quarter and year to date. And that’s due to a couple of different things. One is that broadening and diversification of our product assortment overall, including in fine jewelry. That’s a strategic growth area for us.

We want to be growing disproportionately in fine jewelry with some of the benefits that I talked about before with being able to capture more different opportunities along the customer life cycle. But this also these types of products do have a lower price point than bridal jewelry and engagement rings. And so that’s going to impact AOV overall. So there’s an expected decline in AOVs. And then we’ve also commented that we’ve recently had comparatively strong performance in sub-five thousand dollars engagement rings.

And then we have also, though, seen recent stabilization in ASPs over the last few quarters. I’d like to spend a moment just talking about some of the brand highlights because we really had some very strong meaningful brand highlights in Q2. And some of them you can see here including highlights with Beyonce’s Cowboy Carter tour here in Chicago, where she wore a one of a kind diamond bolo that we made for her. And then we followed that quickly with a limited edition B pendant that was available for sale and that sold out within days. We announced our first professional sports ambassador, Madison Keyes, with a limited edition collaboration that we recently announced.

And then we also were really excited to help Selena Gomez celebrate her birthday when she was wearing a 20 carat diamond necklace which was from our Jane Goodall collection. And so these are some really nice highlights of moments that show how we’re connecting with celebrities. And also we’ve been able to continue to partner with and work with influencers. You know, some of the highlights were for Mother’s Day where we introduced a limited edition collection of medallions that has been doing well. And so these are just some of the examples of how we’ve been connecting across influencers, taste makers and really highlights the connection that we have with our consumers and people that are really really noticeable in terms of their choices.

To highlight some of our working capital dynamics, so we have a design your own model for much of our product assortment that allows us to use things like virtual inventory to offer hundreds of thousands of natural and lab grown diamonds while keeping our balance sheet inventory low. So this virtual inventory are products that are not on our balance sheet, they’re with our suppliers, but we are able to bring them in quickly to meet our customers’ needs when we have an order. And so that helps us have the right balance of diversity of assortment and curation while keeping working capital efficient. As I mentioned before, we have inventory turns that are about four times as of our most recent quarter, which is much higher than the industry average of about one to two. We did have inventory that ended higher year over year in Q2, And this was principally driven by some strategic procurement opportunities that we saw to bring in diamond and jewelry inventory at compelling prices with some of the current tariff environment.

And then also we ended the quarter end with a decline in cash, but that was principally driven by the $20,000,000 reduction in debt principal balance. If If you’re looking at it from a net cash perspective, we ended up 5% year over year with a net cash position at the end of Q2 of $99,000,000 And just to touch a little bit more in detail on our showrooms. So we have 42 showrooms. And what we really want to do is have this be very complementary to all the different touch points that we have, whether it’s digital, whether you’re talking to us on the phone or chat, and really striving to create that seamless omnichannel experience that meets customers where, when, and how they want to shop. Our showrooms are strong performers with most showrooms delivering strong double digit metro uplift in the twelve months post opening.

And this is an important measure of how we look at our showroom performance because we’re looking at driving incrementality across the metro overall. So not just taking what were previously e comm sales and crediting those to the box, we’re looking to drive overall uplift. And these figures show that we have been able to drive that nice uplift across an entire metro when we open the showrooms. We’ve also been innovating with new different features like our try on bar in our showrooms, which we’ve introduced in a number of our recent showrooms, which allows you to style and experience our fine jewelry collection in our showrooms, which has been successful and really allows us to capture some of those complementary benefits of driving fine jewelry growth as well as capturing the benefits from our showrooms. And this next stat about retail customers without scheduled appointments, I think is a really nice manifestation of that where orders from those customers grew 81% year over year in Q2.

So this is people that came in without scheduled appointments and it shows how this is increasingly a source of discovery and being able to capture walk in traffic. So even if you didn’t have an appointment, you’re able to come in, discover the collection and order from us. And that 81% year over year growth I think is a really nice metric. And so as again I mentioned, we’ve got our 42 showrooms with Alpharetta and looking, you know, looking to continue to have an efficient footprint as we expand because our showrooms do tend to be destinations that people are seeking out. And then just to go over some of our priorities that we’ve been delivering against for 2025, overarching is to continue to be the world’s most loved and trusted brand for fine jewelry for today’s and tomorrow’s consumer.

And that’s underpinned by product excellence and design leadership. And so you can see some examples of this here and throughout the presentation, but really people come to us knowing that we’re design leaders, that we that we deliver products that you can get nowhere else whether that’s, you know, the the Soul collection, whether it’s the Jane Goodall collection or some of the other products that I’ve mentioned here. Really being known as design leaders is one of the reasons that we’ve been successful and something that we’re continuing to deliver on. We want to continue to deliver those exciting omnichannel experiences that bring joyful luxury to our consumers. And then underpinning all this, investing as we always have in data, technology, AI and people and processes to drive operational efficiency and excellence in the customer experience to capture long term growth.

And then just to touch briefly on our medium term targets, which we’ve been talking about for a number of quarters now. We are looking to get to a net sales growth rate accelerating to a low teens year over year growth rate in 2027. And that’s going to be underpinned by a number of things, including overall normalization and improvement in engagement rings, outperformance in areas like fine jewelry, growth and annualization of our showroom fleet as well as overall growing brand awareness and brand halo. So I think those are some of the key factors that allow us to get to that accelerating growth rate with that target in 2027 of low teens year over year growth. With gross margin, our medium term target is for 50s, high 50s percent gross margin through 2027.

And that’s going to be supported by the things that I mentioned earlier, the strong brand, amplified operationally by the price optimization engine, seeking out and capturing procurement efficiencies and then really just kind of managing overall to continued strong gross margin. For marketing as a percentage of sales, we have been able to deliver leverage in 2024 versus 2023. We were able to drive leverage in marketing as a percentage of sales. And we’re planning to work towards that this year and also through 2027 to continue to drive decreasing marketing as a percentage of net sales from 2025 to 2027. And then this is all driving towards an adjusted EBITDA margin target increasing to a double digit margin in 2027.

So that’s a bit of the outlook as you go out beyond this year. And so really just to close-up, we are delivering on our mission to be the loved and trusted jeweler for today’s and tomorrow’s consumers. We’ve been able to do that with a combination of our differentiated authentic brand that’s connecting with our consumers’ design leading products and having product excellence throughout our portfolio whether it’s in engagement rings, wedding and anniversary bands and fine jewelry, delivering a seamless omnichannel experience, meeting customers where they are, and then supporting all of that with a working capital efficient data and technology enabled model that allows us to deliver a superior customer experience as well as capture operational efficiencies so that we can capture an increasing portion of the large and fragmented jewelry industry. So thank you for taking the time. If there is any questions, I’d be glad to talk through.

Yes?

Unidentified speaker: Yeah. Have kind of like two two questions. This is mainly a history lesson for some of us that are not familiar with your story. If you go back to like 2022, you had pretty good operating income around $40,000,000 on an annualized basis that’s really drifted down in the last, say, three years to an operating income unadjusted and it’s pretty close to breakeven. Can you talk about what some of the pressures have been on the operating income and then also on the sales, around that same time kind of the 2022, you kind of leveled off in terms of your sales growth.

You’ve been in sort of a $420,000,000 business for the past three years. Can

Jeff Koh, Chief Financial Officer, Brilliant Earth: Sure. So the question just to make sure every everyone heard was about some of the view if you’re going back to 2022 on on the top line and profitability trends. So I say there’s a number of different things that have been a factor if you’re taking that window of time. So I think one is bridal, so engagement rings for example is and and wedding bands, you know, that’s that’s been our heritage and the bulk of our bulk of our business. And what happened in 2021 as well as the bulk of 2022 where there is kind of like a post COVID bump in number of engagements and weddings that came out after the initial year of COVID.

And so a disproportionate kind of growth rate, you know, in year over year engagement, you know, engagement weddings. So with performance there, simultaneously, had a disruption in the cadence of people meeting, you know, during COVID. And so kind of the early stage of the meeting to marriage pipeline, you know, if you will. And so both of those were factors. So we had the disproportionately higher performance in 2021 and 2022 in things like engagement rings.

And then a bit of a lower performance in the years after that. And that was for the industry overall. And then the disruption of the earlier stage pipeline in meeting and relationship development. And so those are underpinning some of the normalization that that we’ve talked about in terms of coming out of some of those trend lines. So that is, of course, going to affect top line, which will there’s some follow on effects into adjusted EBITDA.

I think there’s a few other things that have been occurring on the profitability side. I think one is if you’re looking at the very, very earliest stages of when we came out and went public, there were certain things like public company operating costs that weren’t part of our cost structure, you know, as a newly public company that came out. And we’ve also and you might have heard us talk about this concept of balance of making investments like as you pointed out, expanding some of the showroom fleet to capture the longer term opportunity. And we do still have an eye on near term profitability and having positive adjusted EBITDA. We recognize that, that had has gone down over the last number of years, but still in a positive.

We’re trying to strike that balance of making the investment for what we think will be a medium and longer term payoff even in the face of some of these industry normalization in things like engagement rings. And then we think that we’re on a nice path towards getting to that medium term target that I articulated of that double digit adjusted EBITDA target for 2027. Sure. Any other? Yes.

Operator: How do you value the inventories on the balance sheet? Is it just the cost? Or what’s your kind of write off?

Jeff Koh, Chief Financial Officer, Brilliant Earth: Yes. So we do look at the cost of the inventory and then we’re on an ongoing basis, evaluating for things like excess and obsolescence. But overall, the inventory, I think, is favorable in a number of different ways. One, we have those high inventory turns and an efficient inventory footprint. Another is that the inventory tends to be much less perishable than retail in general.

The collection, you know, has longevity, you know, things like, you know, there’s no there’s no inherent, you know, inherent like kind of seasonality that may be much more prominent in areas like apparel. And and so the combination of the longevity of the inventory, the fact that it’s light and that also we have a close eye on the pulse of consumer trends and are able to see things and adapt very quickly, I think that all benefits us.

Operator: And do you have a current strategy as far as shareholder buybacks?

Jeff Koh, Chief Financial Officer, Brilliant Earth: We a buyback program and we’ve purchased to date through the end of Q2 about $1,000,000 of shares. And so we’ve executed on that program strategically also considering factors like trading volumes in our public float. So we have made some share buybacks. Any other questions? Great.

Well, thank you again. It’s a pleasure to be here at the conference. Welcome the opportunity to speak to you, and hopefully we’ll have the chance to connect one on one with some of you in the near future. Thanks

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