Earnings call transcript: Brilliant Earth Q2 2025 beats revenue forecast, stock surges

Brilliant Earth Group Inc. (BRLT) reported its second-quarter earnings for 2025, showcasing a notable revenue beat and a surprising positive earnings per share (EPS). The company’s revenue stood at $108.9 million, surpassing the forecast of $103.76 million by nearly 5%. EPS came in at $0.01, defying expectations of a $0.01 loss, marking a 200% surprise. Following the announcement, Brilliant Earth’s stock soared, with pre-market trading reflecting a 16.67% increase, and the stock price climbing 32.94% to $1.61. According to InvestingPro data, the company maintains strong gross profit margins of nearly 60% and holds more cash than debt on its balance sheet.

Want deeper insights? InvestingPro has identified 11 additional key factors that could impact BRLT’s performance.

Key Takeaways

• Revenue for Q2 reached $108.9 million, exceeding forecasts by 4.95%.
• EPS of $0.01 surprised analysts, who expected a $0.01 loss.
• Stock surged 32.94% following the earnings announcement.
• 16th consecutive quarter of profitability for Brilliant Earth.
• Strategic initiatives include new showroom openings and brand collaborations.

Company Performance

Brilliant Earth continues to demonstrate robust performance with consistent profitability, marking its 16th consecutive profitable quarter. The company’s strategic focus on expanding its showroom fleet and enhancing brand collaborations has contributed to its growth. Notable partnerships, such as custom jewelry for Beyoncé and a collaboration with tennis star Madison Keys, have bolstered its brand presence. The company also reported a significant increase in total orders, up 18% year-over-year, despite a decline in average order value.

Financial Highlights

• Revenue: $108.9 million, up 3.3% year-over-year.
• EPS: $0.01, compared to a forecasted loss of $0.01.
• Gross Margin: 58.3%, a decline of 250 basis points year-over-year.
• Adjusted EBITDA: $3.2 million, representing a 2.9% margin.

Earnings vs. Forecast

Brilliant Earth’s Q2 results surprised analysts with an EPS of $0.01, against expectations of a $0.01 loss, resulting in a 200% positive surprise. The revenue beat of 4.95% further highlights the company’s strong performance this quarter. This positive deviation from forecasts underscores the effectiveness of the company’s strategic initiatives and operational efficiencies.

Market Reaction

Following the earnings release, Brilliant Earth’s stock experienced a significant rally, with pre-market trading showing a 16.67% increase. The stock price surged by 32.94% to $1.61, reflecting investor confidence in the company’s performance and future prospects. This movement positions the stock closer to its 52-week high of $2.73, indicating a positive market sentiment.

Outlook & Guidance

Looking ahead, Brilliant Earth projects Q3 net sales growth of 8-10% year-over-year, with full-year net sales expected to grow between 2.5% and 4%. The company anticipates an adjusted EBITDA margin of 3-4%. However, it is closely monitoring the potential impact of new 25% tariffs on imports from India, which could affect cost structures.

Executive Commentary

CEO Beth Gerstein emphasized the company’s mission to become the world’s most loved and trusted jewelry brand. She expressed confidence in achieving annual goals, highlighting the company’s data-driven approach and disciplined expense management. CFO Jeff Kuo reiterated the company’s strong position to outperform the industry, leveraging its asset-light business model and dynamic pricing capabilities.

Risks and Challenges

• Potential impact of 25% tariffs on Indian imports.
• Declining average order value, which fell by 12.6% year-over-year.
• Increased inventory levels, which grew by 24%, could pose risks if demand fluctuates.
• Competitive pressures in the jewelry market.
• Macroeconomic uncertainties impacting consumer spending.

Q&A

During the earnings call, analysts inquired about consumer behavior and the company’s ability to navigate tariff challenges. The management emphasized its focus on high-quality, high-value jewelry, and expressed confidence in its strategic initiatives to maintain growth momentum and address potential tariff impacts.

Full transcript - Brilliant Earth Group Inc (BRLT) Q2 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the Brilliant Earth Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there’ll be a question and answer session. To ask a question during the session, you’ll need to press 11 on your telephone.

You will then hear an automated message advising your hand is raised. To start your question, please press 11 again. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to Colin. Please go ahead.

Colin Borland, Vice President of Strategy, Business Development and Investor Relations, Brilliant Earth: Thank you, and good morning, everyone. Welcome to the Brilliant Earth Second Quarter twenty twenty five Earnings Conference Call. My name is Colin Borland, Vice President of Strategy, Business Development and Investor Relations. Joining me today are Beth Gerstein, our Chief Executive Officer and Jeff Kuo, our Chief Financial Officer. During the call today, management will make certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a description of the risks that could cause our actual performance and results to differ materially from those expressed or implied in these forward looking statements. These forward looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events unless required by law. Also, during this call, management will refer to certain non GAAP financial measures. A reconciliation of Brilliant Earth’s non GAAP measures to the comparable GAAP measures is available in today’s earnings release, which can be found on the Brilliant Earth Investor Relations website.

I’ll now turn the call over to Beth.

Beth Gerstein, Chief Executive Officer, Brilliant Earth: Good morning, everyone, and thank you for joining us. We are excited to report a strong quarter where we drove positive year over year net sales growth and far exceeded the high end of our guidance for both net sales and profitability. Our ability to gain share and outperform the industry reflects the successful execution of our strategic vision and the significant progress we’re making toward both our near and long term goals. Furthermore, I am happy to report that we are seeing an acceleration in the business Q3 to date, and we are raising our annual net sales guidance. Of course, we’re also evaluating yesterday’s announcement on new tariffs on India, which Jeff will discuss in more detail.

Most importantly, we remain confident in our ability to navigate in this environment. Our aim since day one has been to build Brilliant Earth into the world’s most loved and trusted jewelry brand. We’ve consistently communicated our strategy to increase brand awareness, provide a seamless omnichannel experience, establish ourselves as the fine jewelry leader for the next generation, and invest in our people, data analytics and technology as the digital leader in the jewelry space, all to drive profitable long term growth. Our Q2 results proved that our disciplined strategy is working. We delivered our best year over year top line growth in the past eighteen months with net sales growth of 3.3% and adjusted EBITDA of $3,200,000 both significantly exceeding our guidance.

And not only do we continue to drive positive adjusted EBITDA, but we continue to generate net cash, which increased 5% year over year to $99,000,000 as of the end of Q2. Given this momentum and our confidence in what lies ahead, I am proud to announce that our Board of Directors has approved a one time dividend and distribution of approximately $25,300,000 in the aggregate. This reflects our commitment to rewarding shareholders, our strong balance sheet, and our confidence in our ability to generate cash while funding future growth initiatives. Quarter after quarter, we’re delivering on our near and long term strategy and building momentum. We’re rapidly expanding Fine Jewelry, growing bookings 38 year over year in Q2.

We’re accelerating brand momentum with standout moments like designing custom jewelry for the iconic Beyonce and forging our first professional sports partnership with tennis star Madison Keys. We’re optimizing our showroom strategy and generating strong paybacks with compelling metro uplifts. We’re leveraging technology and innovation to drive marketing leverage, while continuously expanding our capabilities using the power of AI and machine learning to drive growth and efficiency throughout the business. Let me take you through additional highlights for the quarter. Customer demand for Brilliant Earth Jewelry remains encouragingly strong.

In Q2, we had our strongest year over year total order growth in the last two years, with total orders growing 18% year over year and repeat orders up 11% year over year. We are encouraged as we continue to see an increase in new customers discovering Brilliant Earth, including a notable rebound in engagement ring customers. For the quarter, average order value declined 13% year over year. This continues to be driven by two factors. One, our fine jewelry business growth, which tends to be a lower price point than our bridal assortment, is continuing to outpace the business.

And two, as we’ve stated before, we are continuing to see comparatively strong customer demand in engagement rings under $5,000 with an overall stabilization in engagement ring ASP over the last few quarters. Finally, we’re excited to report year over year unit growth across our assortments, including high single digit year over year unit growth in both engagement rings and wedding and anniversary bands. As mentioned, fine jewelry continues to be an exciting growth driver for the business. In Q2, fine jewelry bookings grew 38% year over year, with a similar percentage of bookings mix as last quarter. Mother’s Day, a key gifting holiday, proved to be an exceptionally strong holiday for us and a prime example of the growing awareness of Brilliant Earth as the fine jewelry destination.

In our Mother’s Day campaign for mom, the forever influencer, we collaborated with leading taste makers to create a limited number of special edition medallions, and we saw resounding success across everything from our signature styles to our classic diamond essentials. Turning to showrooms, we continue to expand our fleet with our latest opening in Alpharetta, Georgia. Beyond opening new locations, we are constantly innovating how we deliver the seamless omnichannel experience for which we are known, including different formats such as Main Street and outdoor centers, new in store enhancements like our try on bars, and optimization of our visual merchandising and showroom inventory strategy. As a result, we have seen increased walk in traction in our showrooms, and orders from retail customers without scheduled appointments grew 81% year over year in q two, with fine jewelry experiencing the fastest growth. Overall, we’re encouraged by our continued success in showrooms, with most showrooms delivering strong double digit metro bookings uplift in the twelve months after we open.

On the digital front, we have been focused, as always, on optimizing our marketing spend efficiency, including through the use of AI. As a result, Q2 marketing spend decreased approximately 4% year over year, even as we drove year over year sales growth, resulting in 180 basis points of year over year leverage as a percent of net sales. This quarter was filled with groundbreaking firsts for the brand. We were privileged to craft a one of a kind Diamond Bolo tie for none other than the Queen herself, Beyonce, marking a watershed moment in the growth and evolution of the Brilliant Earth brand as a leader and innovator in today’s culture. We then seized on this iconic brand moment by launching a limited edition V pendant for our customers that sold out in days.

In addition, we announced our first professional sports ambassador, tennis superstar Madison Keys. You’ll see Madison in many Brilliant Earth bestsellers this US Open, along with the launch of a special piece we designed with her. We are thrilled to have Madison on our team and look forward to cheering her on at the upcoming US Open. And most recently, we were thrilled to be able to help actor, musician, and all around icon Selena Gomez celebrate her birthday with one of our one of our kind creations, a 20 carat diamond necklace from our Jane Goodall collection. These partnerships represent more than just celebrity moments.

They demonstrate how Brilliant Earth continues to be known as the jeweler of choice for today’s most influential cultural icons, reinforcing our position as the premium brand for the next generation. As you can tell, it has been an exciting quarter and we look forward to driving increased momentum and executing through the end of this year and beyond. Q3 to date, we have seen an improvement in trends compared to Q2 with strong overall bookings growth, unit growth in engagement rings and wedding and anniversary bands, continued outperformance in fine jewelry, and growth of both new and repeat orders. While we continue to monitor the macro environment, including tariffs and metal prices, we believe we are exceptionally well positioned to deliver against our annual goals and are confident to raise our annual top line guidance. I want to thank our amazing team and their contributions that allowed us to deliver these strong results.

With that, I will turn it over to Jeff, who will walk through the financials and discuss our outlook for the coming quarter and year in detail.

Jeff Kuo, Chief Financial Officer, Brilliant Earth: Thanks, Beth, and good morning, everyone. As Beth mentioned, we’re pleased to report Q2 results where we continue to successfully drive our strategic initiatives, innovate, capture operating efficiency and exceed both our top line and profitability expectations. Let me take you through the details for Q2. Q2 net sales were $108,900,000 up 3.3% year over year, exceeding the top end of our guidance range by three thirty basis points. Total orders grew 18% year over year and repeat orders grew 11% year over year in the second quarter, demonstrating the effectiveness of our customer acquisition and retention efforts and the resonance of our brand and products with consumers.

Average order value, or AOV, was $2,074 in Q2. This represents a decline of 12.6% year over year in Q2, a smaller decline than Q1 as we continue to broaden and diversify our overall assortment, including in our fine jewelry collection, which carries a lower price point than our bridal collection, as

Conference Operator: well

Jeff Kuo, Chief Financial Officer, Brilliant Earth: as the continued comparatively stronger demand in engagement rings under $5,000 with an overall stabilization in engagement ring ASP over the last few quarters. Q2 gross margin was 58.3%, within our medium term gross margin target in the high 50s and a two fifty basis point decline over Q2 last year. The year over year change in gross margin was primarily driven by higher gold costs and the impact of tariffs, which were within our expectations for the quarter, partially offset by continued optimization of our pricing engine, procurement efficiencies and other efforts to manage our gross margin to target levels. We delivered Q2 adjusted EBITDA of $3,200,000 or a 2.9% adjusted EBITDA margin, far exceeding our guidance range. This marks our sixteenth consecutive quarter of profitability.

We are excited to deliver this level of profitability through our strong gross margin and diligent data driven management of our marketing spend and other operating expenses, including using AI to capture efficiencies in our operating expenses. Q2 operating expense was 59.4% of net sales compared to 59.7% of net sales in Q2 twenty twenty four. We were happy to drive 30 basis points of operating expense leverage even while making investments to drive long term growth. Q2 adjusted operating expense was 55.5% of net sales compared to 55.7 in Q2 twenty twenty four. Adjusted operating expense does not include items such as equity based compensation, depreciation and amortization, showroom preopening expenses, and other nonrecurring expenses.

Q2 marketing expense was 24.1% of net sales compared to 25.9% of net sales in Q2 twenty twenty four. This represents approximately 180 basis points of year over year leverage. Our marketing spend in Q2 was better than our expectations as we continue to be disciplined in driving efficiency and finding opportunities for higher return on our spend. We continue to expect to drive year over year leverage for the full year 2025 as per our medium term outlook. Employee costs as a percentage of net sales were higher in the second quarter by approximately 120 basis points as adjusted year over year.

This includes growth in showroom employees, including from newly opened showrooms, as we continue to strategically focus on our showroom expansion. Other G and A, as a percentage of net sales, increased year over year by approximately 40 basis points as adjusted for the quarter as we continue to prudently invest in our business. Our year over year inventory grew approximately 24%, principally as a result of strategic procurement opportunities in Q2 to purchase diamond and jewelry inventory at advantageous prices in light of the current tariff environment. Our inventory turns continue to be significantly higher than the industry average, and we maintain conviction that our data driven, capital efficient and inventory light operating model continues to provide competitive advantages. We ended the second quarter with approximately $134,000,000 in cash, a decrease of approximately $18,600,000 compared to Q2 twenty twenty four.

The year over year decrease in cash was primarily driven by the $20,000,000 we prepaid against our term loan during the quarter. For net cash, we ended the period with approximately $99,000,000 a year over year increase of approximately $5,000,000 even after the inventory purchases I mentioned earlier. In Q2, we spent approximately $200,000 repurchasing our common stock. This takes our total spend on stock repurchases to date to approximately $1,000,000 as of the end of Q2. Finally, as Beth mentioned, we are happy to announce a one time cash dividend and distribution of $0.25 per share to Brilliant Earth shareholders and per unit to common unitholders, representing aggregate payments of approximately $25,300,000 This dividend reflects our commitment to providing returns to our shareholders, our strong cash position, and our confidence in our ability to generate cash while funding future growth initiatives.

Payment of the dividend will be made on 09/08/2025, to holders of record of the company’s Class A common stock as of the close of business on 08/22/2025. In addition, as of August 4, we have paid off the remaining outstanding balance of our term loan, approximately $34,800,000 The facility is now completely paid off, leaving no outstanding debt on our balance sheet. Even after this dividend payment and the closing of our debt facility, we will maintain a robust cash position, preserving our financial flexibility to continue investing in strategic growth initiatives, including showroom expansion, technology, and AI enhancements, and brand building efforts. We believe these actions illustrate how we look to build shareholder value, both in the near and long term. Turning to our outlook for Q3 and 2025.

For the quarter, we expect net sales to grow 8% to 10% year over year, an acceleration compared to Q2. We expect adjusted EBITDA to be between 3,000,000 and $4,500,000 For the year, we are raising our net sales guidance to 2.5% to 4% growth year over year. Drivers of H2 growth include improvements in engagement ring year over year performance compared with H1, the growth and annualization of our showrooms, a more favorable comp from Q3 twenty twenty four and strong fine jewelry performance and the fact that Q4 is a seasonally important fine jewelry quarter. We are reiterating our adjusted EBITDA margin guidance in the range of approximately 3% to 4% as we continue to effectively manage for strong gross margins and balance making investments with driving near term profitability. For gross margin, we do expect some downward impact from gold and platinum spot prices and tariffs in H2.

We have been successful in optimizing our marketing strategy, leveraging AI and machine learning capabilities year to date and expect to drive year over year leverage in marketing spend for the year. We expect to continue to make near and longer term investments in H2 twenty twenty five, including in employee costs and other G and A, while managing the business for profitability. Our guidance reflects metal prices and tariffs as of August 5 and does not reflect the unforeseen consequences from subsequent tariff announcements, metal price fluctuations, or related changes to the consumer environment. Yesterday, The United States announced an additional 25% tariff on all imports from India effective August 27. We have not yet fully determined the financial impact of this development on our business, and we are actively analyzing how this informs our operating plan.

Importantly, this is an industry wide impact, and we believe Brilliant Earth is better positioned to navigate this environment over traditional jewelry retailers, given several competitive advantages. Our geographic supply chain diversity provides flexibility. Our nimble technology enabled operating model allows us to rapidly adjust sourcing strategies, and our dynamic pricing model and procurement optimization capabilities enable us to respond quickly to cost structure changes to optimize our pricing and gross margin. Most of Q3 will be complete by the time this new tariff takes effect on August 27, and we are continuing to assess the impact for the rest of the year. We maintain confidence in our ability to execute our strategic plan through this evolving tariff environment.

Looking forward, our data driven approach, disciplined expense management, and asset light business model position us to outperform the industry while delivering profitable growth. This quarter’s strong execution illustrates our ability to identify and capture opportunities to drive sustainable, profitable growth and create value for shareholders. With that, I will turn the call over to the operator for questions.

Conference Operator: Thank you. The first question that I have today is coming from the line of Ashley Owens of KeyBanc Capital Markets. Your line is open.

Colin Borland, Vice President of Strategy, Business Development and Investor Relations, Brilliant Earth: Hey, guys. This is Chris on for Ashley. Congrats on the quarter and thanks for taking our question. So just to start, I was wondering if you could touch on the bridge and higher fine growth relative to margins. I think the comments before I’d alluded to this being a higher margin side of the business.

So could you maybe triangulate what you’re seeing in terms of like purchase habits and if the consumers are gravitating towards lower AOV, fine items? And within fine, like what pricing habits are and what you’re seeing compared to bridal and engagement customers as bookings are returned to growth. So just anything different relative to three months ago.

Beth Gerstein, Chief Executive Officer, Brilliant Earth: Hi, Chris. This is Beth. I wouldn’t say that there’s a a huge difference in terms of what we’ve been seeing. I think that consumers continue to be very discerning in terms of fine jewelry and what they’re looking for for high quality, high value jewelry that they’re gonna wear for many years. And as we have been performing exceptionally strong into fine jewelry, we’re just continuing to see increased traction, and that’s gonna have an impact overall in terms of AOV, but that’s something that we’re strategically investing in.

So something we’re happy to see. So I wouldn’t say we’re seeing a a huge difference in terms of pricing and AOV for either bridal or or fine jewelry now versus what we’ve been seeing over the past several months.

Colin Borland, Vice President of Strategy, Business Development and Investor Relations, Brilliant Earth: Okay. Great. And then I guess next, just to maybe drill down on the debt payment in the quarter. Could you maybe just expand thoughts on like further investments in the business and how you’re thinking about redeploying the capital, whether it goes to, you’d like to maybe accelerate insurance or other opportunities to see in the market?

Beth Gerstein, Chief Executive Officer, Brilliant Earth: May Jeff, maybe I can start with just the very high level. I I think that we have been very consistent in terms of how we’ve been communicating our strategic vision, and we’re continuing to see great results. So I I see that the levers that we see for our strategy with showroom growth, leaning in as the digital leader, with becoming the world’s most trusted and loved jewelry brand, all of that will continue. And I think we have a very strong cash balance sheet to be able to execute on that strategic vision. So I feel like we’ve been executing well.

We’re gonna continue to lean into these areas to drive our overall awareness and to drive fine jewelry as well. Jeff, do you wanna kind of expand on that?

Jeff Kuo, Chief Financial Officer, Brilliant Earth: Yeah. I think that captured a lot of the key points well. Really, the dividend and distribution and the debt payoff stem from our strong balance sheet and cash position, our ability to generate cash as a business. And as Beth mentioned, we believe that we are well positioned to continue to make those strategic investments in areas like brand, showrooms and fine jewelry, even with these announcements. And with respect to the debt payment, there’s also some net interest savings that will result from the debt payoff.

So I think this really illustrates a lot of the strengths of the business and how we think about optimizing the business and the capital structure.

Colin Borland, Vice President of Strategy, Business Development and Investor Relations, Brilliant Earth: Okay, great. I’ll pass it along. Thanks, guys.

Jeff Kuo, Chief Financial Officer, Brilliant Earth: Thanks.

Conference Operator: Thank you. Our next question will be coming from the line of Oliver Chen of TD Securities. Your line is open.

Julia, Analyst, TD Securities: Hi, Beth and Jeff. This is Julia on for Oliver Chen. I would love to hear about the strength above and below the one k price point and general comments you have on the health of the consumer that you’ve been seeing with respect to discretionary purchases. Two, where are consumers spending more versus saving more in their bank decisions? And three, any commentary around uplifts related to new showrooms and how the maturation of showrooms later this year may help sales?

Thank you.

Beth Gerstein, Chief Executive Officer, Brilliant Earth: Thanks, Julia. So in terms of how we’re seeing the health of consumer, we are seeing a nice consumer that, as I mentioned, they are discerning, but I think we have been very attuned to the customer trends and what they want. And so we’re able to deliver on that high quality, high value jewelry piece that they’ve been looking for. We also believe that we’ve been outperforming the market. And as we have been leaning into these brand initiatives, introducing new products like our limited edition collections, we have been performing exceptionally well.

So we we feel good about the health of the consumer related to the offerings specifically that we have. We’ve also seen, as we mentioned in the call, high single digit growth for units in both engagement rings and wedding and anniversary bands, and I think this is a testament to a lot of the hard work we’ve been doing. We have a a really nice diamond assortment with hundreds of thousands of diamonds. Our signature styles have been performing exceptionally well as we’re seeing with engagement rings as trend leaders, and we are seeing those market improvements. But as I’ve mentioned, I I think we are outperforming in terms of the overall market.

For that, showroom, overall, we’ve been really pleased with how the showrooms are doing. As we are known increasingly as a a fine jewelry destination, we were really happy to see that fine jewelry growth in the showrooms. And just seeing that walk in traffic, seeing, the 80, 80 plus percent growth with those retail type of consumers, I think, just shows you that we are doing a great job offering the right product for what the customers are looking for at a exceptional price point.

Julia, Analyst, TD Securities: Great. Thank you so much.

Conference Operator: I would now like to turn the call back over to Beth for closing remarks. Please go ahead.

Beth Gerstein, Chief Executive Officer, Brilliant Earth: Hi, everyone. Thank you so much for joining our q two conference call, and we look forward to talking to you in the next quarter.

Conference Operator: Thank you so much for joining today’s conference. You may all

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