Brilliant Earth (BRLT) Q1 2026 Earnings Transcript

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DATE

Wednesday, May 6, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Beth Tanara Gerstein
• Chief Financial Officer — Jeffrey Kuo
• Vice President of Strategy, Business Development, and Investor Relations — Colin Bourland

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TAKEAWAYS

• Net Sales -- $99.5 million, up approximately 6% year over year, reaching the high end of guidance for mid-single-digit growth.
• Total Orders -- Grew 3% year over year, with repeat orders outperforming total growth.
• Average Order Value -- $2,131, an approximate 3% increase year over year, reflecting higher average selling prices across all product categories.
• Fine Jewelry Bookings -- Rose 33% year over year, accounting for 17% of total bookings.
• Fine Jewelry Showroom Bookings -- Increased 48% year over year, outpacing total assortment growth.
• Bookings from Sol Collection -- Achieved 90% year-over-year growth since its Q4 2023 launch.
• Valentine’s Day Bookings -- Up 9% year over year during the two-week peak period.
• Organic Social Engagement -- "triple-digit year-over-year growth" was driven by the Perfect Timing campaign.
• Physical Retail Expansion -- Ended the quarter with 42 showrooms, with two additional openings planned for San Antonio and San Jose by year-end.
• Gross Margin -- 54.3%, in line with the mid-50s target, reflecting impacts from elevated metal costs and pricing adaptation.
• Adjusted EBITDA -- Negative $4.7 million, or a negative 4.7% margin, positioned in the upper half of guidance.
• Operating Expense Ratio -- 63.3% of net sales, up 90 basis points year over year; adjusted operating expenses at 59.2% of net sales, up 160 basis points year over year.
• Marketing Expense Ratio -- 23.6% of net sales, 90 basis points of year-over-year leverage compared to Q1 2025.
• Inventory Turn -- Remained above four times, significantly ahead of industry average, with inventory up year over year due to procurement timing and fine jewelry growth.
• Cash Position -- $59 million at quarter-end, with no debt, reflecting seasonal working capital and the prior year’s loan payoff and $25 million dividend distribution.
• Fine Jewelry New Customer Acquisition -- Nearly 40% increase in new fine jewelry customers purchasing $500 or more on their first order compared to last year.
• Showroom Fine Jewelry Try-On Bar Impact -- Fine jewelry bookings in showrooms nearly doubled in the 18 months post-initiation compared to the prior 18 months.
• Q2 and Full-Year Guidance -- Q2 net sales expected to be up low-single-digit percent year over year, full-year net sales growth expected in the mid-single-digit range, and adjusted EBITDA dollars anticipated to be slightly lower than 2025 but positive for the year.
• Product Assortment and ASP Trend -- ASPs grew across all categories, with management attributing strength to a shift toward higher price points and selective price increases to offset metal costs.

SUMMARY

Management outlined sequential gross margin improvements and expects Q1 to represent the low point for gross margin this year, supported by dynamic pricing, hedging, and sourcing strategies. The company reported that bookings from higher-priced items and repeat purchases are driving performance, while product innovation, including new flagship locations and experience-based retail formats, is accelerating showroom engagement. Fine jewelry is rapidly approaching a $100 million annual revenue run-rate, supported by elevated first-purchase values and growth in proprietary product lines. The cash position will increase in subsequent quarters, reflecting the company’s asset-light business model and normal seasonality.

• Management stated, "most of this year’s adjusted EBITDA will come from Q4," emphasizing the significance of holiday seasonality and margin recovery later in the year.
• The CEO described demand as holding up at higher price points even as "some signs of softness at lower price points" persist, directly addressing consumption trends in luxury jewelry retail.
• The CFO noted, "inventory turns at over four times remain significantly above the industry average," highlighting operational efficiency despite elevated year-over-year inventory levels.
• The company will continue expanding physical retail with two new showrooms, which management sees as core to both brand development and fine jewelry growth.

INDUSTRY GLOSSARY

• Average Selling Price (ASP): The weighted average amount paid per order, reflecting mix and pricing action.
• Inventory Turn: The number of times inventory is sold and replaced over a specific period, indicating operating efficiency.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted to exclude certain non-recurring or non-cash items to reflect core business profitability.

Full Conference Call Transcript

Colin Bourland: Thank you, and good afternoon, everyone. Welcome to the Brilliant Earth Group, Inc. First Quarter 2026 Earnings Conference Call. My name is Colin Bourland, Vice President of Strategy, Business Development, and Investor Relations. Joining me today are Beth Tanara Gerstein, our Chief Executive Officer, and Jeffrey Kuo, 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 Group, Inc.'s non-GAAP measures to the comparable GAAP measures is available in today's earnings release, which can be found on the Brilliant Earth Group, Inc.

Investor Relations website. I will now turn the call over to Beth.

Beth Tanara Gerstein: Good afternoon, everyone, and thank you for joining us. We are pleased to report a strong start to 2026 with first quarter results that reflect the disciplined execution of our growth strategy. Net sales grew approximately 6% year over year to $99.5 million, at the high end of our guidance range. The quarter's strong performance was driven by total orders growing 3% year over year, with outperformance in repeat orders and year-over-year growth in average selling prices across the assortment. Fine jewelry was a clear standout, with bookings growing 33% year over year and making up 17% of total bookings. In addition, we are particularly pleased with the impressive year-over-year bookings growth in wedding and anniversary bands in Q1.

We delivered gross margin within our mid-50s target, year-over-year marketing leverage, and prudent OpEx management resulting in our adjusted EBITDA landing in the upper half of our guidance range. These results underscore our ability to execute with discipline while investing in the growth drivers that are building Brilliant Earth Group, Inc. into a leading jewelry brand in the $350 billion jewelry industry. Let me take you through some of the highlights of the quarter. What I am most proud of this quarter is the ongoing strength and resonance of our brand. Valentine’s Day was a record, with bookings up 9% year over year during the two-week peak shopping period.

Our Perfect Timing campaign celebrated how chance encounters become the unexpected beginnings of lasting love. This campaign drove triple-digit year-over-year growth in organic social engagement, reflecting the power of compelling storytelling to drive both engagement and sales throughout this traditional gifting period. Valentine’s Day is yet another demonstration of our team’s ability to execute with excellence around key gifting moments, and we head into Mother’s Day and other gifting occasions with that same momentum. In January, we also introduced a new concept we call Bridal Collective: creator-hosted events in our New York and Beverly Hills locations showcasing our position as bridal leaders and the experiential aspects of our showrooms.

The Bridal Collective series turned our showrooms into a social media destination for fine jewelry discovery and live styling, reaching a style-savvy bridal audience and generating over 150 pieces of organic content across 41 creators. We believe this proves that as desire for more physical retail experiences grows among consumers, Brilliant Earth Group, Inc. is uniquely positioned to lead the next chapter of luxury jewelry retail. Our omnichannel experience also continues to set us apart. We ended the quarter with 42 showrooms and are planning for two more, in San Antonio, Texas, and San Jose, California, by the end of the year, as we continue to thoughtfully expand our footprint.

Growing our physical presence and creating joyful, personalized shopping experiences has been a key strategic priority since we began. One of the opportunities that excites me most, though, is how well this strategy amplifies our fine jewelry growth. As our retail execution has evolved, we have been intentional about building our showrooms into a true destination for fine jewelry, and that strategy is working. This quarter, fine jewelry bookings in showrooms grew 48% year over year, outpacing the total assortment growth. While that is impressive on its own, I am even more encouraged by the long-term performance. In Q3 2024, we introduced our first fine jewelry try-on bar, and soon after, we began adding them in new and existing showrooms.

In the 18 months following, fine jewelry bookings from showrooms have nearly doubled compared to the preceding 18-month period. These are the kinds of results and learnings that guided our most recent opening, our Beverly Hills flagship location, which we opened in January. So far, the flagship is delivering very strong retail orders and foot traffic with exceptional customer sentiment. We have introduced a number of new elements to our customer experience in Beverly Hills, including our Date Night experience, a fun, hospitality-infused adaptation of our personalized bridal shopping appointment. Date Night has proven to be incredibly popular and is typically booked multiple weeks in advance.

We continue to see our Beverly Hills flagship concept as a blueprint for the future of modern, luxury jewelry retail. We are also encouraged by what we see in our product assortment. Average selling prices are up meaningfully across the assortment, reflecting a growing customer appetite for quality, thoughtfully designed jewelry at elevated price points. This is a consistent trend we are seeing in the industry, and we are well positioned with a premium brand, a design-forward assortment, and long-term customer relationships we have cultivated for over two decades. As I mentioned, fine jewelry is driving increased diversification, outperforming the business, and is well on a path toward becoming a $100 million business.

Further, we have been intentional about elevating our product assortment and strategically focusing on attracting new customers at higher price points. As a matter of fact, in Q1, we acquired nearly 40% more new fine jewelry customers whose first purchase was $500 or more compared to Q1 last year, and we are pleased with the broad demand we are seeing for both our Diamond Essentials and our signature and iconic collections, which continue to outpace total fine jewelry bookings growth. For example, bookings from our proprietary Sol collection, which first launched in Q4 2023, grew an impressive 90% year over year. We are very pleased that our strategy to expand our reach with fine jewelry is paying off.

While bridal remains important to our business, this diversification allows us to mitigate the varying dynamics of bridal and stay focused on quality growth. We have a lot to look forward to for the remainder of the year. We kicked off spring in Q2 with the launch of our Butterfly Collection, a new collection that includes a pendant necklace featuring a single brilliant lab diamond, custom cut to form the wings of a butterfly. Heading into Mother’s Day, we have introduced our Keepsake Collection, a modern, celestial-inspired take on the classic locket.

And we have a number of new and innovative design collections in the pipeline for the year ahead that I believe will further demonstrate the artistry, craftsmanship, and resonance of our brand. I look forward to sharing more as the year goes on. We are watching the consumer environment carefully and are observing a similar bifurcation that has been widely reported across our industry and the consumer sector. Specifically, while we are seeing some signs of softness at lower price points, demand at higher price points is holding up well in Q2 to date. Our ASP strength and fine jewelry growth reflect this dynamic, and more than that, they demonstrate the growing power of our brand with the higher-income consumer.

The deliberate work we have done to build Brilliant Earth Group, Inc. into a brand that stands for quality, craftsmanship, and meaning is exactly what positions us well as the industry landscape shifts. Quarter to date, we have seen year-over-year bookings growth driven by strong performance at higher price points and fine jewelry outperformance, and we are encouraged by sequential gross margin improvement. As we said last quarter, with more time, we have more levers to pull to increase gross margin in this volatile metal environment, including selected price optimization, design and production engineering, and supply chain efficiencies, to name a few.

We are executing diligently on what we can control in gross margin and believe Q1 marks the low point for our gross margin this year, and we are well positioned as we move through the balance of 2026. Jeffrey will share more detail on our guidance and outlook. I want to close by thanking our incredible team for their continued dedication and execution. Their passion and commitment are the reason momentum keeps building quarter after quarter, and the best is still ahead for Brilliant Earth Group, Inc. Now I will hand it over to Jeffrey, who will walk through the financials in detail and discuss our outlook.

Jeffrey Kuo: Thanks, Beth, and good afternoon, everyone. As Beth mentioned, we are pleased to report a solid first quarter where we continue to successfully drive our strategic initiatives, delivering year-over-year net sales growth at the high end of our guidance range, gross margin within our expectations, year-over-year marketing leverage, and profitability in the upper half of our stated guidance. Let me take you through the details for Q1. Net sales were $99.5 million, up approximately 6% year over year and at the high end of our guidance for mid-single-digit year-over-year growth. Total orders grew approximately 3% year over year.

Repeat orders outperformed overall order growth, 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 approximately $2,131, up approximately 3% year over year, with ASP growth across the assortment, including engagement rings, wedding and anniversary bands, and fine jewelry. This was driven largely by two things: customers are mixing into higher-priced items, reflecting our strength with the higher-income consumer, and we have made selective price increases as a result of rising precious metal cost. Gross margin was 54.3%, within our expectations of mid-50s gross margins.

This reflects the impact of historically high metal prices on our cost of goods, partially offset by our ability to nimbly adapt to market conditions, including our price optimization engine, thoughtful product design and specifications, vendor procurement efficiencies, and hedging. We expect gross margin in the remainder of 2026 to be higher than Q1 as we continue to execute on these initiatives. We delivered adjusted EBITDA of negative $4.7 million, or a negative 4.7% adjusted EBITDA margin, landing in the upper half of our guidance range. Q1 is typically our seasonally lowest quarter for net sales, and we expect higher profitability in upcoming quarters this year.

Q1 operating expense was 63.3% of net sales compared to 62.4% of net sales in Q1 2025, representing approximately 90 basis points of deleverage year over year. Q1 adjusted operating expense was 59.2% of net sales compared to 57.6% in Q1 2025, representing approximately 160 basis points of deleverage year over year. Adjusted operating expense does not include items such as depreciation and amortization, equity-based compensation, showroom preopening expenses, and other nonrecurring expenses. Q1 marketing expense was 23.6% of net sales compared to 24.5% in Q1 2025. This represents approximately 90 basis points of year-over-year leverage.

We are pleased to drive year-over-year leverage in marketing expense as a percentage of net sales in Q1, extending the success that we have had in the past two years, driving increasing efficiency while delivering strong top-line results. Employee costs as a percentage of net sales were higher year over year by approximately 190 basis points as adjusted. This includes growth in showroom employees, including from newly opened showrooms, as we strategically invest in our showroom expansion. We continue to manage these expenses in a disciplined and responsible manner.

Other G&A as a percentage of net sales was higher year over year by approximately 60 basis points as adjusted in Q1, reflecting our balanced approach to disciplined cost management as we invest thoughtfully in the business for the medium and long term. As I have noted in the past, we do not have significant seasonal fluctuations in costs such as employee costs and most of our other G&A costs. Since Q1 is historically our seasonally lowest net sales quarter, we expect that adjusted employee and other G&A costs will be lower than Q1 as a percentage of sales in each of the remaining quarters this year.

Year-over-year inventory grew principally as a result of strategic procurement opportunities to purchase diamond and jewelry inventory at advantageous prices last year, as well as growth in our fine jewelry assortment. Even with this increase, our inventory turns at over four times remain significantly above the industry average. We maintain conviction that the agility of our data-driven, capital-efficient, and inventory-light operating model is a compelling competitive advantage. We ended the first quarter with approximately $59 million in cash, with no debt on the balance sheet.

As a reminder, the year-over-year decline in cash balance reflects the payoff of our term loan in Q3 of last year and the completion of our one-time dividend and distribution of approximately $25 million last year. Consistent with recent historical seasonality, Q1 represents our lowest cash quarter of the year. We expect our quarter-end cash balance to be higher than Q1 in every quarter for the remainder of the year, reflecting the strength of our asset-light, data-driven business model that differentiates us from others in the industry. Turning to our outlook, for Q2, we expect net sales to be up in the low-single-digit percent range year over year.

On a two-year stacked basis, this represents an acceleration compared to our Q1 net sales growth. We expect a profitable Q2 with adjusted EBITDA in the range of $0.5 million to $2 million. For the full year, we continue to expect net sales to grow year over year in the mid-single-digit percent range and continue to expect a mid-50s gross margin for the year. We also expect year-over-year leverage in marketing expense as a percentage of net sales for the full year. We will make selective medium- and longer-term investments including employee costs and other G&A, such as investments in technology and in our showrooms.

We continue to expect adjusted EBITDA dollars for the year to be positive but slightly lower than 2025. We also continue to expect that most of this year’s adjusted EBITDA will come from Q4, given the seasonal shape of quarterly net sales, with Q4 being the highest net sales quarter of the year, improvements in gross margin as we progress through the year, and that we do not expect significant seasonal incremental employee and other G&A costs. In closing, our data-driven approach, including our agile price optimization, disciplined expense management, and our asset-light business model, positions us well to outperform the industry while delivering profitable growth.

This quarter’s solid execution reinforces our capability to identify and capture opportunities to drive sustainable, profitable growth and create value for our shareholders. With that, I will turn the call over to the operator for questions.

Operator: Thank you. We will now open the call for questions. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We do ask that you please limit to one question and one follow-up. Our first question comes from the line of Oliver Chen of TD Cowen. Your line is now open.

Oliver Chen: Hi, Beth and Jeff. Nice job on all the progress in fine jewelry, by the way. As we think about your guidance next quarter, how are things trending lately relative to what you are seeing, and also related, pricing sensitivity given the increase this quarter, and what you are thinking about prices relative to unit and elasticity? I imagine you are being pretty surgical and analytical about how you think about pricing. And then a follow-up question on fine jewelry: What are your thoughts on the LTV and the CAC on the fine jewelry customer relative to your heritage in bridal as well? Thank you.

Beth Tanara Gerstein: Hi, Oliver. Thanks for the questions. Maybe we can start with just what we are seeing lately. I would say Q2 to date, nothing really significant to call out as a big difference in macro. We continue to see top-line growth; the high-value customer is continuing to perform and show resiliency there. I think your discussion on pricing sensitivity is absolutely something that we think very carefully about, and the ASPs generally are increasing based on a few different factors. One of those factors is we are continuing to see that strength at the higher end, those higher-value customers, and then we are taking selective ASP increases to mitigate some of the increased metal cost.

But as you mentioned, we are being very surgical, having a really keen eye for that pricing sensitivity is something that we have developed capability for over many years. We are being careful to protect value, quality, profitability while still making sure that we are attracting that new customer. As it relates to fine jewelry, we are really pleased that we are able to acquire new customers at very strong marketing efficiencies. I mentioned how we are investing heavily in the $500-plus assortment. We are very strategically focused on that higher-value customer, and we are seeing very strong results there, growing that customer base.

We are acquiring new customers up over 40% this year relative to last year just in that $500-plus assortment. So driving marketing efficiencies across the assortment is always something that we pay very special attention to, but the brand resonance and the assortment are performing really well and driving nice efficiencies, and as a result, across the assortment, we are seeing marketing leverage, which is something that we are also heavily focused on.

Oliver Chen: Okay. Thanks. And, Jeff, you have always been very active at managing gross margins with agility. We are facing these unprecedented times with costs. What are you seeing now with gross margins, and amongst the volatility, what are the latest strategies in terms of sourcing, and what is implied in your guidance? Thank you.

Jeffrey Kuo: Thanks, Oliver. I think we did a great job managing our gross margin in Q1. In line with our expectations, we were able to take historically high, all-time high metal prices in Q1 and navigate through that really nimbly with a variety of strategies, including price optimization, vendor procurement efficiencies, being thoughtful about product designs and specifications, and hedging. We were able to package all that together really quickly in a dynamic market and deliver a strong gross margin within our expectations.

We are glad to see that, sequentially, quarter to date we have had improving gross margins, and we think that as the year progresses, with time to manage with these tools that we have, we will be able to deliver increasing gross margins, assuming that metal prices stay where they are. So I think this is a real case study in how Brilliant Earth Group, Inc. has been able to be very nimble and effective even in the face of significant changes like what we have seen. This is all included in our guidance, including our agility and our strategies as well as expectations for metal prices being where they are and some continued volatility.

So I think we are feeling good overall about what we were able to deliver.

Oliver Chen: Thanks so much. Best regards.

Jeffrey Kuo: Thank you.

Operator: Our next question comes from the line of Ashley Owens of KeyBanc Capital Markets. Your line is now open.

Ashley Owens: Hi. Great, and good afternoon. Thanks for taking our questions. Maybe just to start, you have noted that nearly half of the new customers are now discovering Brilliant Earth Group, Inc. through fine jewelry, so could you discuss the key drivers behind that trend and the sustainability going forward?

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