Brilliant Earth Group, Inc. Class A Common Stock 2026 Q2 Earnings Call

Thank you. Good morning, everyone. Welcome to Brilliant Earth second quarter 2026 earnings conference call. This is Allison Malkin with ICR. Joining me today are Beth Gerstein, Brilliant Earth's chief executive officer, and Jeff Kuo, Brilliant Earth's 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. During this call, management will refer to certain non-GAAP financial measures. A reconciliation of Brilliant Earth 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.

Good morning, everyone. Thank you for joining us. We're pleased to report an outstanding second quarter, with results that once again reflect the disciplined execution and success of our growth strategy. Q2 net sales grew approximately 6% year-over-year to $150 million, well exceeding our guidance range. Our outstanding net sales performance included strong ASPs, which were up year-over-year across wedding and anniversary bands and fine jewelry, and stable year-over-year in engagement rings. This ASP strength was a continuation from last quarter, and we believe reflects consumers' enduring desire for premium, design-forward jewelry, along with our strength with the higher income consumer. Total orders were slightly down 2% year-over-year during the quarter. As you know, we have been focused on sales at higher price points and excluding sub-$500 AOV orders, which represent just a few % of our net sales.

Our orders were up 5% year-over-year. Fine jewelry was again a clear standout, driven by a strong Mother's Day holiday. Q2 fine jewelry bookings grew approximately 32% year-over-year, making up about 18% of total bookings in Q2 as we continue to drive diversification beyond bridal. We were again pleased with our performance in wedding and anniversary bands, where Q2 bookings grew at a double-digit year-over-year rate, and our engagement ring bookings held steady and remained about the same year-over-year. We also delivered outstanding results on both gross margin and operating expenses. We increased gross margin approximately 360 basis points compared to Q1. As we mentioned during our last call, we expected to increase gross margin from Q1, and I am incredibly proud of how our team delivered ahead of our expectations.

While metal prices eased toward the end of the quarter, that was only a small part of the story. The bigger driver was our team's agile execution on the operational levers that Jeff will discuss, highlighting our ability to outperform profitability expectations in dynamic environments. Even with sales exceeding our expectations, we managed OpEx in a disciplined manner and drove year-over-year leverage across marketing and adjusted employee and G&A expenses. Jeff will walk you through more of the specifics. The combination of our strong top-line performance, solid gross margin, and sustained discipline in driving OpEx leverage year-over-year enabled us to deliver a Q2 adjusted EBITDA of $5.8 million that far outperformed our expectations. These results underscore our ability to execute with discipline while investing in the growth drivers that continue to make Brilliant Earth a leading jewelry brand in the $350 billion jewelry industry.

Let me take you through some additional highlights of the quarter. Mother's Day was a clear proof point of our brand strength and resonance, with overall bookings up 15% year-over-year in the two-week gifting window leading up to Mother's Day. This was our biggest Mother's Day ever and further demonstrates our ability to execute and capitalize on key gifting moments. Thanks to earlier, more integrated planning across our creative, merchandising, and retail teams. We had strong customer reception for our new product collections, including our Butterfly Collection and our Keepsakes Collection, an assortment of lockets and medallions that expand our franchise medallion assortment. Beyond Mother's Day, we saw strength across our full product assortment. In engagement rings and wedding bands, our proprietary design-forward collections led the way, including our nature-inspired designs and the expansion of our Pacific Green offering.

Fine jewelry continued to be a standout, with ongoing strength in our core Diamond Essentials, as well as our iconic and signature offerings. As I mentioned earlier, year-over-year average selling prices were up meaningfully across the assortment in Q2. That strength shows clearly at the higher end, demonstrating our continued resonance with higher income consumers. In fact, fine jewelry bookings at the $500 and above price point, where we are focused, grew over 40% year-over-year in Q2. Our brand also drove standout cultural engagement this quarter through partnerships with creator Allison Kuch and her husband, Isaac Rochell, who celebrated the joy of Mother's Day with content that delivered very strong performance across our channels. We also partnered with Sports Illustrated model and entertainment reporter Camille Kostek to serve as our face of summer, featuring our whimsical Seaside Charms collection.

We're always thrilled to see Brilliant Earth worn by tastemakers, including Maude Apatow at the Met Gala, Emma Roberts, Bella Hadid, and Justin Bieber. These moments reflect the growing cultural resonance of our brand with a new generation of creators and drives our brand awareness. Our omni-channel experience also sets us apart. We continue to drive retail and walk-in interest into our showrooms. In fact, showroom bookings from customers without an appointment grew 47% year-over-year in the second quarter. This is a powerful proof point of the success of our experiential and personalized showroom strategy and how customers are increasingly discovering Brilliant Earth through our showrooms. Our Beverly Hills flagship is off to a strong start, with bookings since opening up over 40% year-over-year through the end of Q2 versus our prior location. Fine jewelry bookings in Q2 nearly double that of our prior location last Q2.

Average order values through the end of Q2 for Beverly Hills appointments were about 10% higher than typical appointments. We continue to see our Beverly Hills flagship as a blueprint for the future of modern luxury jewelry retail. We also opened our 43rd showroom in San Antonio, Texas, the next evolution of our showroom of the future, and a demonstration of how that concept can also be applied successfully in a smaller footprint. Quarter to date, we have seen continued outperformance in wedding and anniversary bands and fine jewelry, ongoing strength at higher price points, repeat orders outpacing overall order growth, and continued gross margin strength. Jeff will share more details on our guidance and outlook. Of course, we continue to watch the consumer environment carefully, and we are observing the same bifurcation that has been widely reported across our industry and the broader consumer sector.

Similar to last quarter, while we see some signs of softness at lower price points, demand at higher price points is holding up well. Our ASP strength reflects this dynamic and demonstrates the growing power of our brand with a higher income consumer. We have exciting product launches and partnerships planned for this fall, which we'll share more about in the upcoming months. We continue to focus on our strategic initiatives across brands, showrooms, and fine jewelry. The outsized interest we are seeing for fine jewelry in our showrooms gives us confidence as we head into Q3 and our important holiday season later this year. Given our strong Q2 performance and confidence in the second half of the year, we are raising our annual profitability guidance. Jeff will walk you through these details. I want to close by thanking our incredible team.

Their passion and commitment are the reason our momentum keeps building quarter after quarter, and the best is still ahead for Brilliant Earth. Now, I'll hand it over to Jeff.

Thanks, Beth. Good morning, everyone. As Beth mentioned, we're pleased to report an outstanding second quarter in which we continued to successfully drive our strategic initiatives, delivering net sales above the high end of our guidance range, sequential gross margin improvement, year-over-year operating expense leverage, and adjusted EBITDA that significantly exceeded our guidance. Let me take you through the details for Q2. Net sales were $115.1 million, up approximately 5.7% year-over-year and above the high end of our guidance range. While total orders were down approximately 2% year-over-year, they grew 16% on a two-year stacked basis. Repeat orders continue to outperform total order growth, demonstrating the effectiveness of our customer acquisition and retention efforts and the resonance of our brand and products with consumers. As Beth noted, we've been focused on driving growth at higher end price points.

If you exclude orders under $500, which are only a few percent of our net sales, orders are up 5% year-over-year, illustrating the success that we are having at higher price points. Q2 average order value, or AOV, was approximately $2,238, up about 8% year-over-year, with stable year-over-year engagement ring ASP and year-over-year ASP growth across wedding and anniversary bands and fine jewelry. Like in Q1, this was driven largely by two things. First, customers are mixing into higher priced items, reflecting our strength with the higher income consumer. Second, we've made selective price increases as a result of increased precious metal costs. Gross margin was 57.9%, down approximately forty basis points year-over-year, but up approximately 360 basis points sequentially versus the first quarter. As we said last quarter, we expected to increase gross margin from Q1. We're proud of how our team delivered.