Brilliant Earth (BRLT) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Chief Executive Officer - Beth Tanara Gerstein
• Chief Financial Officer - Chuenhong Kuo

TAKEAWAYS

• Net Sales -- $112.8 million, representing 2.3% growth year over year and 13% growth on a two-year stack.
• Total Orders -- 52,720, growing 5.6% year over year despite high prior-year comparisons.
• Average Order Value (AOV) -- $2,140, a 3.1% decrease year over year reflecting diversification into fine jewelry categories with lower price points.
• Gross Margin -- 59.7%, expanding 210 basis points year over year driven by price optimization engines and supply chain efficiencies.
• Adjusted EBITDA -- $5.1 million, representing a 4.5% margin and exceeding the high end of management guidance.
• Net Income -- $2.4 million, compared to a net loss of $0.7 million in the third quarter of 2025.
• Adjusted Diluted EPS -- $0.03, representing a 50.0% increase compared to $0.02 in the prior-year period.
• Fine Jewelry Bookings -- 16% of total bookings, as the company continues to diversify its product mix beyond its bridal heritage.
• Inventory -- $50.3 million, a 6% decrease from the end of the second quarter of 2026.
• Cash and Cash Equivalents -- $76.2 million, an increase of 4% year over year with the company reporting zero debt.
• Marketing Expense -- 23.3% of net sales, achieving 40 basis points of leverage compared to the third quarter of 2025.
• Net Sales Guidance -- 2.75% to 4% year-over-year growth for the full year, reflecting a measured outlook for the holiday season.
• Adjusted EBITDA Guidance -- $13 million to $15 million for the full year, maintained from previous projections.
• Fourth Quarter Gross Margin Guidance -- high 50s, an increase from previous expectations due to operational efficiency initiatives.
• Showroom Performance -- 50% growth in bookings from walk-in customers without appointments compared to the prior year.
• Fine Jewelry Walk-in Bookings -- 37% year-over-year growth, highlighting the showroom destination appeal for non-bridal products.
• Adjusted Operating Expenses -- 55.3% of net sales, representing 80 basis points of deleverage year over year.
• Adjusted Employee Costs -- a 40 basis point increase as a percentage of net sales year over year.
• Other General and Administrative Expenses -- an 80 basis point increase as a percentage of net sales reflecting investments in technology.
• Inventory Turnover -- approximately fourfold, which management stated is significantly higher than the jewelry industry average.
• Headcount -- 764 employees, supporting operations across 43 showroom locations.

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RISKS

• Gerstein stated, "Engagement ring budgets are somewhat tighter as these considered purchases are increasingly affected by cost pressures," noting the impact of the macroeconomic environment on high-consideration items.
• Kuo warned that the company is seeing increased budget pressures particularly affecting engagement ring ASPs and is lapping reasonably strong ASP comparisons from the fourth quarter of the prior year.

SUMMARY

Brilliant Earth Group, Inc. (NASDAQ:BRLT) reported third quarter results that exceeded its internal guidance for both net sales and adjusted EBITDA. Management noted that the results were achieved despite macroeconomic headwinds and budget pressures that have specifically impacted the engagement ring category. The company highlighted its successful strategic pivot toward product diversification, reporting that fine jewelry and wedding bands reached record booking levels during the quarter. Gross margin expansion was a primary driver of profitability, which management attributed to internal pricing optimization tools and cost-efficient product designs that helped offset elevated metal prices. While the company maintained its full-year profitability guidance, it adopted a measured revenue outlook for the holiday season to account for cautious consumer spending on high-ticket items.

• CEO Gerstein noted that the Elizabeth Taylor Estate collaboration was "one of our strongest fine jewelry launches ever" and exceeded demand expectations.
• Management reported that the recently opened San Antonio showroom delivered the highest walk-in bookings of any location in its first 13 weeks of operation.
• The company reached a significant brand milestone by surpassing 1 million Instagram followers, with engagement rates more than doubling compared to the prior year.
• Management introduced the third chapter of the Jane Goodall collection, which utilizes repurposed gold and carbon-capture lab diamonds to support the Jane Goodall Legacy Foundation.
• The company reported it is prepared for the holiday season with new product launches, including a collaboration with Ring Pop and expanded offerings in the California Collection.

INDUSTRY GLOSSARY

• AOV (Average Order Value): A metric calculated by dividing net sales by the total number of orders in a given period.
• ASP (Average Selling Price): The average price at which product units are sold during a specific timeframe.
• Adjusted EBITDA: A non-GAAP financial measure that excludes interest, taxes, depreciation, amortization, and non-recurring costs to evaluate core operating performance.
• Bookings: The total dollar value of confirmed customer orders as of the placement date, serving as a leading indicator for net sales.
• DTC (Direct-to-Consumer): A business model in which a company sells products directly to the end customer, bypassing third-party retailers.
• LLC Units: Equity interests in Brilliant Earth, LLC that are exchangeable for shares of Class A common stock.
• Omnichannel: A retail approach that provides a seamless shopping experience across both digital platforms and physical showrooms.
• Two-year stack: A financial calculation that adds growth rates from two consecutive years to show performance relative to a baseline two years prior.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. The brilliant Earth third quarter 2026 earning call is about to begin. Welcome. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11. Again. For questions, please ask those that are in the queue. I want to please have everyone to ask 1 question and then 1 follow-up question after that and then re queue.

I would now like to turn the call over to Allison Malkin with ICR.

Allison Malkin: Thank you, and good morning, everyone. Welcome to Brilliant Earth's Third Quarter 2026 Earnings Conference Call. This is Allison Malkin with ICR. Joining me today are Beth Tanara Gerstein, Brilliant Earth Chief Executive Officer, and Chuenhong Kuo, Brilliant Earth's Chief Financial Officer. During this call, management will make certain forward looking statements. Within the meaning of the Private Securities Litigation Reform Act of 2000. 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 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 will now turn the call over to Beth.

Beth Tanara Gerstein: Good morning, everyone, and thank you for joining us. We are pleased to report a strong third quarter with results that once again reflect the disciplined execution and success of our growth strategy. Q3 net sales grew approximately 2% year over year to $113 million above our guidance. And representing 13% growth on a 2 year stack as we lapped a very strong third quarter in 2025, Total orders grew 6% year over year in Q3, We are particularly pleased with this performance given that Q3 last year was a strong comp especially for engagement rings as customers pulled forward purchases in anticipation of potential tariffs.

Average order value or AOV was down year over year by 3% in the third quarter. As we continue to diversify the business in areas such as fine jewelry. Average selling prices were up year over year in both fine jewelry and wedding and anniversary bands. Which we believe reflects consumers' enduring desire for premium design forward jewelry along with our strength with the higher income consumer. Fine jewelry and wedding and anniversary bands were again highlights of the quarter. Fine jewelry continued its standout performance. With Q3 bookings making up about 16% of total bookings in Q3 as we continue our diversification beyond bridal. We continue to see strength and outsized demand for our iconic fine jewelry pieces.

In Q3, we also had our biggest quarter of wedding and anniversary band bookings in company history with year over year growth in both men's and women's bands. Against the strong Q3 2025 comp, our engagement ring bookings were down year over year. But our signature engagement rings outperformed. Underscoring the enduring appeal of our proprietary designs. We delivered a strong gross margin this quarter even in the face of ongoing metal price headwinds. Q3 gross margin expanded approximately 210 basis points year over year.

As we mentioned during our last call, we expected Q3 gross margin to be in a similar range as Q2, and I am proud that our team delivered ahead of our expectations through the operational levers that Jeff will discuss. And we continue to manage OpEx in a disciplined manner. We once again delivered year over year marketing leverage in Q3, And over the past 3 years, we have taken marketing, from 27% of sales in Q3 23 to 23.3% today, about 370 basis points of leverage. We also continued to manage other operating expenses efficiently, balancing driving growth with delivering profitability ahead of our expectations.

The combination of our top line performance gross margin expansion, and sustained expense discipline enabled us to deliver Q3 adjusted EBITDA of $5.1 million above the high end of our guidance range. 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. As you know, 1 of the clearest ways we differentiate Brilliant Earth is through the artistry and craftsmanship behind our proprietary designs and collections. Our newest collections extend those same principles and continue to resonate deeply with customers.

Our recent collaboration with the Elizabeth Taylor Estate was 1 of our strongest fine jewelry launches ever. Anchored by an exclusive prelaunch event that generated tremendous media reach. The launch has driven very strong engagement for this new collection. And has translated into demand that has exceeded our expectations. And we are proud that a portion of net proceeds benefits the Elizabeth Taylor AIDS Foundation continuing her life's work. We also introduced the third chapter of our Jane Goodall collection, crafted with repurposed gold and carbon capture lab diamonds. Continuing our multiyear support of the Jane Goodall Legacy Foundation. The broader Jane Goodall collection continues to be 1 of our top selling fine jewelry collections.

Underscoring the staying power of storytelling led collaborations like this 1. And we saw strong reception for our new Charms launch, which we celebrated with a launch event in the Hamptons alongside Camille Kostek, bringing together nearly 40 creators several stars from across the Bravo-verse, and other fans of the brand for an evening that generated over 10 million in estimated reach across social media. Our brand also continued to resonate culturally this quarter. We were honored to be part of the celebrity weddings of Hunter King and Emma Roberts. Among other high profile moments. We also crossed a major brand milestone this quarter. surpassing 1 million Instagram followers. With engagement rates more than doubling year over year.

These moments reflect the growing cultural resonance of our brand, with today's pacemakers, press, and influencers. We continue to drive strong showroom performance with outsized retail and walk in interest in our showrooms. Showroom bookings from customers without an appointment grew approximately 50% year over year in Q3, highlighting how our showrooms are engines of driving awareness and conversion. Our showrooms are also increasingly a destination for fine jewelry, and fine jewelry bookings from walk in customers were up approximately 37% year over year. Our newly opened San Antonio showroom is off to an excellent start It delivered our highest walk in bookings of any showroom in its first 13 weeks after opening.

And we look forward to opening our next showroom at Westfield Valley Fair in San Jose, California for the holiday season. As we head into the holiday season, we feel as prepared as we have ever been, with exciting upcoming product and partnership announcements, including the launch today of our latest Ring Pop collaboration. We are also executing better than ever through more integrated planning across our creative, merchandising, and retail teams. Resulting in an ever-improving merchandise assortment marketing campaigns, and thoughtful inventory planning that will lay the foundation for a successful holiday season. Quarter to date, we are seeing strong resonance of our brand and product offerings.

With year over year order growth, and strong wedding and anniversary band and fine jewelry performance. Engagement ring budgets are somewhat tighter as these considered purchases are increasingly affected by cost pressures. The bulk of the holiday season is still ahead of us. Including our seasonally biggest fine jewelry quarter. And in any environment, our approach remains sharply focused on investing in and building our brand. Optimizing our unique business model and ensuring that we deliver exceptional product and experiences. Before I hand it over to Chuenhong to take you through more of the results and our outlook, I want to close by thanking our incredible team.

Their passion and commitment are the reason our momentum keeps building quarter after quarter. And what fuels my confidence that Brilliant Earth's future is very bright. Now I will hand it over to Chuenhong.

Chuenhong Kuo: Thanks, Beth, and good morning, everyone. As Beth mentioned, we are pleased to report a strong third quarter in which we continue to successfully drive our strategic initiatives delivering net sales above our guidance year over year and sequential gross margin expansion and adjusted EBITDA above the high end of our guidance range. Let me take you through the details for Q3. Net sales were $112.8 million up approximately 2% year over year and above our guidance. As a reminder, we were comping a very strong third quarter last year when many consumers accelerated purchases in anticipation of potential tariffs. On a 2 year stacked basis, Q3 net sales grew approximately 13%.

As Beth noted, total orders grew approximately 6% year over year, demonstrating the effectiveness of our customer acquisition and retention efforts and the resonance of our brand and products with consumers. Q3 average order value, or AOV, was $2.14 thousand. Down approximately 3% year over year as we continue to broaden and diversify our overall assortment including our fine jewelry collection, which, as you know, has lower price points than engagement rings. Year over year ASP growth continued in fine jewelry, and in wedding and anniversary bands, reflecting our strength with the higher income consumer.

Engagement ring ASP, while down year over year, saw varying ASP performance across the assortment with ASP strength in portions of the assortment, such as fancy 3 stone rings, and certain higher carat weight rings. Gross margin for Q3 was 59.7%, As Beth noted, that was up approximately 210 basis points year over year. And it was up approximately 180 basis points sequentially versus Q2 2026. As we said last quarter, we expect a Q3 gross margin to be in a similar range as Q2, and we came in ahead of that expectation.

The outperformance in gross margin was principally driven by strength of our operational efforts, including our price optimization engine, product design for cost efficiency, and other supply chain efficiencies. Our team's agility in leveraging our data driven business model to drive these strong gross margins in the face of elevated year over year metal prices continues to be a key differentiator for Brilliant Earth. We delivered adjusted EBITDA of $5.1 million or a 4.5% adjusted EBITDA margin above the high end of our guidance range. This reflects the combination of our top line performance strong gross margin and focused discipline in managing operating expenses.

Q3 operating expenses was 58% of net sales, compared to 58.1% of net sales in Q3 2025, representing approximately 10 basis points of leverage year over year. Q3 adjusted operating expense was 55.3% of net sales compared to 54.5% in Q3 25, representing approximately 80 basis points of deleverage year over year. Adjusted operating expense does not include items such as equity based compensation, depreciation and amortization, showroom preopening expenses, and other nonrecurring expenses. Q3 marketing expense was 23.3% of net sales compared to 23.7% in Q3 25. Approximately 40 basis points of year over year leverage and again highlighting the resonance of our brand and seamless omnichannel model.

The effectiveness of our data driven approach, and the technology capabilities that our team has developed. Adjusted employee costs as a percentage of net sales were higher year over year by approximately 40 basis points in Q3. And we continue to manage these expenses in a disciplined and responsible manner. Adjusted other G&A as a percentage of net sales was higher year over year by approximately 80 basis points in Q3. As we continue to prudently invest in our business including in technology to drive growth and efficiency. Our inventory was approximately $50.3 million at the end of Q3, down approximately 6% from the end of Q2.

Our inventory turns of approximately 4x continue to be significantly higher than the industry average, and we maintain conviction that the agility of our data driven capital efficient and inventory light operating model is a compelling competitive. We ended the third quarter with approximately $76 million in cash up 4% year over year and no debt. Our ability to generate cash further differentiates us from many others in the industry and highlights the benefits of our asset light business model. Turning to our outlook, we are planning prudently. We are seeing increased budget pressures, particularly affecting engagement ring ASPs, and we are lapping reasonably strong ASP comps from Q4 last year.

For the full year, we now expect net sales up approximately 2.75% to 4% year over year. Which reflects this more measured view of the holiday season. At the midpoint, this implies Q4 net sales growth on a year over year and 2 year stack basis. This outlook includes expected outperformance in fine jewelry, during the holidays. Even with this environment in mind, we are maintaining our previous adjusted EBITDA guidance of $13 million to $15 million for the year. We are able to maintain our profitability outlook with gross margin performing ahead of prior expectations given the success of our initiatives to drive strong gross margins, and our disciplined management of operating expenses.

We expect to drive a high 50s gross margin in Q4 an increase from our previous guidance. We also continue to plan for year over year leverage in marketing expense as a percentage of net sales for the full year and making selective investments in employee costs and other G&A to drive the medium and long term growth of our business. In closing, our data driven approach, including our agile price optimization, disciplined expense management, and our asset light business model, position us well to deliver long term, profitable growth. This quarter's strong 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. 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 to be placed in the queue. After that, your name will be announced. To withdraw your question, please press 11 again. For those in the queue, please limit yourself to 1 question and then re queue for any additional questions. Please stand by as we compile the q and a roster. I see no questions at the moment. So as a reminder, if you would like to ask a question, please press 11. To be placed in the queue.

And since I see no questions, I am going to turn it back over to Chuenhong Kuo for closing remarks.

Chuenhong Kuo: Thank you guys for your interest in Brilliant Earth, and we look forward to discussing our holiday results next quarter.

Operator: the program for today's conference. You may now disconnect.

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