Brilliant Earth Group, Inc.

Brilliant Earth Group, Inc. operates as an innovative, digitally native omnichannel jewelry company, recognized as a global leader in ethically sourced fine jewelry. The company offers exclusive designs with superior craftsmanship and supply chain transparency, delivered through a highly personalized omnichannel experience. Its extensive collection includes premium-quality diamond engagement and wedding rings, gemstone rings, and fine jewelry, all conceptualized by an in-house design studio and brought to life by expert jewelers. The global jewelry industry was estimated to be approximately $350 billion in 2024 ⁴, characterized by fragmentation with approximately 65% of the diamond jewelry retail industry composed of small retailers ⁵. Brilliant Earth aims to address evolving consumer preferences for personalization and e-commerce, particularly among Millennial and Gen Z consumers who are drawn to purpose-driven brands and expect seamless shopping experiences.

Brilliant Earth's core business model revolves around generating revenue from the retail sale of diamonds, gemstones, and jewelry through its website and 42 showrooms across the United States ⁶. The company emphasizes a mission-driven ethos focused on transparency, sustainability, compassion, and inclusivity. Revenue is primarily transactional, with customers making payments prior to fulfillment. The company's proprietary technology enables dynamic product visualization, augmented reality try-on, blockchain-verified transparency, and rapid fulfillment of its flagship Design Your Own product, a custom design process. This made-to-order capability and virtual inventory model contribute to attractive inventory turns and negative working capital.

The company's product and service lines include diamond engagement rings, wedding and anniversary rings, gemstone rings, and fine jewelry such as earrings, necklaces, and bracelets. Diamond engagement rings are made-to-order through a "Design Your Own" digital tool, allowing customization of setting, metal type, ring size, and diamond or gemstone selection. Wedding and anniversary rings include classic bands and those accented with diamonds or gemstones, often designed to complement engagement rings. Gemstone rings feature vibrant center gemstones like sapphires, emeralds, moissanites, and aquamarines, also customizable through the "Design Your Own" tool or available as pre-set options. Fine jewelry offers a broad and evolving assortment for gifting and self-purchase, with an emphasis on personalization through engravable jewelry and "Design Your Own" earrings and necklaces. The company offers both natural and lab-grown diamonds, with Beyond Conflict Free Diamonds™ and Pathway to Beyond Conflict Free Diamonds™ sourced from vetted suppliers adhering to rigorous ethical and environmental standards. In February 2025, the company expanded its offerings to include Pathway to Beyond Conflict Free Diamonds™ ⁷.

For the fiscal year ended December 31, 2025, Brilliant Earth reported net sales of $437.5 million ⁸, an increase of 3.6% from $422.2 million in the prior year ⁹. Gross profit for 2025 was $251.504 million ¹⁰, resulting in a gross margin of 57.5% ¹¹. Operating expenses totaled $256.880 million ¹², leading to an operating loss of $5.376 million ¹³. The company recorded a net loss of $6.4 million ¹⁴, with a net loss margin of 1.5% ¹⁵. Diluted EPS for the period was $(0.25) ¹⁶. Cash and cash equivalents, excluding restricted cash, stood at $79.1 million ¹⁷ as of December 31, 2025, and the company had negative working capital of $(24.5) million ¹⁸. Total debt, net of debt issuance costs, was $0 ¹⁹ as of December 31, 2025, following the prepayment of the SVB Term Loan.

Comparing 2025 to 2024, net sales increased by $15.3 million ²⁰, or 3.6% ²¹. This growth was driven by a 13.0% increase in order volumes ²², partially offset by an 8.2% decrease in Average Order Value (AOV) ²³. The increase in order volumes was attributed to strong performance in lower price point products, including fine jewelry, and the opening of new showrooms. The decrease in AOV was due to a higher mix of lower price point products and stronger performance of engagement rings priced below $5,000. Gross profit decreased by $2.9 million ²⁴, or 1.1% ²⁵, with gross margin contracting by 280 basis points, primarily due to higher gold and platinum costs. Operating expenses increased by $5.8 million ²⁶, or 2.3% ²⁷, mainly due to a $5.4 million increase in employment expenses ²⁸ and a $2.8 million increase in other general and administrative expenses ²⁹, partially offset by a $2.4 million decrease in marketing expenses ³⁰. Interest expense decreased by $2.7 million ³¹, or 54.6% ³², due to the prepayment of the SVB Term Loan.

During the fiscal year, Brilliant Earth expanded its offerings in February 2025 to include Pathway to Beyond Conflict Free Diamonds™ ³³. The company also launched partnerships with tennis star Madison Keys as its first athlete ambassador and a second jewelry collection with Jane Goodall in 2025 ³⁴. Operationally, the company prepaid all principal amounts outstanding of $34.8 million under the SVB Term Loan and terminated all commitments outstanding under the SVB Credit Agreement in August 2025 ³⁵, resulting in a loss on debt extinguishment of $0.6 million ³⁶. The Board declared a one-time cash dividend of $0.25 per share ³⁷ in August 2025, totaling approximately $25.0 million ³⁸ from Brilliant Earth, LLC, with $3.8 million ³⁹ paid to Class A common stock holders. The company also recorded a full valuation allowance on its deferred tax assets and reduced its Tax Receivable Agreement (TRA) liability to zero, recognizing a gain on TRA liability adjustment of $7.8 million ⁴⁰ in 2025.

Brilliant Earth anticipates continued growth through several strategic initiatives, including increasing brand awareness, expanding its omnichannel reach, broadening purchase occasions with existing and new customers, and international expansion. The company expects to drive brand awareness through marketing, earned media, showroom expansion, and word-of-mouth referrals. The strategic opening of new showrooms in the U.S. is expected to accelerate growth by increasing average order value, improving conversion in metro regions, and raising brand awareness. The company believes it can achieve broad national showroom coverage with fewer locations than traditional retailers, complementing its digital strategy and driving future growth and profitability.

To expand purchase occasions, Brilliant Earth is investing in its fine jewelry assortment and enhancing customer lifetime marketing and data-segmentation capabilities. This is intended to extend customer relationships beyond engagement and wedding purchases, driving fine jewelry orders from both new and existing customers. The company has observed encouraging signs for future global expansion, having sold to customers in over 50 countries ⁴¹ despite minimal existing language, logistics, and currency support. There is substantial potential to launch e-commerce in new overseas markets and new showrooms in countries where a localized digital presence has been established.

Operationally, Brilliant Earth aims to maintain its capital-efficient operating model and drive continuous improvement as it expands. This model includes attractive working capital dynamics, capital-efficient showrooms, and a vast virtual inventory of premium natural and lab-grown diamonds, allowing for a broad selection while keeping balance sheet inventory low. The company plans to continue investing in technology to enhance the digital and showroom experience and improve conversion.

The company's capital allocation plans include continued investments to support product and service development, marketing expenses, and expansion of sales resources. As of December 31, 2025, the company had capital commitments of $0.8 million ⁴² related to new showroom construction and improvements to existing locations. The Board approved a share repurchase program in December 2023, authorizing the company to purchase up to an aggregate of $20.0 million ⁴³ of its Class A common stock through December 2026 ⁴⁴. The company does not anticipate declaring or paying any cash dividends on its Class A and Class D common stock in the foreseeable future ⁴⁵, beyond the one-time cash dividend of $0.25 per share ⁴⁶ declared in August 2025.

Management has identified several structural headwinds and execution risks. Fluctuations in the pricing and supply of diamonds, other gemstones, and precious metals, particularly responsibly sourced natural and lab-grown diamonds and repurposed precious metals, could adversely impact sales, earnings, and cash availability. An overall decline in the health of the economy and other factors impacting consumer spending, such as recessionary or inflationary conditions, governmental instability, wars, and natural disasters, may reduce demand for products. Increased lead times, supply shortages, and changes in the supply chain, including increased costs, could disrupt business operations. The company's rapid growth and limited operating experience at its current scale pose risks to managing growth effectively. International expansion exposes the company to regulatory, economic, and political risks. The company also faces risks related to its reliance on third-party providers for cloud services, payment processing, and fulfillment.

Brilliant Earth faces several material risks, including fluctuations in the pricing and supply of diamonds, other gemstones, and precious metals, particularly responsibly sourced natural and lab-grown diamonds and repurposed precious metals, which account for the majority of merchandise costs. Significant price increases for gold, platinum, and other precious metals occurred in 2025 ⁴⁷, and sustained elevated prices could increase merchandise costs and working capital requirements, adversely impacting demand if cost increases cannot be passed through. An overall decline in the health of the economy, including recessionary or inflationary conditions, governmental instability, wars, and natural disasters, may reduce consumer purchases of discretionary items like jewelry. Increased lead times, supply shortages, and changes in the supply chain, including increased costs, could disrupt business operations. The fine jewelry retail industry is highly competitive, with many competitors possessing greater financial and operational resources, longer operating histories, and broader geographic presence. The company's rapid growth and limited operating experience at its current scale pose risks to effective management, potentially impacting brand, company culture, and financial performance. Cybersecurity threats, including data breaches and cyberattacks, could significantly impact IT systems and confidential information, leading to legal claims, regulatory investigations, fines, and reputational damage. The company is subject to rapidly changing and increasingly stringent laws and regulations related to privacy, data security, and data protection, such as the CCPA and GDPR, with potential penalties for the most serious breaches under GDPR reaching up to the greater of EUR 20 million/ GBP 17.5 million or 4% of global annual turnover ⁴⁸. Changes in the internet and mobile device accessibility of users, as well as anti-corruption, anti-bribery, and anti-money laundering laws, also present risks.

Management's message to shareholders emphasizes Brilliant Earth's identity as an innovative, digitally native omnichannel jewelry company and a global leader in ethically sourced fine jewelry, driven by a mission to create a more transparent, sustainable, compassionate, and inclusive jewelry industry. The company highlights its strong financial performance and rapid growth, with net sales of $437.5 million ⁴⁹ for the year ended December 31, 2025, an increase of 3.6% ⁵⁰ from the prior year. Despite a net loss of $6.4 million ⁵¹ in 2025, management believes the company is in the early stages of realizing its potential in a significant market opportunity. Key strategic priorities for the period ahead include increasing brand awareness through dynamic marketing and showroom expansion, cost-effectively acquiring new customers and retaining existing ones by leveraging brand resonance and expanding fine jewelry assortments, and successfully growing and managing its omnichannel presence in new and existing markets, including international expansion. Management also stresses the importance of its capital-efficient operating model and continued investment in technology to enhance the customer experience and drive operational efficiencies.