Brilliant Earth Group, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Brilliant Earth first quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker for today. Allison Malkin, you may begin.

Thank you. Good afternoon, everyone. Thank you for joining us for our first quarter fiscal year 2022 conference call. Joining me today are Beth Gerstein, our Chief Executive Officer, and Jeff Quill, our Chief Financial Officer. For today's call, Beth will begin with highlights of our first quarter financial and operational performance and the drivers of our future growth. Jeff will follow with more details on our first quarter financial results and guidance. Following this, the operator will begin the Q&A session with our presenters, Beth and Jeff, available to answer the questions you have for us today. Before we start, I would like to remind you that management will make certain remarks today that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These future 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 the results to differ materially from those expressed or implied in these forward-looking statements. These forward-looking statements reflect our opinions 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. Also, during this call, we will discuss both GAAP and non-GAAP financial measures. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's earnings release. which is available at the investor relations section of our website at investors.brilliantearth.com. A live broadcast of this call is also available at the investor relations section of our website. With that, I'll turn the call over to Beth.

Hello, everyone, and thank you for joining us today. We're pleased to share our results for the first quarter of the year, which reflect a strong start to what we believe will represent another record year of revenue for our company. The results we've reported today again demonstrate the tenets of the Brilliant Earth growth story, one that is laser-focused on disrupting, transforming, and modernizing the $280 billion global fine jewelry industry. As a young public company, we know that many people are just getting to know our story. It's a growth story, one that is built on increasing demand and affinity for the Brilliant Arts brand among millennial and Gen Z consumers, and a business model that is powered by data, a committed and talented team, and an incredibly efficient and advantageous asset-light operating model. Our first quarter results showcase our ability to both lead and to execute in a market that is highly fragmented and in an increasingly uncertain and challenging macro environment. For the first quarter, net sales were 100 million, increasing 42% from Q1 last year and up by 102% from Q1 2020. Gross margin expanded 432 basis points over Q1 2022 to 50.1%, And adjusted EBITDA was 8.4 million or 8.4% of net sales. Before Jeff takes you through these results in detail, I want to first share my perspective on the current environment and then highlight a few priorities that you will hear us talk about consistently as they really demonstrate our ability to lead the industry and to execute our long-term growth strategy. It is clear that the recent macro environment is affecting consumer sentiment and behavior. For Brilliant Earth, although we have seen greater variations in recent weeks, we also continue to see strong demand and resonance for our brand. We believe that by staying intensely focused on how we lead, manage, invest, and execute against our long-term goals, we will deliver strong revenue and profitability and continue to take market share, as we have done every year since we were founded. Jeff will talk about this in more detail in his remarks. We continue to execute our omnichannel expansion by creating truly seamless and joyful consumer experiences across our digitally native and showroom environments. The Metro sales uplift from the opening of new showrooms continues to be the same or better than our historical experience and reinforces our confidence in our omnichannel model. Early in the second quarter, we open our 16th, 17th, and 18th showrooms in Bethesda, Maryland, Columbus, Ohio, and Houston, Texas. Our Bethesda showroom is our second in the greater Washington, D.C. area and establishes deeper reach across this major metropolitan area. One of the other aspects of our showroom openings that I'm incredibly proud of is the way in which our teams choose to put Brilliant Earth values in action. In Houston this week, our team celebrated by partnering with the Houston Food Bank through the Brilliant Earth Foundation. Each of our showroom teams partners in the local community to give back. And this is just one great example of how our mission is carried out from day one in the communities in which we operate. Operationally, we use both data and a laser focus on the customer experience to continuously refine the format of our showrooms as well as how we engage with and service our customers at every touchpoint. Our digital results also remain strong as we continue to optimize how customers browse our trend-driven, unique collections, further driving consumers' engagement on our site. We regularly receive feedback from consumers who tell us how different and refreshing their Brilliant Earth experience is, which is reflected in strong word-of-mouth referrals and our high NPS of over 75. As we mentioned last quarter, with a line of sight to signing 15 new leases this year, we will continue to roll out our showroom strategy over the coming quarters. Our next few locations will bring Brilliant Earth to Cleveland, Detroit, and Minneapolis. As you know, successful omnichannel experiences are fueled by the strength and resonance of the brand and by the quality and differentiation of the product. For Brilliant Earth, this is particularly true. And it is what has catalyzed our growth from a young digital disruptor to a leader, an industry transformer for a new generation. From a brand perspective, we recently completed an updated brand awareness study, and we're pleased to see our aided awareness has grown over the past year from 54% to 62%. This growing awareness reflects our execution across every dimension of the brand. For Valentine's Day, we executed successful brand awareness campaigns across diversified advertising channels, including streaming video. We're also delighted to have celebrities showcasing Brilliant Earth for our exclusive designs and master craftsmanship. In recent months, we're proud to have Lana Condor, Mindy Kaling, and MJ Rodriguez all choose Brilliant Earth for their red carpet and other major moments. These moments have highlighted customized, premium luxury products for which Brilliant Earth is known. They have also amplified our ability to showcase the breadth and depth of our product offering from $100 to $100,000 and higher. If you haven't seen the custom diamond necklace we made for MJ Rodriguez for her to wear when she was honored at the Time Woman of the Year event, we really hope you'll look it up. It's spectacular. Leaning into the strong demand and our capability to rapidly introduce trend-driven styles, during the quarter, we launched a number of new collections that have performed very well, to name a few. The Wildflower Collection, a unique design collection that is inspired by a walk through a field of wildflowers. The Greenland Ruby Collection. These stunning and ethically mined rubies from Greenland adhere to sustainable practices and are traceable from mine to market. Virtue Gems, a new line that supports local economies and fair trade markets and extends our blockchain technology into gemstones. And the Decori exclusive collection, which we launched in January, has been very strongly received and is outperforming our expectations. Each of these collections reflect a curated and unique assortment in bridal, gemstones, and fine jewelry. As pleased as we are with consumers' responses to our new, beautiful products, We're equally gratified that Brilliant Earth's uncompromising, industry-leading ESG values are consistently recognized and treasured by our customers. As a data-driven company, you know that our ongoing investments in data and technology are critical contributors to our current and future growth. This quarter was no different as we launched enhancements to our digital shopping experience for fine jewelry. improving customer engagement and driving significant improvement in conversion. We also executed initiatives to enhance our client telling experiences, which enhanced our ability to personalize our service and support our customers through their shopping experience. Our ability to optimize data to refine and deepen insights to better serve our customers is a key driver to building our brand and growing lifetime value. As pleased as we are with our start to the year, our focus is forward. And as I said up front, we understand the importance of staying focused on what we can control in an uncertain global environment. While we have experienced more geopolitical and macroeconomic headwinds in recent weeks than we could have predicted, causing us to moderate our near-term growth outlook, you can expect that we will continue to prudently and strategically invest to grow the Brilliant Earth brand and business. to expand our showroom and omni-channel footprint, and to optimize our huge financial and operating advantage with our asset-light, agile, and highly efficient business model, all with an eye on delivering profitable and sustainable near and long-term growth and on extending our lead as a transformative, modern fine jeweler for today's consumer. We look forward to sharing our journey with you. Thank you. Here's Jess.