Brilliant Earth Group, Inc.

Good day and thank you for standing by. Welcome to the Brilliant Earth third quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Colin Borland, Vice President of Strategy, Business Development, and Investor Relations. Please go ahead.

Thank you and good afternoon, everyone. Welcome to Brilliant Earth's third quarter 2024 earnings conference call. My name is Colin Borland, Vice President of Strategy, Business Development, and Investor Relations. Joining me today are Beth Gerstein, our Chief Executive Officer, and Jeff Kuo, our 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 result 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's 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 afternoon, and thank you for joining us today. I'm happy to report that we continue to drive the progress of our strategic initiatives and delivered another quarter of profitability. This is our 13th consecutive quarter of profitability as a public company and something I continue to be very proud of. In Q3, we delivered net sales of $99.9 million, which was within our guidance range, and a 13% year-over-year decline. We continue to operate nimbly and efficiently, expanding gross margin 230 basis points year-over-year to 60.8%, driving marketing efficiency and effectiveness, and exceeded our profitability expectations for the quarter, delivering $3.6 million in adjusted EBITDA or a 3.6% adjusted EBITDA margin. As you all know, the engagement market continues to normalize, and our competitors are increasingly relying on promotions and discounts to encourage sales. Yet, we've remained steadfast in driving sustainable, profitable results, and protecting and strengthening our premium brand in this environment. We believe this balanced approach positions us to seize what we believe is enormous untapped potential for our business. While we have experienced expected softness in engagement ring sales, we've seen strong sales growth outside of engagement rings, including in both wedding and anniversary bands and fine jewelry. We believe the strength and demand is a strong reflection of consumers' desire for our high-quality, beautiful products and their affinity for our brand. It was a banner quarter for our brand. Even as we exceeded our profitability guidance, we continued to make long-term strategic investments in our brand. We launched a much-anticipated fine jewelry collection with Dr. Jane Goodall, which has been our most successful launch ever for a fine jewelry collection. Our partnership with Dr. Goodall is a reflection of the best of our company, beautiful, unique, and exclusive product, an authentic mission-aligned partnership, and a fully integrated, culturally resonant omnichannel campaign. In conjunction with the release of our Jane Goodall collection, we launched Rethink Everything You Know About Diamonds to share and amplify our industry-defining innovations and leadership in both natural and lab diamonds. This campaign highlights our nearly 20-year legacy of diamond leadership from our groundbreaking diamond collections to our transparent and responsible sourcing practices. Our mission to redefine ethical luxury and to inspire consumers to make impactful choices that reflect their values is resonating strongly with our customers. For the past several years, you've heard me talk about our commitment to investing in and building our premium brands. we're very pleased to see the strong progress we're making. Over the last two years, we've been growing our aided and unaided brand awareness, including outsized growth and awareness in our local markets where we have invested in expanding our physical footprint during the same period. In addition, over the same time period, we've grown earned media impressions by 38% and counting and grown impressions from our social media strategy by 375% and counting. We've also continued to expand upon our successful showroom strategy. Our showrooms continue to deliver compelling metro uplift, and we are thrilled to launch three new showrooms in time for the holiday season. During the quarter, we expanded our retail footprint with the opening of our second location in Boston. This new location at Chestnut Hill features a fine jewelry try-on bar with a destination-oriented, elevated design with an interactive experience. Today, we open our first New York City ground floor location in Nolita. And in the coming weeks, we will open our third Boston location at Seaport Village, bringing our total showroom footprint to 40 by year end. I encourage you to stop by when you are in the area. We are excited for the holiday season ahead of us. We'll be bringing the brand to life in a beautiful way across our digital channels and our showrooms, both of which have joyful holiday elements celebrating the season as part of our upcoming Be Together, Be Brilliant campaign. We continue to offer compelling items for both gifting and self-purchase with a curated, unique, and trend-forward assortment. Look out for our gift guides, which will feature some of my favorite pieces, including our Soul Collection, Diamond Essentials, Zodiac, and of course, the Jane Goodall Collection. So far this quarter, we are pleased to see sequential improvement in our bookings growth rate, including in engagement rings. We continue to have strong performance in our fine jewelry sales, including encouraging repeat purchase trends, which we see as a positive indicator going into the most important seasonal quarter for fine jewelry. The bulk of the holiday season still lies ahead of us, and our asset-light data-driven model positions us well to capture demand as it emerges. Before turning the call over to Jeff, I want to thank him and our entire team for their unrelenting commitment. The passion and persistence that our team demonstrates every day not only inspires me, it reinforces my confidence in our path ahead, which will continue to be focused on investing for profitable and sustainable growth in our business and our brand. I look forward to sharing our progress with you in the new year and wish everyone a happy holiday season. Here's Jeff.