QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company |
Page | |||||
March 31, | December 31, | ||||||||||
2024 | 2023 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Inventories, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Deferred tax assets | |||||||||||
Operating lease right of use assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders' equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Deferred revenue | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Current portion of long-term debt | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net of debt issuance costs | |||||||||||
Operating lease liabilities | |||||||||||
Payable pursuant to the Tax Receivable Agreement | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 10) | |||||||||||
Stockholders' equity | |||||||||||
Preferred stock, $ | |||||||||||
Class A common stock, $ | |||||||||||
Class B common stock, $ | |||||||||||
Class C common stock, $ | |||||||||||
Class D common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Treasury stock, at cost; | ( | ||||||||||
Retained earnings | |||||||||||
Stockholders' equity attributable to Brilliant Earth Group, Inc. | |||||||||||
Non-controlling interests attributable to Brilliant Earth, LLC | |||||||||||
Total stockholders' equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Net sales | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||
Gross profit | ||||||||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative | ||||||||||||||
Income (loss) from operations | ( | |||||||||||||
Interest expense | ( | ( | ||||||||||||
Other income, net | ||||||||||||||
Income (loss) before tax | ( | |||||||||||||
Income tax (expense) benefit | ( | |||||||||||||
Net income (loss) | ( | |||||||||||||
Net income (loss) allocable to non-controlling interest | ( | |||||||||||||
Net income (loss) allocable to Brilliant Earth Group, Inc. | $ | $ | ( | |||||||||||
Earnings per share: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||
Basic | ||||||||||||||
Diluted |
Brilliant Earth Group, Inc. Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Common Stock | Class C Common Stock | Non-Controlling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Additional Paid-In Capital | Treasury Stock | Retained Earnings | Stockholders' Equity | Units | Amounts | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax distributions to members | — | — | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Class B to Class A common stock | — | ( | — | — | — | — | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU vesting during period | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | — | — | — | — | — | ( | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class B shares issued upon vesting of LLC units | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in deferred tax asset and TRA liability related to redemption of LLC Units | — | — | — | — | — | — | ( | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rebalancing of controlling and non-controlling interest | — | — | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2024 | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brilliant Earth Group, Inc. Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Common Stock | Class C Common Stock | Non-Controlling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Additional Paid-In Capital | Retained Earnings | Stockholders' Equity | Units | Amounts | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax distributions to members | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Class B to Class A common stock | — | ( | — | — | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU vesting during period | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class B shares issued upon vesting of LLC units | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in deferred tax asset and TRA liability related to redemption of LLC Units | — | — | — | — | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | ( | ( | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rebalancing of controlling and non-controlling interest | — | — | — | — | — | — | ( | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Operating activities | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||||
Depreciation | |||||||||||
Equity-based compensation | |||||||||||
Non-cash operating lease cost | |||||||||||
Amortization of debt issuance costs | |||||||||||
Deferred tax expense (benefit) | ( | ||||||||||
Other | ( | ||||||||||
Changes in assets and liabilities: | |||||||||||
Inventories | ( | ||||||||||
Prepaid expenses and other current assets | |||||||||||
Other assets | ( | ( | |||||||||
Accounts payable, accrued expenses and other current liabilities | ( | ( | |||||||||
Deferred revenue | |||||||||||
Operating lease liabilities | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
Investing activities | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Payments on SVB term loan | ( | ( | |||||||||
Repurchases of common stock | ( | ||||||||||
Payment of debt issuance costs | ( | ||||||||||
Tax distributions to members | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
Reconciliation of cash, cash equivalents and restricted cash | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ | |||||||||
Non-cash investing and financing activities | |||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | |||||||||
Change in deferred tax assets associated with redemption of LLC Units | ( | ||||||||||
TRA Obligation associated with redemption of LLC Units | ( | ||||||||||
Purchases of property and equipment included in accounts payable and accrued liabilities | |||||||||||
Change in APIC related to redemption of LLC Units | ( | ||||||||||
Three Months Ended March 31, | ||||||||||||||
Numerator: | 2024 | 2023 | ||||||||||||
Net income (loss) attributable to Brilliant Earth Group, Inc., BASIC | $ | $ | ( | |||||||||||
Add: Net income (loss) impact from assumed redemption of all LLC Units to common stock | ( | |||||||||||||
(Less) add: Income tax (expense) benefit on net income (loss) attributable to NCI | ( | |||||||||||||
Net income (loss) attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED | $ | $ | ( | |||||||||||
Denominator: | ||||||||||||||
Weighted average shares of common stock outstanding, BASIC | ||||||||||||||
Dilutive effects of: | ||||||||||||||
Vested LLC Units that are exchangeable for common stock | ||||||||||||||
Unvested LLC Units that are exchangeable for common stock | ||||||||||||||
RSUs | ||||||||||||||
Weighted average shares of common stock outstanding, DILUTED | ||||||||||||||
BASIC earnings per share | $ | $ | ||||||||||||
DILUTED earnings per share | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
RSUs | ||||||||||||||
Stock options | ||||||||||||||
Vested LLC Units | ||||||||||||||
Unvested LLC Units |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
United States | $ | $ | ||||||||||||
International | ||||||||||||||
Total net sales | $ | $ |
March 31, | December 31, | ||||||||||
2024 | 2023 | ||||||||||
Loose diamonds | $ | $ | |||||||||
Fine jewelry and other | |||||||||||
Allowance for inventory obsolescence | ( | ( | |||||||||
Total inventories, net | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Balance at beginning of period | $ | ( | $ | ( | |||||||
Change in allowance for inventory obsolescence | ( | ||||||||||
Balance at end of period | $ | ( | $ | ( |
March 31, | December 31, | ||||||||||
2024 | 2023 | ||||||||||
Vendor expenses | $ | $ | |||||||||
Inventory received not billed | |||||||||||
Payroll expenses | |||||||||||
Sales and other tax payable | |||||||||||
Provision for sales returns and allowances | |||||||||||
Current portion of TRA | |||||||||||
Other | |||||||||||
Total accrued expenses and other current liabilities | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Balance at beginning of period | $ | $ | |||||||||
Provision | |||||||||||
Returns and allowances | ( | ( | |||||||||
Balance at end of period | $ | $ |
Three Months Ended March 31, | ||||||||||||||||||||
Classification | 2024 | 2023 | ||||||||||||||||||
Operating lease costs | Selling, general and administrative expense | $ | $ | |||||||||||||||||
Operating lease costs | Cost of sales | |||||||||||||||||||
Variable lease costs | Selling, general and administrative expense | |||||||||||||||||||
Variable lease costs | Cost of sales | |||||||||||||||||||
Total lease costs | $ | $ |
Amount | |||||
For the remainder of the year ending December 31, 2024 | $ | ||||
Years ending December 31, | |||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
2029 | |||||
Thereafter | |||||
Total minimum lease payments(1) | |||||
Less: imputed interest | ( | ||||
Net present value of operating lease liabilities | |||||
Less: current portion | ( | ||||
Long-term portion | $ |
March 31, | March 31, | |||||||||||||
2024 | 2023 | |||||||||||||
Weighted-average remaining lease term - operating leases | ||||||||||||||
Weighted-average discount rate - operating leases | % | % | ||||||||||||
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
Outstanding principal | Debt issuance costs | Net carrying amount | Outstanding principal | Debt issuance costs | Net carrying amount | ||||||||||||||||||||||||||||||
Current portion | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||||||||||||||
Long term | ( | ( | |||||||||||||||||||||||||||||||||
Total debt | $ | $ | ( | $ | $ | $ | ( | $ |
Principal | |||||
For the remainder of the year ending December 31, 2024 | $ | ||||
Years ending December 31, | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Total aggregate future principal payments | $ |
Number of RSUs | Weighted average grant date fair value | ||||||||||
Balance as of December 31, 2023, unvested | $ | ||||||||||
Granted | $ | ||||||||||
Vested | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Balance as of March 31, 2024, unvested | $ |
Number of options | Weighted average exercise price | Weighted average grant date fair value | Weighted average remaining contractual term (years) | ||||||||||||||||||||
Outstanding as of December 31, 2023 | $ | $ | |||||||||||||||||||||
Forfeited | ( | $ | $ | — | |||||||||||||||||||
Outstanding as of March 31, 2024 | $ | $ | |||||||||||||||||||||
Exercisable as of March 31, 2024 | $ | $ | |||||||||||||||||||||
Unvested as of March 31, 2024 | $ | $ | |||||||||||||||||||||
Vested and expected to vest as of March 31, 2024 | $ | $ |
Three months ended March 31, | |||||||||||||||||||||||||||||||||||
2024 | 2023 | Period change | |||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
Net sales | $ | 97,337 | 100.0 | % | $ | 97,698 | 100.0 | % | $ | (361) | (0.4) | % | |||||||||||||||||||||||
Cost of sales | 39,031 | 40.1 | % | 44,022 | 45.1 | % | (4,991) | (11.3) | % | ||||||||||||||||||||||||||
Gross profit | 58,306 | 59.9 | % | 53,676 | 54.9 | % | 4,630 | 8.6 | % | ||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||
Selling, general and administrative | 57,429 | 59.0 | % | 53,766 | 55.0 | % | 3,663 | 6.8 | % | ||||||||||||||||||||||||||
Income (loss) from operations | 877 | 0.9 | % | (90) | (0.1) | % | 967 | 1074.4 | % | ||||||||||||||||||||||||||
Interest expense | (1,214) | (1.2) | % | (1,206) | (1.2) | % | (8) | 0.7 | % | ||||||||||||||||||||||||||
Other income, net | 1,477 | 1.5 | % | 843 | 0.9 | % | 634 | 75.2 | % | ||||||||||||||||||||||||||
Income (loss) before tax | 1,140 | 1.2 | % | (453) | (0.5) | % | 1,593 | 351.7 | % | ||||||||||||||||||||||||||
Income tax (expense) benefit | (73) | (0.1) | % | 13 | — | % | (86) | (661.5) | % | ||||||||||||||||||||||||||
Net income (loss) | 1,067 | 1.1 | % | (440) | (0.5) | % | 1,507 | 342.5 | % | ||||||||||||||||||||||||||
Net income (loss) allocable to non-controlling interest | 928 | 1.0 | % | (388) | (0.4) | % | 1,316 | 339.2 | % | ||||||||||||||||||||||||||
Net income (loss) allocable to Brilliant Earth Group, Inc. | $ | 139 | 0.1 | % | $ | (52) | (0.1) | % | $ | 191 | 367.3 | % | |||||||||||||||||||||||
Amounts may not sum due to rounding |
Three Months Ended March 31, | ||||||||||||||||||||||||||
2024 | 2023 | Change | % Change | |||||||||||||||||||||||
Net Sales | $ | 97,337 | $ | 97,698 | (361) | (0.4) | % | |||||||||||||||||||
Total Orders | 40,525 | 35,631 | 4,894 | 13.7 | % | |||||||||||||||||||||
AOV | $ | 2,402 | $ | 2,742 | $ | (340) | (12.4) | % |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Net income (loss) | $ | 1,067 | $ | (440) | ||||||||||
Interest expense | 1,214 | 1,206 | ||||||||||||
Income tax expense (benefit) | 73 | (13) | ||||||||||||
Depreciation expense | 1,203 | 951 | ||||||||||||
Amortization of cloud-based software implementation costs | 205 | 124 | ||||||||||||
Showroom pre-opening expense | 213 | 1,772 | ||||||||||||
Equity-based compensation expense | 2,587 | 2,258 | ||||||||||||
Other income, net (1) | (1,477) | (843) | ||||||||||||
Transaction costs and other expense (2) | — | 532 | ||||||||||||
Adjusted EBITDA | $ | 5,085 | $ | 5,547 | ||||||||||
Net income (loss) margin | 1.1 | % | (0.5) | % | ||||||||||
Adjusted EBITDA margin | 5.2 | % | 5.7 | % |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Net cash used in operating activities | $ | (5,790) | $ | (1,982) | |||||||
Net cash used in investing activities | (562) | (4,414) | |||||||||
Net cash used in financing activities | (2,001) | (2,281) | |||||||||
Net decrease in cash, cash equivalents and restricted cash | (8,353) | (8,677) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 156,020 | 154,854 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 147,667 | $ | 146,177 |
Period | Total Number of Shares Purchased | Average Price Paid per share | Total Number of shares Purchased as Part of Publicly Announced Plans or Programs1 | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||||||||||||
January 1 - January 31 | — | — | — | $20.0 million | ||||||||||||||||||||||
February 1 - February 29 | — | — | — | $20.0 million | ||||||||||||||||||||||
March 1 - March 31 | 32,371 | $ | 3.06 | 32,371 | $19.9 million |
Incorporated by Reference | Filed / Furnished Herewith | |||||||||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | |||||||||||||||
3.1 | 8-K | 001-40836 | 3.1 | 9/27/2021 | ||||||||||||||||
3.2 | 8-K | 001-40836 | 3.2 | 9/27/2021 | ||||||||||||||||
4.1 | S-1/A | 001-40836 | 4.1 | 9/14/2021 | ||||||||||||||||
10.1†+ | 10-K | 001-40836 | 10.15 | 3/28/2024 | ||||||||||||||||
31.1 | * | |||||||||||||||||||
31.2 | * | |||||||||||||||||||
32.1 | ** | |||||||||||||||||||
32.2 | ** | |||||||||||||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | * | ||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | * | ||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | * | ||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | * | ||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | * | ||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | * | ||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * | ||||||||||||||||||
* | Filed herewith. | |||||||||||||||||||
** | Furnished herewith. | |||||||||||||||||||
† | Schedules and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(a)(5). Brilliant Earth agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. | |||||||||||||||||||
+ | Certain portions of this exhibit (indicated by “[****]”) have been redacted pursuant to Regulation S-K Item 601(b)(10)(iv) because such information is (i) not material and (ii) is the type of information that the Company both customarily and actually treats as private and confidential. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Statement [Abstract] | ||
Net sales | $ 97,337 | $ 97,698 |
Cost of sales | 39,031 | 44,022 |
Gross profit | 58,306 | 53,676 |
Operating expenses: | ||
Selling, general and administrative | 57,429 | 53,766 |
Income (loss) from operations | 877 | (90) |
Interest expense | (1,214) | (1,206) |
Other income, net | 1,477 | 843 |
Income (loss) before tax | 1,140 | (453) |
Income tax (expense) benefit | (73) | 13 |
Net income (loss) | 1,067 | (440) |
Net income (loss) allocable to non-controlling interest | 928 | (388) |
Net income (loss) allocable to Brilliant Earth Group, Inc. | $ 139 | $ (52) |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.01 | $ 0.00 |
Diluted (in dollars per share) | $ 0.01 | $ 0.00 |
Weighted average shares of common stock outstanding: | ||
Basic (in shares) | 12,736,014 | 11,387,936 |
Diluted (in shares) | 97,850,288 | 11,387,936 |
Description of Business and Summary of Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Brilliant Earth Group, Inc. was formed as a Delaware corporation on June 2, 2021 for the purpose of facilitating an initial public offering ("IPO") and executing other related organizational transactions to acquire and carry on the business of Brilliant Earth, LLC. Brilliant Earth, LLC was originally incorporated in Delaware on August 25, 2005, and subsequently converted to a limited liability company on November 29, 2012. Brilliant Earth Group, Inc., the sole managing member of Brilliant Earth, LLC, consolidates Brilliant Earth, LLC and both are collectively referred to herein as the "Company". The Company designs, procures and sells ethically sourced diamonds, gemstones and jewelry online and through showrooms operating within the United States ("U.S."). Co-headquarters are located in San Francisco, California and Denver, Colorado. Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP" or "GAAP") and the requirements of the Securities and Exchange Commission (the "SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2024, or for any other interim period or for any other future year. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements of the Company, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2023, as disclosed in the 2023 Form 10-K. There have been no material changes or updates to the Company's significant accounting policies from those described in the audited consolidated financial statements included in the 2023 Form 10-K except for the updates noted below. Principles of Consolidation and Non-Controlling Interest The unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiary, Brilliant Earth, LLC. All intercompany balances and transactions have been eliminated in consolidation. The non-controlling interest on the unaudited condensed consolidated statements of operations represents the portion of earnings or loss attributable to the economic interest in Brilliant Earth, LLC held by the Continuing Equity Owners. The non-controlling interest on the unaudited condensed consolidated balance sheets represents the portion of net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders. As of March 31, 2024, the non-controlling interest was 86.7%. At the end of each reporting period, equity related to Brilliant Earth, LLC that is attributable to Brilliant Earth Group, Inc. and the Continuing Equity Owners is rebalanced to reflect Brilliant Earth Group, Inc.'s and the Continuing Equity Owners' ownership in Brilliant Earth, LLC. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Some of the more significant estimates include inventory valuation, allowance for sales returns, estimates of current and deferred income taxes payable pursuant to the TRA, useful lives and depreciation of long-lived assets. Actual results could differ materially from those estimates. On an ongoing basis, the Company reviews its estimates to ensure that they appropriately reflect changes in its business or new information available. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. U.S. GAAP prescribes three levels of inputs that may be used to measure fair value: Level 1 Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Level 2 Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from, or corroborated by, observable market data by correlation or other means. Level 3 Valuation techniques with significant unobservable market inputs. The Company is required to disclose its estimate of the fair value of material financial instruments, including those recorded as assets or liabilities in its financial statements, in accordance with U.S. GAAP. At March 31, 2024 and December 31, 2023, there were no financial instruments (assets or liabilities) measured at fair value on a recurring basis. The carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities and were classified as Level 1. The carrying value of long-term debt, net of debt issuance costs, also approximates its fair value, which has been estimated by management based on the consideration of applicable interest rates (including certain instruments at variable or floating rates) for similar types of borrowing arrangements and were classified as Level 2. Marketing Expenses Marketing, advertising and promotional costs are generally expensed as incurred, except for certain production costs that are expensed the first time the advertising takes place. During the three months ended March 31, 2024 and 2023, the Company recorded marketing, advertising and promotional costs of $23.2 million and $22.8 million, respectively. Recent Accounting Pronouncements Accounting Pronouncements Issued but Not Yet Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new standard requires enhanced disclosures about significant segment expenses and other segment items and requires companies to provide all annual disclosures about segments in interim periods. All disclosure requirements are also required for public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on the Company's consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update are intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's consolidated financial statements and related disclosures.
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Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share is computed by dividing net income (loss) applicable to Brilliant Earth Group, Inc. by the weighted average shares of Class A common stock outstanding (and Class D common stock, if outstanding) during the period. Diluted earnings per share is computed by adjusting the net income (loss) available to Brilliant Earth Group, Inc. and the weighted average shares outstanding to give effect to potentially dilutive securities. Shares of Class B and Class C common stock are not entitled to receive any distributions or dividends and are therefore excluded from this presentation since they are not participating securities. Basic and diluted earnings per share of common stock for the three months ended March 31, 2024 and 2023 have been computed as follows (in thousands, except share and per share amounts):
Net income (loss) attributable to the non-controlling interest is added back to net income (loss) in the fully dilutive computation and has been adjusted for income taxes which would have been (expensed) benefited had the income (loss) been recognized by Brilliant Earth Group, Inc., a taxable entity. The weighted average common shares outstanding in the diluted computation per share assumes all outstanding LLC Units are converted and the Company will elect to issue shares of common stock upon redemption rather than cash-settle. For the three months ended March 31, 2024 and 2023, the dilutive impact of LLC Units convertible into common stock were included in the computation of diluted earnings per share under the if-converted method, except when the effect would be anti-dilutive. The dilutive impact of unvested LLC Units and RSUs were included using the treasury stock method. The following table presents potentially dilutive securities that have been excluded from the computations of earnings per share because such impact would have been anti-dilutive for three months ended March 31, 2024 and 2023:
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | REVENUE Disaggregation of Revenue The following table discloses total net sales by geography for the three months ended March 31, 2024 and 2023 (in thousands):
Contract Balances Transactions where payment has been received from customers, but control has not transferred, are recorded as customer deposits in deferred revenue and revenue recognition is deferred until delivery has occurred. Deferred revenue also includes payments on the Company's three-year extended service plan that customers have elected to purchase. As of March 31, 2024, December 31, 2023, and December 31, 2022, total deferred revenue that includes our contract balances was $22.8 million, $19.6 million, and $18.6 million, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized $16.2 million and $17.4 million, respectively, of revenue that was deferred as of December 31, 2023 and December 31, 2022, respectively. Sales Returns and Allowances A returns asset account and a refund liabilities account are maintained to record the effects of estimated product returns and sales returns allowance. Returns asset and refund liabilities are updated at the end of each financial reporting period and the effect of such changes are accounted for in the period in which such changes occur. The Company estimates anticipated product returns in the form of a refund liability based on historical return percentages and current period sales levels and accrues a related returns asset for goods expected to be returned in salable condition less any expected costs to recover such goods, including return shipping costs that the Company may incur. As of March 31, 2024 and December 31, 2023, refund liabilities balances were $1.5 million and $2.4 million, respectively, and are included as a provision for sales returns and allowances within accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets. As of March 31, 2024 and December 31, 2023, returns asset balances were $0.5 million and $1.0 million, respectively, and are included within prepaid expenses and other current assets in the unaudited condensed consolidated balance sheets.
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Inventories, Net |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, Net | INVENTORIES, NET Inventories, net consist of the following (in thousands):
The allowance for inventory obsolescence consists of the following (in thousands):
As of March 31, 2024 and December 31, 2023, the Company had $21.1 million and $24.8 million, respectively, in consigned inventory held on behalf of suppliers which is not recorded in the unaudited condensed consolidated balance sheets.
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Accrued Expenses and Other Current Liabilities |
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Accrued Expenses and Other Current Liabilities | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands):
Included in accrued expenses and other current liabilities is a provision for sales returns and allowances. Returns are estimated based on past experience and current expectations and are recorded as an adjustment to revenue. Activity for the three months ended March 31, 2024 and 2023, was as follows (in thousands):
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Leases |
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Leases | LEASES The Company leases its executive offices, retail showrooms, office and operational locations under operating leases. The fixed, non-cancelable terms of our real estate leases are generally 5-10 years. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments. Most of the real estate leases require payment of real estate taxes, insurance and certain common area maintenance costs in addition to future minimum lease payments. Total operating lease costs were as follows (in thousands):
The maturity analysis of the operating lease liabilities as of March 31, 2024 was as follows (in thousands):
(1) Future minimum lease payments exclude $4.6 million of future payments required under signed lease agreements that has not yet commenced. These operating leases will commence after March 31, 2024 with a lease term of to seven years. The weighted-average remaining lease term and weighted-average discount rate on long-term leases was as follows:
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Debt |
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Debt | DEBT The following table summarizes the net carrying amount of the Company's outstanding debt as of March 31, 2024 and December 31, 2023, net of debt issuance costs (in thousands):
Credit Agreement - Silicon Valley Bank On May 24, 2022, Brilliant Earth, LLC, as borrower, and Silicon Valley Bank ("SVB"), as administrative agent and collateral agent for the lenders, entered into a credit agreement (the "SVB Credit Agreement") which provides for a secured term loan credit facility of $65.0 million (the "SVB Term Loan") and a secured revolving credit facility in an amount of up to $40.0 million (the "SVB Revolving Facility," and together with the SVB Term Loan, the "SVB Credit Facilities"). The SVB Credit Facilities are subject to customary affirmative covenants and negative covenants as well as financial maintenance covenants. The financial covenants are tested at the end of each fiscal quarter, and require that (a) the Company and its subsidiaries not have a Consolidated Fixed Charge Coverage Ratio (defined as the ratio of (i) Consolidated EBITDA, less cash taxes (including tax distributions), less certain capital expenditures, less cash dividends and other cash restricted payments, to (ii) the sum of cash interest expense and scheduled principal payments on outstanding debt (in each case, as further defined in the SVB Credit Agreement)) of less than 1.25 to 1.00, (b) the Company and its subsidiaries not have a Consolidated Total Leverage Ratio of more than 4.00 to 1.00, and (c) Brilliant Earth, LLC and its subsidiaries not have a Consolidated Borrower Leverage Ratio (defined substantially similar as Consolidated Total Leverage Ratio, but limited to Brilliant Earth, LLC and its subsidiaries) in excess of 3.00 to 1.00 (which level is subject to temporary increases to 4.00 to 1.00 in connection with certain acquisitions). On February 21, 2024, we entered into the First Amendment to the SVB Credit Agreement (the "First Amendment"), pursuant to which the lenders agreed to suspend the requirement to comply with the Consolidated Fixed Charge Coverage Ratio covenant on the last day of the fiscal quarters ending December 31, 2023, March 31, 2024, and June 30, 2024. The First Amendment also requires us to maintain Balance Sheet Cash (defined as unrestricted cash and cash equivalents held in accounts with the lenders and their affiliates ) in an amount greater than the sum of the aggregate principal amount outstanding under the SVB Revolving Facility (including issued letters of credit) and the aggregate principal amount of the SVB Term Loan outstanding at such time, which requirement applies at all times commencing on February 21, 2024 until the last day of the fiscal quarter ending June 30, 2024. After such time, the minimum Balance Sheet Cash covenant no longer applies. As of March 31, 2024, the Company was in compliance with all applicable covenants under the SVB Credit Agreement. The Company's debt effective interest rate was 8.10% and 7.72% for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there were no amounts outstanding under the SVB Revolving Facility. As of March 31, 2024, the aggregate future principal payments under the SVB Term Loan were as follows (in thousands):
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Equity-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation | EQUITY-BASED COMPENSATION Grants of Restricted Stock Units The following table summarizes the activity related to the Company's restricted stock units ("RSUs") for the three months ended March 31, 2024:
Total compensation expense for RSUs was $2.4 million and $2.0 million for three months ended March 31, 2024 and 2023 respectively, and is included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. As of March 31, 2024, total compensation cost related to unvested RSUs not yet recognized is $22.6 million and is expected to be recognized over a weighted-average period of approximately 2.6 years. Grants of Stock Options The following table summarizes the activity related to the outstanding and exercisable stock options for the three months ended March 31, 2024:
As of March 31, 2024, the vested stock options did not have an aggregated intrinsic value as the exercise price exceeded the estimated fair market value of the stock options. Total compensation expense for stock options was approximately $0.2 million and $0.2 million, for the three months ended March 31, 2024 and 2023 respectively, and is included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. As of March 31, 2024, total compensation cost related to unvested options not yet recognized is $0.6 million and is expected to be recognized over a weighted-average period of approximately 1.0 year.
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Income Taxes and Tax Receivable Agreement |
3 Months Ended |
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Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes and Tax Receivable Agreement | INCOME TAXES AND TAX RECEIVABLE AGREEMENT Overview of Income Taxes Brilliant Earth Group, Inc. is taxed as a subchapter C corporation and is subject to federal and state income taxes. Brilliant Earth Group, Inc.'s sole material asset is its ownership interest in Brilliant Earth, LLC, which is a limited liability company that is taxed as a partnership for U.S. federal and certain state and local income tax purposes. Brilliant Earth, LLC's net taxable income or loss and related tax credits, if any, are passed through to its members on a pro-rata basis and included in the member's tax returns. The income tax burden on the earnings taxed to the non-controlling interest holders is not reported by the Company in its unaudited condensed consolidated financial statements under U.S. GAAP. The Company files U.S. federal and certain state income tax returns. The income tax returns of the Company are subject to examination by U.S. federal and state taxing authorities for various time periods, depending on those jurisdictions' rules, generally after the income tax returns are filed. Tax Provision and Deferred Tax Asset At the end of each interim period, Brilliant Earth Group, Inc. estimates the effective tax rate expected to be applicable for the full fiscal year. This differs from the method utilized at the end of an annual period. The Company's effective tax rate of 6.40% for the three months ended March 31, 2024, differs from the U.S. federal statutory tax rate of 21% primarily due to income associated with the non-controlling interest, state tax expense and other permanent items. The Company recorded net decreases in deferred tax assets of $0.3 million during the three months ended March 31, 2024, with a corresponding decrease to additional paid in capital, resulting from changes in the outside basis difference on Brilliant Earth Group Inc.'s investment in Brilliant Earth, LLC. The Company has determined it is more-likely-than-not that it will be able to realize this deferred tax asset in the future. Tax Receivable Agreement As each of the Continuing Equity Owners elect to convert their LLC Interests into Class A common stock or Class D common stock, as applicable, Brilliant Earth Group, Inc. will succeed to their aggregate historical tax basis which will create a net tax benefit to the Company. These tax benefits are expected to be amortized over 15 years pursuant to Sections 743(b) and 197 of the Code. The Company will only recognize a deferred tax asset for financial reporting purposes when it is "more-likely-than-not" that the tax benefit will be realized. In addition, as part of the IPO, the Company entered into a the TRA with the Continuing Equity Owners to pay 85% of the tax savings from the tax basis adjustment to them as such savings are realized. Amounts payable under the TRA are contingent upon, among other things, generation of sufficient future taxable income during the term of the TRA. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the TRA will be estimated at the time of any purchase or redemption as a reduction to shareholders' equity, and the effects of changes in any of our estimates after this date will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. As of March 31, 2024, related to the TRA, the Company has recorded (i) a deferred tax asset in the amount of $8.6 million, (ii) a corresponding estimated liability with a balance of $8.0 million representing 85% of the projected tax benefits to the Continuing Equity Owners; and (iii) $0.6 million of additional paid-in capital.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Legal Proceedings In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes or claims. In addition, the Company is regularly audited by various tax authorities. Although the Company cannot predict with assurance the outcome of any litigation or audit, it does not believe there are currently any such actions that, if resolved unfavorably, would have a material impact on the Company's financial condition, results of operations or cash flows. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, to the extent possible, the Company discloses the range of such reasonably possible losses. On December 5, 2022, plaintiff Veronica Cusimano, a former employee of the Company, filed a representative action against the Company pursuant to the Private Attorneys General Act of 2004 in California Superior Court, Los Angeles County. The complaint alleges, on behalf of the plaintiff and similarly situated employees and former employees in California, various claims under the California Labor Code related to wages, overtime, meal and rest breaks, reimbursement of business expenses, wage statements and records, and other similar allegations. The plaintiff seeks civil penalties, attorneys' fees and costs in unspecified amounts, and other unspecified damages. On February 10, 2023, the Company filed a petition to compel arbitration on the basis of an agreement between the plaintiff and the Company to arbitrate any claims between them. On April 28, 2023, the petition was denied. The Company intends to vigorously defend the alleged individual and representative claims, and, on May 9, 2023, the Company appealed the Superior Court's denial of its petition to compel arbitration to the California Court of Appeal, Second Appellate District, and the appeal remains pending as of the date of this Quarterly Report on Form 10-Q. At this time, any liability related to the alleged claims is not currently probable or reasonably estimable.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 139 | $ (52) |
Insider Trading Arrangements |
3 Months Ended |
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Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Description of Business and Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP" or "GAAP") and the requirements of the Securities and Exchange Commission (the "SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2024, or for any other interim period or for any other future year. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements of the Company, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2023, as disclosed in the 2023 Form 10-K.
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Principles of Consolidation and Non-Controlling Interest | The unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiary, Brilliant Earth, LLC. All intercompany balances and transactions have been eliminated in consolidation. The non-controlling interest on the unaudited condensed consolidated statements of operations represents the portion of earnings or loss attributable to the economic interest in Brilliant Earth, LLC held by the Continuing Equity Owners. The non-controlling interest on the unaudited condensed consolidated balance sheets represents the portion of net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders.
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Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Some of the more significant estimates include inventory valuation, allowance for sales returns, estimates of current and deferred income taxes payable pursuant to the TRA, useful lives and depreciation of long-lived assets. Actual results could differ materially from those estimates. On an ongoing basis, the Company reviews its estimates to ensure that they appropriately reflect changes in its business or new information available.
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Fair Value Measurements | Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. U.S. GAAP prescribes three levels of inputs that may be used to measure fair value: Level 1 Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Level 2 Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from, or corroborated by, observable market data by correlation or other means. Level 3 Valuation techniques with significant unobservable market inputs. The Company is required to disclose its estimate of the fair value of material financial instruments, including those recorded as assets or liabilities in its financial statements, in accordance with U.S. GAAP. At March 31, 2024 and December 31, 2023, there were no financial instruments (assets or liabilities) measured at fair value on a recurring basis. The carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities and were classified as Level 1. The carrying value of long-term debt, net of debt issuance costs, also approximates its fair value, which has been estimated by management based on the consideration of applicable interest rates (including certain instruments at variable or floating rates) for similar types of borrowing arrangements and were classified as Level 2.
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Marketing Expenses | Marketing Expenses Marketing, advertising and promotional costs are generally expensed as incurred, except for certain production costs that are expensed the first time the advertising takes place. During the three months ended March 31, 2024 and 2023, the Company recorded marketing, advertising and promotional costs of $23.2 million and $22.8 million, respectively.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Issued but Not Yet Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new standard requires enhanced disclosures about significant segment expenses and other segment items and requires companies to provide all annual disclosures about segments in interim periods. All disclosure requirements are also required for public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on the Company's consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update are intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's consolidated financial statements and related disclosures.
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Earnings Per Share (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share of common stock for the three months ended March 31, 2024 and 2023 have been computed as follows (in thousands, except share and per share amounts):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents potentially dilutive securities that have been excluded from the computations of earnings per share because such impact would have been anti-dilutive for three months ended March 31, 2024 and 2023:
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Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table discloses total net sales by geography for the three months ended March 31, 2024 and 2023 (in thousands):
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Inventories, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories, Net | Inventories, net consist of the following (in thousands):
The allowance for inventory obsolescence consists of the following (in thousands):
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Accrued Expenses and Other Current Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses and other current liabilities consist of the following (in thousands):
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Schedule of Accrued Expenses And Other Current Liabilities Provision For Sales Returns | Activity for the three months ended March 31, 2024 and 2023, was as follows (in thousands):
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Lease Information | Total operating lease costs were as follows (in thousands):
The weighted-average remaining lease term and weighted-average discount rate on long-term leases was as follows:
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Schedule of Future Minimum Lease Payments Under Long-term Non-cancelable Operating Leases | The maturity analysis of the operating lease liabilities as of March 31, 2024 was as follows (in thousands):
(1) Future minimum lease payments exclude $4.6 million of future payments required under signed lease agreements that has not yet commenced. These operating leases will commence after March 31, 2024 with a lease term of to seven years.
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The following table summarizes the net carrying amount of the Company's outstanding debt as of March 31, 2024 and December 31, 2023, net of debt issuance costs (in thousands):
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Schedule of Maturities of Long-term Debt | As of March 31, 2024, the aggregate future principal payments under the SVB Term Loan were as follows (in thousands):
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Equity-Based Compensation (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Share Activity | The following table summarizes the activity related to the Company's restricted stock units ("RSUs") for the three months ended March 31, 2024:
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Schedule of Stock Options Roll Forward | The following table summarizes the activity related to the outstanding and exercisable stock options for the three months ended March 31, 2024:
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Schedule of Activity Related to the Unvested LLC Units |
Description of Business and Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Noncontrolling Interest [Line Items] | ||
Marketing, advertising and promotional costs | $ 23.2 | $ 22.8 |
Brilliant Earth, LLC | ||
Noncontrolling Interest [Line Items] | ||
Noncontrolling interest, ownership percentage | 86.70% |
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 97,337 | $ 97,698 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 93,653 | 92,615 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 3,684 | $ 5,083 |
Revenue - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
Dec. 31, 2022 |
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Revenue from Contract with Customer [Abstract] | ||||
Extended service plan period | 3 years | |||
Deferred revenue | $ 22,800 | $ 19,600 | $ 18,600 | |
Revenue recognized | 16,200 | $ 17,400 | ||
Provision for sales returns and allowances | 1,487 | $ 1,520 | 2,449 | $ 2,332 |
Refund assets | $ 500 | $ 1,000 |
Inventories, Net - Schedule of Inventories, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Inventory [Line Items] | ||||
Allowance for inventory obsolescence | $ (289) | $ (355) | $ (371) | $ (307) |
Total inventories, net | 38,905 | 37,788 | ||
Loose diamonds | ||||
Inventory [Line Items] | ||||
Inventory, gross | 7,490 | 8,168 | ||
Fine jewelry and other | ||||
Inventory [Line Items] | ||||
Inventory, gross | $ 31,704 | $ 29,975 |
Inventories, Net - Allowance for Inventory Obsolescence (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Inventory Valuation Reserves [Roll Forward] | ||
Balance at beginning of period | $ (355) | $ (307) |
Change in allowance for inventory obsolescence | 66 | (64) |
Balance at end of period | $ (289) | $ (371) |
Inventories, Net - Narratives (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Consigned inventory | $ 21.1 | $ 24.8 |
Accrued Expenses and Other Current Liabilities - Accrued Expenses And Other Current Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Payables and Accruals [Abstract] | ||||
Vendor expenses | $ 11,406 | $ 12,400 | ||
Inventory received not billed | 10,333 | 12,686 | ||
Payroll expenses | 3,107 | 6,027 | ||
Sales and other tax payable | 2,564 | 4,040 | ||
Provision for sales returns and allowances | 1,487 | 2,449 | $ 1,520 | $ 2,332 |
Current portion of TRA | 0 | 186 | ||
Other | 4,702 | 6,036 | ||
Total accrued expenses and other current liabilities | $ 33,599 | $ 43,824 |
Accrued Expenses and Other Current Liabilities - Accrued Expenses and Other Current Liabilities is a Provision For Sales Returns (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Contract with Customer, Refund Liability [Roll Forward] | ||
Balance at beginning of period | $ 2,449 | $ 2,332 |
Provision | 5,942 | 5,110 |
Returns and allowances | (6,904) | (5,922) |
Balance at end of period | $ 1,487 | $ 1,520 |
Leases - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Lessee, Lease, Description [Line Items] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 1,900 | $ 1,300 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Term of contracts | 5 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Term of contracts | 10 years |
Leases - Total Operating Lease Right-of-Use Assets and Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Lessee, Lease, Description [Line Items] | ||
Total lease costs | $ 2,286 | $ 1,818 |
Selling, general and administrative expense | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease costs | 1,855 | 1,553 |
Variable lease costs | 329 | 265 |
Cost of sales | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease costs | 68 | 0 |
Variable lease costs | $ 34 | $ 0 |
Leases - Future Minimum Lease Payments Under Long-term Non-cancelable Operating Leases (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Lessee, Lease, Description [Line Items] | ||
For the remainder of the year ending December 31, 2024 | $ 5,462 | |
2025 | 8,472 | |
2026 | 8,249 | |
2027 | 6,896 | |
2028 | 5,897 | |
2029 | 5,054 | |
Thereafter | 12,273 | |
Total minimum lease payments | 52,303 | |
Less: imputed interest | (9,669) | |
Net present value of operating lease liabilities | 42,634 | |
Less: current portion | (5,372) | $ (4,993) |
Long-term portion | 37,262 | $ 35,572 |
Amount of operating leases not yet commenced | $ 4,600 | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, lease not yet commenced, term of contract | 7 years | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, lease not yet commenced, term of contract | 5 years |
Leases - Weighted Average Remaining Lease Term and Weighted Average Discount Rate (Details) |
Mar. 31, 2024 |
Mar. 31, 2023 |
---|---|---|
Leases [Abstract] | ||
Weighted-average remaining lease term - operating leases | 7 years | 7 years 6 months |
Weighted-average discount rate - operating leases | 5.60% | 4.50% |
Debt - Term Loan (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Debt Disclosure [Abstract] | ||
Outstanding principal | $ 59,313 | $ 60,126 |
Debt issuance costs | (507) | (490) |
Net carrying amount | 58,806 | 59,636 |
Current portion | 4,469 | 4,063 |
Long term outstanding principal | 54,844 | 56,063 |
Long term net carrying amount | $ 54,337 | $ 55,573 |
Debt - Narrative (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024
USD ($)
|
Mar. 31, 2023 |
May 24, 2022
USD ($)
|
|
Silicon Valley Bank Credit Agreement | |||
Debt Instrument [Line Items] | |||
Amount outstanding | $ 0 | ||
Secured Debt | Silicon Valley Bank Credit Agreement | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 65,000,000 | ||
Fixed charge coverage ratio | 1.25 | ||
Consolidated rotal leverage ratio | 4 | ||
Consolidated borrower leverage ratio | 3 | ||
Secured Debt | Term Loan Agreement | |||
Debt Instrument [Line Items] | |||
Interest rate during period | 8.10% | 7.72% | |
Line of Credit | Silicon Valley Bank Credit Agreement | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 40,000,000 |
Debt - Debt Maturity (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Debt Disclosure [Abstract] | ||
For the remainder of the year ending December 31, 2024 | $ 3,250 | |
2025 | 5,688 | |
2026 | 6,500 | |
2027 | 43,875 | |
Outstanding principal | $ 59,313 | $ 60,126 |
Equity-Based Compensation - RSU Activity (Details) - RSUs |
3 Months Ended |
---|---|
Mar. 31, 2024
$ / shares
shares
| |
Number of RSUs | |
Unvested, beginning balance (in shares) | shares | 3,942,052 |
Grants in period (in shares) | shares | 1,468,413 |
Vested (in shares) | shares | (506,264) |
Forfeited (in shares) | shares | (52,726) |
Unvested, ending balance (in shares) | shares | 4,851,475 |
Weighted average grant date fair value | |
Unvested beginning balance (in dollars per share) | $ / shares | $ 6.10 |
Granted (in dollars per share) | $ / shares | 2.89 |
Vested (in dollars per share) | $ / shares | 6.41 |
Forfeited (in dollars per share) | $ / shares | 7.00 |
Unvested ending balance (in dollars per share) | $ / shares | $ 5.09 |
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 2.4 | $ 2.0 |
Unamortized compensation cost | $ 22.6 | |
Cost not yet recognized, period for recognition | 2 years 7 months 6 days | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 0.2 | $ 0.2 |
Cost not yet recognized, period for recognition | 1 year | |
Option, cost not yet recognized | $ 0.6 |
Income Taxes and Tax Receivable Agreement - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Effective income tax rate | 6.40% |
Changes in outside basis difference | $ (0.3) |
Tax benefit distributions to noncontrolling interest holders, percent | 85.00% |
Deferred tax assets | $ 8.6 |
Tax receivable agreement liability | 8.0 |
Tax receivable agreement, recognition in additional-paid-in-capital | $ 0.6 |
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