Brilliant Earth 2025 Q1 Earnings Net Income Declines 406%

Brilliant Earth (BRLT) reported its fiscal 2025 Q1 earnings on May 13th, 2025. The company experienced a net income decline of 406.2% year-over-year, resulting in a GAAP net loss of $3.3 million. Despite the revenue shortfall, total orders grew by 12% year-over-year, indicating potential consumer interest. Guidance for Q2 suggests net sales to remain flat or decline by 3% year-over-year, with adjusted EBITDA projected between a loss of $1.5 million and a profit of $2 million. Investors should note the cautious outlook for the upcoming quarter.

Revenue
Total revenue for Brilliant Earth decreased by 3.5% to $93.88 million in Q1 2025, compared to $97.34 million in Q1 2024.

Earnings/Net Income
Brilliant Earth reported a net loss of $0.03 per share in Q1 2025, down from a profit of $0.01 per share in Q1 2024. The company's net loss of $3.27 million marks a significant deterioration from the previous year's net income of $1.07 million. The earnings report highlights a challenging financial period for the company.

Post-Earnings Price Action Review
The strategy of purchasing Brilliant Earth (BRLT) shares following a revenue miss, with the intention of holding for 30 days, remains speculative. This approach is predicated on the belief that the market may have overreacted to the revenue shortfall, potentially causing a short-term rebound in stock price. Nonetheless, this tactic carries substantial risk given the current fundamental and technical indicators. Brilliant Earth has faced a year-to-date decline of 29% and a 43% decrease over the past year, casting doubt on its competitive standing and sales growth potential. Although the company has maintained profitability for 15 consecutive quarters and boasts a robust gross margin of 58.6%, the recent 3.5% drop in net sales is concerning. The stock's volatility, trading near its 52-week low, coupled with rising customer acquisition costs, suggests ongoing challenges. Additionally, the ethical jewelry market's projected CAGR of 8-9% over the next eight years may not counteract the short-term negative sentiment impacting Brilliant Earth's stock. Investors should exercise caution, considering the potential for continued declines before adopting this investment strategy.

CEO Commentary
Beth Gerstein, CEO of Brilliant Earth, expressed satisfaction with the company's performance, noting that it marked the 15th consecutive quarter of profitability since going public. She highlighted a 12% year-over-year growth in total orders and a 13% increase in repeat orders, underscoring strong customer retention. Gerstein pointed out the successful Valentine's Day campaign, which contributed to record bookings, particularly in the fine jewelry segment. She emphasized the company's agility in responding to market dynamics and reaffirmed confidence in their premium brand positioning and differentiated products, while maintaining a focus on sustainable growth and expanding their showroom footprint.

Guidance
For the second quarter of 2025, Brilliant Earth expects net sales to decline between 3% and remain flat year-over-year, with adjusted EBITDA projected between a loss of $1.5 million and a profit of $2 million. For the full year, the company anticipates revenue growth of 1% to 3%, with an adjusted EBITDA margin of 3% to 4%.

Additional News
Brilliant Earth announced its participation in the B. Riley Securities 25th Annual Investor Conference, scheduled for May 21-22, 2025, at the Ritz-Carlton in Marina Del Rey, California. The company's management team will engage in meetings with investors during the event. Additionally, Brilliant Earth recently unveiled its Fourth Annual Mission Report, celebrating its 20th anniversary with significant achievements in sustainability and transparency. The company launched the Jane Goodall Collection, featuring repurposed gold and innovative CO2-captured lab diamonds, with proceeds supporting conservation efforts. Furthermore, Brilliant Earth expanded its retail reach with a new showroom in the Dallas-Fort Worth metro area, increasing its total showrooms to 41 across the United States.