Brilliant Earth’s Earnings Call Contradictions: Order Growth Discrepancy and EBITDA Timing Shift

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $150 million, up 6% year-over-year
• Gross Margin: 57.9%, up approximately 360 basis points sequentially

Guidance:

• Full-year net sales expected in the range of $459 billion to $462 million.
• Full-year adjusted EBITDA guidance raised to $13 to $15 million.
• Gross margin expected to be in the mid to high 50s for the second half of the year, similar to Q2 and Q3 levels.
• Q3 net sales expected to be about flat year-over-year.
• Q3 adjusted EBITDA expected to be $3 to $5 million.
• Expect year-over-year leverage in marketing, adjusted employee, and adjusted other G&A expenses.

Business Commentary:

Strong Financial Performance and Strategic Execution:

• Brilliant Earth reported Q2 net sales of $150 million, up 6% year-over-year, exceeding guidance expectations.
• The growth was driven by disciplined execution of their growth strategy, strong average selling prices (ASPs), and a focus on higher-income consumers.

Gross Margin Improvement and Operational Leverage:

• The company achieved a gross margin of 57.9%, a 360 basis points sequential improvement from Q1.
• This improvement was attributed to agile execution on operations, thoughtful product design, vendor procurement efficiencies, and dynamic pricing strategies.

Increased Profitability and EBITDA Performance:

• Adjusted EBITDA for Q2 was $5.8 million, representing a 5% margin, significantly above expectations.
• This was driven by strong top-line performance, operating expense leverage, and gross margin improvements.

Growth in Fine Jewelry and Product Demand:

• Fine jewelry bookings grew approximately 32% year-over-year, contributing to 18% of total bookings in Q2.
• The growth was supported by strong customer reception to new product collections like the butterfly and keepsakes collections, and partnerships with influential creators and models.

Showroom Success and Brand Awareness:

• Showroom bookings from customers without appointments grew 47% year-over-year, with the Beverly Hills flagship store's bookings up over 40% year-over-year.
• This success is attributed to the brand's strong resonance, effective marketing campaigns, and a focus on providing a premium, personalized in-person experience.

Sentiment Analysis:

Overall Tone: Positive

• Management described results as 'outstanding' and 'reflect the disciplined execution and success of our growth strategy.' They noted 'strong ASPs,' 'fine jewelry bookings grew approximately 32% year-over-year,' and 'we are raising our annual profitability guidance.' The tone highlights 'momentum keeps building quarter after quarter' and 'the best is still ahead.'

Q&A:

• Question from Oliver Chen (TD Cowen): Regarding the beat of Q2 EBITDA relative to the full-year guidance raise, what's happening there and what's embedded for order growth?
  Response: Order growth focus on $500+ segment is expected to continue; Q2 outperformance was driven by strong top-line, gross margin improvements, and operating expense leverage, with these benefits also embedded in full-year guidance.

• Question from Oliver Chen (TD Cowen): How should we model marketing spend as a percentage of sales and customer acquisition costs?
  Response: Management takes a balanced approach, investing strategically in brand while increasing marketing efficiencies through internal capabilities and full-funnel optimization, with dynamic adjustments based on the environment.

• Question from Oliver Chen (TD Cowen): What are the drivers for implied gross margin in the back half, and are further price increases expected?
  Response: Gross margin outlook is driven by operational levers like price optimization, product design efficiencies, and vendor procurement; further price increases are not explicitly mentioned but dynamic pricing is a key tool.

• Question from Oliver Chen (TD Cowen): Showroom bookings from customers without appointments grew 47% year-over-year; what drives this and what's expected going forward?
  Response: Strong product resonance, marketing campaigns, and experiential retail appeal to Gen Z/millennials are driving increased showroom interest; this trend is expected to support fine jewelry and holiday season performance.

Contradiction Point 1

Order Growth in the $500+ Segment

It involves inconsistent framing of the $500+ order segment's growth contribution, potentially impacting understanding of high-value customer trends.

Oliver Chen (TD Cowen) - Oliver Chen (TD Cowen)

2026Q2: The strategic focus on the $500+ order segment led to 5% growth in orders at $500+ (excluding a few percent of net sales). - [Beth Gerstein](CFO) & [Jeff Quo](CFO)

How should we interpret the Q2 EBITDA beat's partial contribution to the full-year guidance raise, and what insights can you provide on the second half's performance and embedded order growth expectations? - Oliver Chen (TD Cowen)

2026Q2: The company is strategically focused on the $500+ segment, where orders grew 5% year-over-year in Q2. Sub-$500 orders represent just a few percent of net sales. - [Beth Gerstein](CFO) & [Jeff Kuo](CFO)

Contradiction Point 2

Outlook for Marketing Spend as a Percentage of Sales

It involves contradiction on the company's approach to marketing spend predictability, affecting how investors model future expenses.

Oliver Chen (TD Cowen) - Oliver Chen (TD Cowen)

2026Q2: The company takes a balanced approach to marketing investment... They use a full-funnel marketing approach and constant optimization. During holiday, they will dynamically adjust spending while ensuring appropriate investment. - [Beth Gerstein](CFO)

How should we model marketing spend as a percentage of sales, considering potential increased competition during the holiday period, and what trends are you observing in customer acquisition costs? - Oliver Chen (TD Cowen)

2026Q2: The company takes a balanced approach to marketing investment... They have a full-funnel marketing approach and are skilled at dynamically adjusting their strategy based on the environment. - [Beth Gerstein](CFO)

Contradiction Point 3

Growth Outlook for Orders at $500+

It involves contradiction on the reported growth rate for high-value orders, affecting assessment of premium segment performance.

Oliver Chen (TD Cowen) - Oliver Chen (TD Cowen)

2026Q2: Efforts to enhance the premium experience and assortment have led to 5% growth in orders at $500+ (excluding a few percent of net sales). - [Beth Gerstein](CEO)

How does the Q2 EBITDA beat relate to the full-year guidance raise, and what does this imply for second-half performance and embedded order growth? - Oliver Chen (TD Cowen)

2026Q1: Strong marketing efficiency in acquiring new fine jewelry customers, especially in the $500+ segment (up over 40% year-over-year). - [Beth Gerstein](CEO)

Contradiction Point 4

Gross Margin Trajectory and Drivers

It involves contradiction on the expected timing of gross margin improvement, impacting financial forecasting.

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2026Q2: The expected gross margin strength in H2 is driven by leveraging operational levers... The company successfully expanded gross margin while driving top-line growth in Q2. - [Jeff Quo](CFO)

Could you help us dimensionalize the drivers for the implied gross margin in the back half, including any planned price increases? - Oliver Chen (TD Cowen)

2026Q1: Sequential gross margin improvement is expected; Q1 is considered the low point for the year. - [Jeffrey Kuo](CFO)

Contradiction Point 5

Seasonality and Timing of Adjusted EBITDA

It involves the expected timing of EBITDA generation within the year appearing to have changed, affecting profit forecasting.

Oliver Chen (TD Cowen) - Oliver Chen (TD Cowen)

2026Q2: The full-year guidance does include the benefit from Q2's strong performance and embeds an increased outlook for profitability in the second half. - [Jeff Quo](CFO)

How should we interpret the Q2 EBITDA beat only partially reflecting the full-year guidance raise, and what does this imply for the second half and order growth? - Anna Glaessgen (B. Riley Securities)

20260305-2025 Q4: Most adjusted EBITDA is expected in Q4 due to historical seasonality and a larger revenue base, which allows for better amortization of stable operating costs. - [Chuenhong Kuo](CFO)