Good day, and thank you for standing by. Welcome to the Brilliant Earth Second Quarter 2025 Earnings Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to turn the conference over to Colin. Please go ahead.

Thank you, and good morning, everyone. Welcome to the Brilliant Earth Second Quarter 2025 Earnings Conference Call. My name is Colin Bourland, 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 results 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 morning, everyone, and thank you for joining us. We are excited to report a strong quarter where we drove positive year-over- year net sales growth and far exceeded the high end of our guidance for both net sales and profitability. Our ability to gain share and outperform the industry reflects the successful execution of our strategic vision and the significant progress we're making toward both our near- and long-term goals. Furthermore, I am happy to report that we are seeing an acceleration in the business Q3 to date, and we are raising our annual net sales guidance. Of course, we're also evaluating yesterday's announcement on new tariffs on India, which Jeff will discuss in more detail. Most importantly, we remain confident in our ability to navigate in this environment. Our aim since day 1 has been to build Brilliant Earth into the world's most loved and trusted jewelry brand. We've consistently communicated our strategy to increase brand awareness, provide a seamless omnichannel experience, establish ourselves as the fine jewelry leader for the next generation, and invest in our people, data analytics and technology as the digital leader in the jewelry space, all to drive profitable long-term growth. Our Q2 results prove that our disciplined strategy is working. We delivered our best year-over-year top line growth in the past 18 months with net sales growth of 3.3% and adjusted EBITDA of $3.2 million, both significantly exceeding our guidance. And not only do we continue to drive positive adjusted EBITDA, but we continue to generate net cash, which increased 5% year-over-year to $99 million as of the end of Q2. Given this momentum and our confidence in what lies ahead, I'm proud to announce that our Board of Directors has approved a onetime dividend and distribution of approximately $25.3 million in…

Thanks, Beth, and good morning, everyone. As Beth mentioned, we're pleased to report Q2 results where we continue to successfully drive our strategic initiatives, innovate, capture operating efficiency, and exceed both our top line and profitability expectations. Let me take you through the details for Q2. Q2 net sales were $108.9 million, up 3.3% year-over-year, exceeding the top end of our guidance range by 330 basis points. Total orders grew 18% year-over-year and repeat orders grew 11% year-over-year in the second quarter, demonstrating the effectiveness of our customer acquisition and retention efforts and the resonance of our brand and products with consumers. Average order value, or AOV, was $2,074 in Q2. This represents a decline of 12.6% year-over-year in Q2, a smaller decline than Q1 as we continue to broaden and diversify our overall assortment, including in our fine jewelry collection, which carries a lower price point than our bridal collection as well as the continued comparatively stronger demand in engagement rings under $5,000 with an overall stabilization in engagement ring ASP over the last few quarters. Q2 gross margin was 58.3%, within our medium-term gross margin target in the high 50s and a 250 basis point decline over Q2 last year. The year-over-year change in gross margin was primarily driven by higher gold costs and the impact of tariffs, which were within our expectations for the quarter, partially offset by continued optimization of our pricing engine, procurement efficiencies, and other efforts to manage our gross margin to target levels. We delivered Q2 adjusted EBITDA of $3.2 million, or a 2.9% adjusted EBITDA margin, far exceeding our guidance range. This marks our 16th consecutive quarter of profitability. We are excited to deliver this level of profitability through our strong gross margin and diligent data-driven management of our marketing spend and…

[Operator Instructions] The first question that I have today is coming from the line of Ashley Owens of KeyBanc Capital Markets.

This is Chris on for Ashley. Congrats on the quarter. So just to start, I was wondering if you could touch on the bridge in higher fine growth relative to margins. I think the comments before I alluded to this being a higher-margin side of the business. So could you maybe triangulate what you're seeing in terms of like purchase habits and if the consumers are gravitating towards lower AOV fine items? And within fine, like what pricing habits are and what you're seeing compared to bridal and engagement customers as bookings have returned to growth. So just anything different relative to 3 months ago?

Chris, this is Beth. I wouldn't say that there's a huge difference in terms of what we've been seeing. I think that consumers continue to be very discerning in terms of fine jewelry and what they're looking for, for high-quality, high-value jewelry that they're going to wear for many years. And as we have been performing exceptionally strong into fine jewelry, we're just continuing to see increased traction, and that's going to have an impact overall in terms of AOV, but that's something that we're strategically investing in. So something we're happy to see. So I wouldn't say, we're seeing a huge difference in terms of pricing and AOV for either bridal or fine jewelry now versus what we've been seeing over the past several months.

Great. And then I guess, next, just to maybe drill down on the debt payment in the quarter. Could you maybe just expand thoughts on like further investments in the business and how you're thinking about redeploying the capital, whether it goes to you'd like to maybe accelerating showrooms or other opportunities you see in the market?

Jeff, maybe I can start with just the very high level. I think that we have been very consistent in terms of how we've been communicating our strategic vision, and we're continuing to see great results. So I see that the levers that we see for our strategy with showroom growth, leaning in as the digital leader with becoming the world's most trusted and loved jewelry brand, all of that will continue. I think we have a very strong cash balance sheet to be able to execute on that strategic vision. So I feel like we've been executing well. We're going to continue to lean into these areas to drive our overall awareness and to drive fine jewelry as well. Jeff, do you want to kind of expand on that?

Yes. I think Beth captured a lot of the key points well. Really, both the dividend and distribution and the debt payoff stem from our strong balance sheet and cash position, our ability to generate cash as a business. As Beth mentioned, we believe that we are well positioned to continue to make those strategic investments in areas like brand, showrooms and fine jewelry even with these announcements. And with respect to the debt payment, there's also some net interest savings that will result from the debt payoff. So I think this really illustrates a lot of the strengths of the business and how we think about optimizing the business and the capital structure.

[Operator Instructions] Our next question will be coming from the line of Oliver Chen of TD Securities.

Beth and Jeff, this is Julia on for Oliver Chen. I would love to hear about the strength above and below the $1,000 price point and general comments you have on the health of the consumer that you've been seeing with respect to discretionary purchases. Two, where consumers spending more versus saving more in their rent decisions? And three, any commentary around uplift related to new showrooms and how the maturation of showrooms later this year may help sales?

Thanks, Julia. So in terms of how we're seeing the health of consumer, we are seeing a nice consumer that, as I mentioned, they are discerning, but I think we have been very attuned to the customer trends and what they want. And so we're able to deliver on that high- quality, high-value jewelry piece that they've been looking for. We also believe that we've been outperforming the market. And as we have been leaning into these brand initiatives, introducing new products like our limited edition collections, we have been performing exceptionally well. So we feel good about the health of the consumer related to the offerings specifically that we have. We've also seen, as we mentioned in the call, high single-digit growth for units in both engagement rings and wedding and anniversary bands. And I think this is a testament to a lot of the hard work we've been doing. We have a really nice diamond assortment with hundreds of thousands of diamonds. Our signature styles have been performing exceptionally well as we're seeing with engagement rings as trend leaders. And we are seeing those market improvements. But as I mentioned, I think we are outperforming in terms of the overall market. For that showroom overall, we've been really pleased with how the showrooms are doing. As we are known increasingly as a fine jewelry destination, we were really happy to see that fine jewelry growth in the showrooms. And just seeing that walk-in traffic, seeing the 80-plus percent growth with those retail type of consumers, I think, just shows you that we are doing a great job offering the right product for what the customers are looking for at an exceptional price point.

I would now like to turn the call back over to Beth for closing remarks.

Thank you so much for joining our Q2 conference call, and we look forward to talking to you in the next quarter.

Thank you so much for joining today's conference. You may all disconnect.