Ladies and gentlemen, thank you for standing by. Welcome to the Brilliant Earth Group, Inc. Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Colin Bourland, Vice President of Strategy, Business Development, and Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to the Brilliant Earth Group, Inc. Fourth 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 Jeffrey Kuo, our Chief Financial Officer. During the call today, management will make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a description of the risks that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements. These forward-looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release the result of any revision to these forward-looking statements in light of new information or future events unless required by law. Also, during this call, management will refer to certain non-GAAP financial measures. A reconciliation of Brilliant Earth Group, Inc.'s non-GAAP measures to the comparable GAAP measures is available in today's earnings release, which can be found on the Brilliant Earth Group, Inc. Investor Relations website. I will now turn the call over to Beth. Good morning, everyone, and thank you for joining us.

I am pleased to share strong Q4 results today. We delivered our largest quarter ever of net sales in Q4, driving 4% year-over-year growth in net sales with particularly strong performance in fine jewelry. We also delivered positive adjusted EBITDA, above the midpoint of our stated guidance, highlighting the agility of our business model. Our results reflect the success of the investments we have been making across product, brand, and experience. 2025 was a banner year for Brilliant Earth Group, Inc. We celebrated our twentieth anniversary and achieved major accomplishments across each of the strategic priorities that drive our growth. Before we dive into the results, I want to remind you of that growth strategy and how it guides our execution in this highly competitive and dynamic industry. We believe that these four things are key to realizing the growth opportunity ahead of us. First, our aim is to build Brilliant Earth Group, Inc. into the most loved and trusted jewelry brand. 2025 was a year of incredible brand momentum and successes. Our brand was at the center of many high-visibility moments this year, as stars like Beyoncé, Sabrina Carpenter, and Selena Gomez chose our product for major events in their lives. And we expanded our brand reach through unique partnerships ranging from Jane Goodall to Ring Pop. Second, create great product that is distinctive and ownable and builds affinity for the Brilliant Earth Group, Inc. brand. Have particular focus on expanding beyond our core bridal business into fine jewelry. And 2025 was a breakthrough year in which we grew fine jewelry mix to 17% of bookings with many iconic product releases, including our signature Pacific green-colored lab diamond collection, our Medallions with Meaning, and our Love Decoded collection. Our success in fine jewelry has turned what was a nascent…

Thanks, Beth, and good morning, everyone. As Beth mentioned, we are pleased to report fourth quarter and full-year results where we continue to successfully drive our strategic initiatives, deliver top-line growth, and sustain profitability and positive free cash flow despite a challenging cost environment. Let me take you through the details. Q4 net sales were $124,400,000, up 4.1% year over year, which was our biggest quarter ever and near the midpoint of our stated guidance range. Full-year 2025 net sales were $437,500,000, up 3.6% year over year. Total orders grew 6.5% year over year in Q4 and 13% for the full year. Repeat orders grew 15% year over year in Q4 and 13% for the full year, demonstrating the effectiveness of our customer acquisition and retention efforts, and the continued resonance of our brand and products with consumers. Average order value, or AOV, was $2,001 in Q4 and $2,082 for the full year. This represents a decline of 2.3% year over year in Q4 and 8.2% for the full year. Our Q4 AOV reflects the continued success we have had in driving strong fine jewelry performance, which carries a comparatively lower price point, along with year-over-year growth in ASPs across the assortment, as we see strong success driving sales of higher price point items. Q4 gross margin was 55.9%, and full-year gross margin was 57.5%. This represents a 370 basis point decline year over year in Q4 and a 280 basis point decline for the full year. To put the Q4 margin environment in context, gold prices at the end of Q4 were up approximately 67% year over year, while platinum was up approximately 144% year over year, both at or near what were then all-time highs, and we continue to navigate a challenging tariff environment. We are extraordinarily proud…

Thank you. We will now open for questions. To ask a question, please press 11 and wait for your name to be announced. To withdraw your question, please press 11 again. The first question comes from Oliver Chen with TD Securities. Your line is open.

This is Julia Shlansky on for Oliver Chen. I am curious to hear about your expectations for AOV growth in the context of guidance for the next year, and expectations for gold and platinum hedging, and how much of your current inventory that you have secured throughout the year is effectively hedged or price loaded. Thank you.

Okay, great. I can start on AOV. In Q4, it was slightly down, which I think is actually the smallest decrease that we have seen for a bit of a while. Overall, what is driving AOV is we are seeing ASPs increase across the assortment. Part of that is due to the price positioning that we have, the strength of our brand, and the strong reception we are seeing for our iconic jewelry collections, as well as a great reception from our higher-income customers. So ASPs are up across the assortment. We are also seeing really strong performance in fine jewelry, and as fine jewelry is a lower category, that is what is driving the overall effect. That is what we are seeing from a high level. Jeffrey, I do not know if you want to comment more on AOV, and then maybe you can lean into the gold and platinum question.

No, I think you covered that well, Beth. From the perspective of how we are managing metal costs, we have a variety of different tools that we use. Hedging is one of those strategies. As you know, we also are able to price optimize and really think dynamically about pricing, think about things like design and product engineering and ways to manage costs while maintaining very high quality standards, as well as vendor optimization and negotiations. We have a lot of different tools at our disposal, and you can see that in the results of how we navigated Q4. We were able to navigate these very significant changes in metal prices and still deliver an adjusted EBITDA that was within our expected range.

Great. Thank you both.

Thank you. Our next question will come from Ashley Owens with KeyBanc Capital Markets. Your line is open.

Hi, great. Good morning, and thanks for taking our questions. As we think about 2026, how would you frame the key bookings growth drivers across the business, whether that is further bridal recovery or continued fine expansion? And how should we think about share gains relative to industry growth over the next year?

We are really encouraged by the growth that we have been seeing and the continuation of some of the strong growth that we saw in Q4. The drivers that I mentioned in the remarks—with fine jewelry being very strong, with our showroom strategy, and with the brand awareness—continue to be key growth drivers in 2026. It is really a continuation of all of the initiatives that we have been talking about, and we are very encouraged by the brand resonance that we are seeing and by some of the breakthrough moments that we are partnering with and driving overall increased awareness. On the fine jewelry side, we are going to continue to see this be a growth driver. There is a lot of opportunity. It is a very large market, and we are also continuing to outperform the industry as it relates to fine jewelry. We are very encouraged by the growth signals that we are seeing there and are going to continue to lean in and continue to be that go-to destination for jewelry. One of the stats that I mentioned—that half of our new customers discover us now through fine jewelry—just shows you the size of the opportunity and how it is gaining momentum.

Within the $100,000,000 longer-term opportunity you called out, do you expect the business to become less dependent on some of the engagement ring cycles and volatility we have seen and driven more by repeat purchases and gifting occasions? And then quickly on gross margin and the mid-50s outlook for the year given the metal environment, as we think about modeling for 2026, should we assume that persists through the year, or is there potential for sequential improvement as pricing, sourcing adjustments, or fine jewelry mix growth increase and those things flow through? Thank you.

Sure. Yes, in terms of how we are thinking about the business, fine jewelry is a continuation of the diversification away from our bridal heritage. We are continuing to be bridal leaders and introduce new collections, and we continue to see that as an important part of our overall growth, but fine jewelry becomes more and more of a driver. We are continuing to see that diversification. Even wedding and anniversary bands, having double-digit growth, show an evolution of the business, and if you look at a lot of the independents out there where the mix is leaning more toward fine jewelry, that is the path that we are on as well. Jeffrey, do you want to talk about gross margin?

In terms of gross margin outlook for the year, as I mentioned, we are looking at gross margin to be in the mid-50s percent for the year given the metal environment. As we go through the year, we do have more and more ways to mitigate some of the headwinds, including things like pricing and the operational actions that I mentioned earlier. We have more tools over time. We do not have a more specific shaping on a quarter-by-quarter basis of how we expect gross margin to look, but we think that our agility overall that we have demonstrated in recent quarters continues to serve us well, and we are better positioned than the industry at large to be able to navigate a variety of different conditions.

Super helpful. I will pass it along. Thank you.

Thank you. As a reminder, to ask a question, please press 11. The next question comes from Anna Glaessgen with B. Riley Securities. Your line is open.

Hi. Good morning. Thanks for taking my questions. I would like to start on the embedded pricing within the guidance. I think on the Q3 call we talked about Q4 being a particularly challenging time to lift prices as the consumer is generally more price sensitive. Are you assuming that at the turn of the year in Q1 there is better opportunity to offset the headwinds that you have been noting in gross margin?

Yes, I can start there. We are seeing an improved opportunity in terms of continuing to optimize and take selective price increases. Jeffrey mentioned the speed and the volatility in terms of metal prices overall, which is especially notable in Q1. One of the advantages that we have is a very sophisticated pricing algorithm. We are very much a test-and-learn and data-driven company, and we also have a premium brand positioning with proprietary designs. All of that enables us to have more pricing power. Q1 certainly gives us a better opportunity than Q4, where we tend to be a little bit more selective. This is something that we have a lot of experience navigating throughout our history, and we are going to continue to use the tools available to us, but we do see opportunity to be selective in terms of increasing our pricing.

Great. Turning to OpEx, with the mid-50s approximately gross margin assumption, to get to slightly lower profitability from 2025, it seems to imply an escalation in operating expense leverage in the year. Could you maybe talk to the biggest opportunities there?

Yes, I would be glad to. I would like to frame how we are thinking about overall guidance for the year. You can see that we have seen strong performance on the top-line side, and we are guiding to a higher growth rate overall for the year than last year. We have been very successful in driving marketing efficiencies and expect to be able to continue to drive year-over-year marketing efficiencies this year. The big headwind that is incorporated is on the metal pricing side and the impact on gross margin. That is something that is facing the entire industry. You can see the very large and very fast shifts in terms of metal price recently, and that is really the main factor. Some of the things like marketing leverage help us to offset that, and we are going to be disciplined in terms of other OpEx areas such as employee and other G&A costs to balance, as we always have, making medium- and longer-term investments with driving profitability. Our approach to OpEx is that we are going to be disciplined and look to continue to drive efficiency in areas like marketing. What you are seeing in terms of the year-over-year change in profitability is really coming from the metal cost that we are seeing in the environment overall.

Got it. One more follow-up, if I may. I believe, Jeffrey, you said in the prepared remarks that most of the adjusted EBITDA in 2026 should be from Q4. That seems to be roughly in line with historical seasonality. I was just wondering if you are implying that we could potentially see a negative EBITDA in Q2 or Q3?

You are right that we do expect most of the profitability in Q4, and that factors in a number of different things. Seasonally, Q4 is our biggest quarter, and you are going to see that come into play. We may have discussed in prior calls how a lot of our operating cost structure is not highly seasonal, so you have a relatively more stable base of things like employee costs and other G&A over the course of the year. In Q4, you have the opportunity to amortize that over a much larger revenue base, and that is factored into our guidance. As you go over the course of the year, we think that we have more and more opportunities to capture efficiencies and be able to mitigate some of the metal cost headwinds as we go through the year.

Great. Thanks.

Thank you. I am showing no further questions in the queue at this time. I will now turn the call back over to Beth for closing remarks.

Thank you, everyone, for joining us, and we look forward to talking to you in our next quarterly call.

This concludes today's conference call. Thank you for participating, and you may now disconnect.