Brilliant Earth Group, Inc.

Previous wording

•Net loss of $0.7 million, up 37.5% compared to net loss of $1.1 million for the three months ended September 30, 2024;

Current wording

•Net loss of$8.5 million, up 158.7% compared to net loss of $3.3 million for the three months ended March 31, 2025;

Previous wording

•Net loss margin of 0.6%, compared to net loss margin of 1.1% for the three months ended September 30, 2024;

Current wording

•Net loss margin of 8.5%, compared to net loss margin of 3.5% for the three months ended March 31, 2025;

Previous wording

We have historically had attractive customer acquisition economics, including substantial first order profitability. To continue to grow our business, we must continue to acquire new customers and retain existing customers in a cost-effective manner. The success of our customer acquisition strategy depends on a number of factors, including the level and pattern of consumer spending on the products that we offer, and our ability to cost-effectively drive traffic to our website and showrooms and to convert these visitors to customers. With our strong brand resonance and passionate customer base, we generate significant earned and organic traffic, impressions, and media placements. We continually evolve our dynamic marketing strategies, optimizing our messaging, creative assets, and spending across channels. We also believe our expanded fine jewelry assortment and strategic customer acquisition will continue to drive fine jewelry orders from new customers and repeat orders from existing customers.

Current wording

We have historically had attractive customer acquisition economics, including substantial first order profitability. To continue to grow our business, we must continue to acquire new customers and retain existing customers in a cost-effective manner. The success of our customer acquisition strategy depends on a number of factors, including the level and pattern of consumer spending on the products that we offer, and our ability to cost-effectively drive traffic to our website and showrooms and to convert these visitors to customers. With our strong brand resonance and passionate customer base, we generate significant earned and organic traffic, impressions, and media placements. We continually evolve our dynamic marketing strategies, optimizing our messaging, creative assets, and spending across channels.

Previous wording

Product expansion allows us significant opportunity to drive new and repeat purchases by expanding purchase occasions beyond engagement and bridal. We intend to leverage our in-house design capabilities and nimble data-driven product development to expand product assortment for special occasions and self-purchase. In addition, we will have more opportunity to enhance and leverage our customer relationship management (“CRM”) and data-segmentation capabilities to increase repeat purchases and lifetime value. We have consistently invested in technology to create a seamless customer experience, including dynamic visualization, augmented reality try-on, and automated, rapid fulfillment, and we intend to continue investing in technology to enhance the digital and showroom experience and help drive conversion. Expanding affiliations and brand collaborations will also broaden our existing assortment, reinforce our brand ethos, and feature like-minded designers, which will help to drive both new and repeat purchases.

Current wording

Product expansion allows us significant opportunity to drive new and repeat purchases by expanding purchase occasions beyond engagement and bridal. We intend to leverage our in-house design capabilities and nimble data-driven product development to expand product assortment for special occasions and self-purchase. In addition, we will have more opportunity to enhance and leverage our customer relationship management (“CRM”) and data-segmentation capabilities to increase repeat purchases and lifetime value. We have consistently invested in technology to create a seamless customer experience, including dynamic visualization, augmented reality try-on, and automated, rapid fulfillment, and we intend to continue investing in technology to enhance the digital and showroom experience and help drive conversion. Expanding partnerships and brand collaborations will also expand our reach, broaden our existing assortment, and reinforce our brand ethos.

Previous wording

Kingdom, and our sales to customers from over 50 countries, provide encouraging signs for future global expansion. We see strong potential in launching e-commerce in new overseas markets and new showrooms in countries where we have already established a localized digital presence. We plan to drive brand awareness through localized marketing channels and expect our data-driven technology platform to continue providing insights for product recommendations and inventory management.

Current wording

We are in the early stages of selling globally, and a larger geographic footprint will help drive future growth. Our proof-points from localizing our website for Canada, Australia, and the United Kingdom, and our sales to customers from over 50 countries, provide encouraging signs for future global expansion. We see strong potential in launching e-commerce in new overseas markets and new showrooms in countries where we have already established a localized digital presence. We plan to drive brand awareness through localized marketing channels and expect our data-driven technology platform to continue providing insights for product recommendations and inventory management.

Previous wording

We have a unique, asset-light operating model with attractive working capital dynamics, capital-efficient showrooms, and a vast virtual inventory of premium natural and lab-grown diamonds that allows us to offer a broad selection of diamonds while keeping our balance sheet inventory low. This has driven attractive inventory turns and allows us to operate with negative working capital, which we define as our current assets less cash minus our current liabilities. Our showroom strategy minimizes the inefficiencies of traditional, retail-first jewelers. Our showrooms are primarily appointment-driven with large catchment regions, so we are less reliant on expensive high foot traffic retail locations. Our showroom locations and formats vary from interior, upper floor locations to more recently higher traffic pedestrian and retail mall locations. In all locations, we also curate showroom inventory for scheduled visits and require limited inventory in each location. Our tech-enabled jewelry consultants can support online customers when not in appointment, increasing workforce utilization. As we continue to scale our business, our future success is dependent on maintaining this capital efficient operating model and driving continued operational improvement as we expand to new locations both in the U.S. and internationally.

Current wording

We have a unique, asset-light operating model with attractive working capital dynamics, capital-efficient showrooms, and a vast virtual inventory of premium natural and lab-grown diamonds that allows us to offer a broad selection of diamonds while keeping our balance sheet inventory low. This has driven attractive inventory turns and allows us to operate with negative working capital, which we define as our current assets less non-restricted cash minus our current liabilities. Our showroom strategy minimizes the inefficiencies of traditional, retail-first jewelers. Our showrooms are primarily appointment-driven with large catchment regions, so we are less reliant on expensive high foot traffic retail locations. Our showroom locations and formats vary from interior, upper floor locations to more recently higher traffic pedestrian and retail mall locations. In all locations, we also curate showroom inventory for scheduled visits and require limited inventory in each location. Our tech-enabled jewelry consultants can support online customers when not in appointment, increasing workforce utilization. As we continue to scale our business, our future success is dependent on maintaining this capital efficient operating model and driving continued operational improvement as we expand to new locations.

Previous wording

In addition, many of the materials that go into our products are sourced and manufactured internationally. Tariffs on imports into the U.S. have had an impact on our materials costs and have the potential to further impact our business depending on the outcome of changes in U.S. trade policy and any corresponding actions by other countries in which companies with which we do business are located. Similarly, increases in prices of gold and other precious metals have also had an impact on our materials costs and have the potential to further impact our business. Any deterioration in macroeconomic conditions resulting from uncertainties and effects from tariffs, increases in the costs of materials, especially of gold and other precious metals, increased congestion and/or new import/export restrictions at ports that we rely on for our business, or delays or disruptions in the delivery of materials could adversely impact our business, financial condition, and operating results.

Current wording

Increases in prices of gold, platinum and other precious metals have also had an impact on our materials costs and have the potential to further impact our business. In addition, many of the materials that go into our products are sourced and manufactured internationally. Tariffs on imports into the U.S. have had an impact on our materials costs and have the potential to further impact our business depending on the outcome of changes in U.S. trade policy and any corresponding actions by other countries in which companies with which we do business are located. Any deterioration in macroeconomic conditions resulting from uncertainties and effects from tariffs, increases in the costs of materials, especially of gold, platinum and other precious metals, increased congestion and/or new import/export restrictions at ports that we rely on for our business, delays or disruptions in the delivery of materials, or increases in costs of the delivery of materials could adversely impact our business, financial condition, and operating results.

Previous wording

The following table sets forth our statements of operations for the three months ended September 30, 2025 and 2024, including amounts and percentages of net sales for each period and the period-to-period change in dollars and percent (amounts in thousands):

Current wording

The following table sets forth our statements of operations for the three months ended March 31, 2026 and 2025, including amounts and percentages of net sales for each period and the period-to-period change in dollars and percent (in thousands):

Previous wording

Net sales for thethree months ended September 30, 2025 increased by $10.4 million, or 10.4%, compared to thethree months ended September 30, 2024. The increase in net sales was due to an increase of 16.8% in order volumes partially offset by a decrease of 5.5% in AOV.

Current wording

Net sales for thethree months ended March 31, 2026 increased by $5.6 million, or 6.0%, compared to thethree months ended March 31, 2025. The increase in net sales was due to an increase of 3.3% in AOV and an increase of 2.5% in order volumes.

Previous wording

The 15.9% increase in order volumes was due to strong performance in lower price point products, including fine jewelry, continued effectiveness of our customer acquisition and retention activities and the opening of new showrooms.

Current wording

The 2.5% increase in order volumes was due to strong performance in fine jewelry, which typically carries a relatively lower price point than other products in our assortment, continued effectiveness of our customer acquisition and retention activities and the opening of new showrooms.

Previous wording

September 30, 2025 compared to thethree months ended September 30, 2024, primarily driven by higher gold and platinum costs and the impact of tariffs. This decrease was partially offset by continued optimization of our pricing engine, procurement efficiencies, and other efforts to manage our gross margins to target levels.

Current wording

Gross profit for thethree months ended March 31, 2026 decreased by $1.0 million, or 1.8%, compared to thethree months ended March 31, 2025. Gross margin, expressed as a percentage and calculated as gross profit divided by net sales, decreased by 430 basis points for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily driven by higher gold and platinum costs. The increase in gold and platinum costs was partially offset by the continued optimization of our pricing engine, procurement efficiencies, and other efforts to manage our gross margins to target levels.

Previous wording

Operating expenses for the three months ended September 30, 2025 increased by $2.2 million, or 3.6%, compared to thethree months ended September 30, 2024. Operating expenses as a percentage of net sales decreased by 380 basis points for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase in operating expenses was primarily driven by an increase in employment expenses of $1.8 million and an increase in other general and administrative expenses of $0.9 million. These increases were partially offset by a decrease in marketing expenses of $0.5 million for the period.

Current wording

Operating expenses for the three months ended March 31, 2026 increased by $4.4 million, or 7.5%, compared to thethree months ended March 31, 2025. Operating expenses as a percentage of net sales increased by 90 basis points for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase in operating expenses was primarily driven by anincrease in employment expenses of $2.0 million, anincrease in other general and administrative expenses of $1.8 million, and an increase in marketing expenses of $0.6 million for the period.

Previous wording

The increase in employment expenses was primarily driven by an increase in salaries and wages and other benefits expense primarily due to the addition of staff to support our growth. The increase in other general and administrative expenses was primarily driven by an increase in rent, and lease-related expenses, professional fees, information technology and other software-related costs, and depreciation expense. These increases were partially offset by a decrease in product development costs as compared to the nine months ended September 30, 2024. The decrease in marketing expenses compared to the nine months ended September 30, 2024 resulted from our continued focus on improving the effectiveness and efficiency of our marketing spend.

Current wording

The increase in employment expenses was primarily driven by an increase in salaries and wages and other benefits expense primarily due to the addition of staff to support our growth. The increase in other general and administrative expenses was primarily driven by an increase in donation expense, an increase in information technology and other software-related costs and an increase in rent, and lease-related expenses. These increases were partially offset by a decrease in professional fees and future showroom expenses as compared to the three months ended March 31, 2025. The increase in marketing expenses compared to the three months ended March 31, 2025 was a result of our continued focus on managing our marketing spend in relation to our sales volume.

Previous wording

Interest expense for the three months ended September 30, 2025 decreased by$1.0 million, or 79.4%, compared to the three months ended September 30, 2024, primarily due to the prepayment of all principal amounts outstanding of $34.8 million under the SVB Term Loan in August 2025. As a result of the prepayment, the Company recognized a loss on debt extinguishment of $0.6 million associated with the write-off of unamortized debt issuance costs.

Current wording

Interest expense for the three months ended March 31, 2026 decreased by $1.1 million, or 100.0%, compared to the three months ended March 31, 2025, primarily due to the prepayment of all principal amounts outstanding of $34.8 million under the SVB Term Loan in August 2025.

Previous wording

Other income, net for the three months ended September 30, 2025 decreased by$0.7 million, or 45.1%, compared to the three months ended September 30, 2024, primarily due to decreased interest income earned on our cash balances. Additionally, this amount includes immaterial losses on exchange rates on consumer payments and other miscellaneous income.

Current wording

Other income, net for thethree months ended March 31, 2026 decreased by $0.8 million, or 65.5%, compared to the three months ended March 31, 2025, primarily due to decreased interest income earned on our cash balances. Additionally, this amount includes immaterial losses on exchange rates on consumer payments and other miscellaneous income.

Previous wording

The following table sets forth our key performance metrics for the periods presented (amounts in thousands, except for total orders and AOV):

Current wording

The following table sets forth our key performance metrics for the periods presented (dollars in thousands, except for AOV):

Previous wording

Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures, are included in this Quarterly Report on Form 10-Q because they are used by management and our board of directors to assess our financial performance. We define Adjusted EBITDA as net (loss) income excluding interest expense, income taxes, depreciation expense, amortization of cloud-based software implementation costs, showroom pre-opening expense, equity-based compensation expense, certain non-operating expenses and income, and other unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA calculated as a percentage of net sales. These non-GAAP financial measures provide users of our financial information with useful information in evaluating our operating performance and exclude certain items from net (loss) income that may vary substantially in frequency and magnitude from period to period. These non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for net (loss) income prepared in accordance with GAAP and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of each of Adjusted EBITDA and Adjusted EBITDA margin to its most directly comparable GAAP financial measure, net (loss) income and net (loss) income margin, are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items, and may include other expenses, costs and non-recurring items.

Current wording

Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures, are included in this Quarterly Report on Form 10-Q because they are used by management and our board of directors to assess our financial performance. We define Adjusted EBITDA as net loss excluding interest expense, income taxes, depreciation expense, amortization of cloud-based software implementation costs, showroom pre-opening expense, equity-based compensation expense, certain non-operating expenses and income, and other unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA calculated as a percentage of net sales. These non-GAAP financial measures provide users of our financial information with useful information in evaluating our operating performance and exclude certain items from net loss that may vary substantially in frequency and magnitude from period to period. These non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for net loss prepared in accordance with GAAP and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of each of Adjusted EBITDA and Adjusted EBITDA margin to its most directly comparable GAAP financial measure, net loss and net loss margin, are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items, and may include other expenses, costs and non-recurring items.

Previous wording

The following table presents a reconciliation of net (loss) income and net (loss) income margin, the most comparable GAAP financial measures, to Adjusted EBITDA and Adjusted EBITDA margin, respectively, for the periods presented (amounts in thousands):

Current wording

The following table presents a reconciliation of net loss and net loss margin, the most comparable GAAP financial measures, to Adjusted EBITDA and Adjusted EBITDA margin, respectively, for the periods presented (in thousands):

Previous wording

Our primary requirements for liquidity and capital are for purchases of inventory, payment of operating expenses, tax distributions to Continuing Equity Owners, and capital expenditures. Historically, these cash requirements have been met through cash provided by operating activities, cash and cash equivalents, proceeds from capital-raising activities and borrowings under our loan facilities. We have historically had negative working capital driven by our high inventory turns and typical collection of payments from customers prior to payment of suppliers. As of September 30, 2025, we had a cash balance, excluding restricted cash, of$73.4 million, and negative working capital, excluding non-restricted cash, of($20.7) million.

Current wording

Our primary requirements for liquidity and capital are for purchases of inventory, payment of operating expenses, tax distributions to Continuing Equity Owners, and capital expenditures. Historically, these cash requirements have been met through cash provided by operating activities, cash and cash equivalents, proceeds from capital-raising activities and borrowings under our loan facilities. We have historically had negative working capital driven by our high inventory turns and typical collection of payments from customers prior to payment of suppliers. As of March 31, 2026, we had a cash balance, excluding restricted cash, of$58.6 million, and negative working capital, excluding non-restricted cash, of$11.6 million.

Previous wording

For thenine months ended September 30, 2025, the Company declared and paid$6.7 million of distributions to, or on behalf of, members associated with their estimated income tax obligations pursuant to the LLC Agreement. We are comm itted to continue to make quarterly distributions in connection with member estimated income tax obligations which we expect to fund with cash flow from operations.

Current wording

For thethree months ended March 31, 2026, the Company declared and paid$1.4 million of distributions to, or on behalf of, members associated with their estimated income tax obligations pursuant to the LLC Agreement. We are comm itted to continue to make quarterly distributions in connection with member estimated income tax obligations which we expect to fund with cash flow from operations.

Previous wording

We believe, based on our current projections, that we have sufficient sources of liquidity to meet our projected operating, tax distribution requirements for at least the next 12 months following the filing of this Quarterly Report on Form 10-Q.

Current wording

We believe, based on our current projections, that we have sufficient sources of liquidity to meet our projected operating and tax distribution requirements for at least the next 12 months following the filing of this Quarterly Report on Form 10-Q.

Previous wording

The following table summarizes our cash flows for thenine months ended September 30, 2025 and 2024 (in thousands):

Current wording

The following table summarizes our cash flows for thethree months ended March 31, 2026 and 2025 (in thousands):

Previous wording

For the nine months ended September 30, 2025, net cash provided by operating activities was $2.6 million compared to net cash provided by operating activities of $3.5 million for the nine months ended September 30, 2024, a decrease of $1.0 million. This decrease was primarily driven by a decrease in cash provided from net (loss) income adjusted for non-cash expense addbacks of $4.6 million. This decrease was partially offset by a $3.6 million decrease in cash used from changes in assets and liabilities related to working capital management activities. The decrease in cash used from changes in working capital was primarily due to a decrease in cash used of $12.8 million in accounts payable, accrued expenses and other current liabilities and other assets. This was offset by increases in cash used of $14.0 million in inventories, prepaid expenses and other current assets and operating lease liabilities. Also impacting the decrease in cash used was an increase in cash generated of $4.8 million in deferred revenue.

Current wording

For the three months ended March 31, 2026, net cash used in operating activities was $18.8 million compared to net cash used in operating activities of $7.1 million for the three months ended March 31, 2025, an increase of $11.7 million. This increase was primarily driven by an increase in net loss adjusted for non-cash expense addbacks of $5.7 million and an increase in cash used from changes in assets and liabilities related to working capital management activities of $6.0 million. The increase in cash used from changes in working capital was primarily due to an increase in cash used of $4.0 million in prepaid expenses and other current assets; accounts payable, accrued expenses and other current liabilities; and other assets. Also impacting the increase in cash used was a decrease in cash generated of $2.1 million in deferred revenue. These increases in cash used were partially offset by decreases in cash used in inventories and operating lease liabilities of $0.1 million.

Previous wording

For thenine months ended September 30, 2025, net cash used in investing activities was $2.5 million compared to $2.7 million for the nine months ended September 30, 2024. The decrease of $0.2 million was principally due to a decrease in purchases of property and equipment related to new facilities leased during the period.

Current wording

For thethree months ended March 31, 2026, net cash used in investing activities was $0.6 million compared to $0.7 million for the three months ended March 31, 2025. The decrease of $0.2 million was principally due to a decrease in purchases of property and equipment related to new facilities leased during the period.

Previous wording

Additionally, in the event we declare any cash dividends, we intend to cause Brilliant Earth, LLC to make distributions to us in amounts sufficient to fund such cash dividends declared by us to our shareholders. Deterioration in the financial condition, earnings, or cash flow of Brilliant Earth, LLC for any reason could limit or impair their ability to pay such distributions.

Current wording

In the event we declare any cash dividends, we intend to cause Brilliant Earth, LLC to make distributions to us in amounts sufficient to fund such cash dividends declared by us to our shareholders. Deterioration in the financial condition, earnings, or cash flow of Brilliant Earth, LLC for any reason could limit or impair their ability to pay such distributions.

Previous wording

If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. To the extent that we are unable to make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the TRA and therefore accelerate payments due under the TRA. In addition, if Brilliant Earth, LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.

Current wording

If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. In addition, if Brilliant Earth, LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.