Brilliant Earth Group, Inc.

Previous wording

Below is a summary of our performance for the three months ended March 31, 2025:

Current wording

Below is a summary of our performance for thethree months ended June 30, 2025:

Previous wording

•Net loss margin of(3.5)%, compared to net income margin of 1.1% for the three months ended March 31, 2024;

Current wording

•Net loss margin of 1.0%, compared to net income margin of 1.3% for the three months ended June 30, 2024;

Previous wording

•Adjusted EBITDA margin of 1.1%, compared to 5.2% for the three months ended March 31, 2024.

Current wording

•Adjusted EBITDA margin of 2.9%, compared to 5.2% for the three months ended June 30, 2024.

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 in 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.

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. 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.

Previous wording

In addition, several of the materials that go into the manufacturing of our products are sourced 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

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.

Previous wording

Net sales for thethree months ended March 31, 2025 decreased by $3.5 million, or 3.5%, compared to the three months ended March 31, 2024. The decrease in net sales was due to a decrease of 14.2% in AOV, partially offset by an increase in order volumes of 12.4%.

Current wording

Net sales for thethree months ended June 30, 2025 increased by $3.5 million, or 3.3%, compared to thethree months ended June 30, 2024. The increase in net sales was due to an increase of 18.3% in order volumes partially offset by a decrease of 12.6% in AOV.

Previous wording

The decrease in AOV was driven by comparatively stronger performance of engagement rings priced below $5,000 and a higher mix of lower price point products, including fine jewelry.

Current wording

The decrease in AOV was driven by a higher mix of lower price point products, including fine jewelry, and comparatively stronger performance of engagement rings priced below $5,000.

Previous wording

Operating expenses for the three months ended March 31, 2025 increased by $1.1 million, or 2.0%, compared to the three months ended March 31, 2024. Operating expenses as a percentage of net sales increased by 340 basis points for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase in operating expenses was primarily driven by an increase in other general and administrative expenses of $1.3 million partially offset by decreases in marketing expenses of $0.3 million for the period.

Current wording

Operating expenses for the three months ended June 30, 2025 increased by $1.8 million, or 2.8%, compared to thethree months ended June 30, 2024. Operating expenses as a percentage of net sales decreased by 30 basis points for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase in operating expenses was primarily driven by an increase in employment expenses of $1.7 million and an increase in other general and administrative expenses of $1.1 million. These increases were partially offset by a decrease in marketing expenses of $1.0 million for the period.

Previous wording

The increase in other general and administrative expenses was primarily driven by increases in information technology and other software-related costs, pre-opening expenses from new showrooms, and increases in rent, and lease-related expenses compared to the three months ended March 31, 2024. The decrease in marketing expenses compared to the three months ended March 31, 2024 resulted from our continued focus on improving the effectiveness and efficiency of our marketing program.

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 increases in professional fees, rent, and lease-related expenses, and depreciation expense as compared to the three months ended June 30, 2024. The decrease in marketing expenses compared to the three months ended June 30, 2024 resulted from our continued focus on improving the effectiveness and efficiency of our marketing spend.

Previous wording

Other income, net for the three months ended March 31, 2025 decreased by$0.2 million, or 16.0%, compared to the three months ended March 31, 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 the three months ended June 30, 2025 decreased by$0.3 million, or 22.8%, compared to the three months ended June 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.

Previous wording

Brilliant Earth Group, Inc.'s income tax benefit was $0.1 million for the three months ended March 31, 2025 compared to income tax expense of $0.1 million for the three months ended March 31, 2024. The change in income taxes was primarily due to a decline in pre-tax income to a loss from operations for the three months ended March 31, 2025 as compared to the prior year.

Current wording

Brilliant Earth Group, Inc.'s income tax expense was$0.1 million for the three months ended June 30, 2025 compared to an income tax benefit of$0.1 million for the three months ended June 30, 2024. The change in income taxes was primarily due to changes in deferred taxes related to the outside basis difference of Brilliant Earth Group, Inc.'s investment in Brilliant Earth, LLC.

Previous wording

The 12.4% 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 15.5% 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.

Previous wording

Gross profit for the three months ended March 31, 2025 decreased by $3.3 million, or 5.6%, compared to the three months ended March 31, 2024. Gross margin, expressed as a percentage and calculated as gross profit divided by net sales, decreased by 130 basis points for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by higher gold costs and labor/occupancy costs related to our fulfillment and distribution center. 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 thesix months ended June 30, 2025 decreased by $3.8 million, or 3.1%, compared to thesix months ended June 30, 2024. Gross margin, expressed as a percentage and calculated as gross profit divided by net sales, decreased by 190 basis points for thesix months ended June 30, 2025 compared to thesix months ended June 30, 2024, primarily driven by higher gold costs. 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.

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 asnet (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.

Previous wording

Our primary requirements for liquidity and capital are for purchases of inventory, payment of operating expenses, tax distributions to Continuing Equity Owners, debt service, 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 payment from customers prior to payment of suppliers. As of March 31, 2025, we had a cash balance, excluding restricted cash, of$147.3 million, and negative working capital, excluding non-restricted cash, of($36.5) 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, debt service, 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 June 30, 2025, we had a cash balance, excluding restricted cash, of$133.6 million, and negative working capital, excluding non-restricted cash, of($57.6) million.

Previous wording

As of March 31, 2025, the SVB Term Loan (as defined below) had an outstanding principal balance of$54.8 million, excluding unamortized debt issuance costs of$0.3 million, of which$34.8 million is classified as long-term. As of March 31, 2025, there were no amounts outstanding under the SVB Revolving Facility. Refer to Note 7. “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding the SVB Credit Facilities, including aggregate future principal payments under the SVB Term Loan.

Current wording

As of June 30, 2025, the SVB Term Loan had an outstanding principal balance of$34.8 million, excluding unamortized debt issuance costs of$0.4 million, of which$0.0 million is classified aslong-term. As of June 30, 2025, there were no amounts outstanding under the SVB Revolving Facility. Refer to Note 7. “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding the SVB Credit Facilities, including aggregate future principal payments under the SVB Term Loan.

Previous wording

Subsequent to March 31, 2025, we entered into the Second Amendment dated May 13, 2025 to the SVB Credit Agreement (the “Second Amendment”), pursuant to which the lenders agreed to suspend the requirement to comply with the (i) Consolidated Fixed Charge Coverage Ratio covenant for the period ended March 31, 2025 through and including the fiscal quarter ending March 31, 2026 and (ii) the Consolidated Borrower Leverage Ratio covenant for the period ended March 31, 2025. In addition, the Second Amendment increased the interest rate margin applicable to the SVB Revolving Facility and Term Loan by 10 basis points for the period commencing on the effective date of the Second Amendment through (but not including) April 1, 2026. The Second Amendment also requires us to maintain Balance Sheet Cash (defined as unrestricted cash and cash equivalents held in accounts with the lenders and their affiliates) in an amount greater than one and one half (1.5) times the sum of the aggregate principal amount outstanding under the SVB Revolving Facility (including issued letters of credit) and the aggregate principal amount of the SVB Term Loan outstanding at such time, which requirement applies at all times commencing on the effective date of the Second Amendment until the last day of the fiscal quarter ending March 31, 2026. After such time, the minimum Balance Sheet Cash covenant will no longer apply.

Current wording

On May 13, 2025, we entered into the Second Amendment dated May 13, 2025 to the SVB Credit Agreement (the “Second Amendment”), pursuant to which the lenders agreed to suspend the requirement to comply with the (i) Consolidated Fixed Charge Coverage Ratio covenant for the period ended March 31, 2025 through and including the fiscal quarter ending March 31, 2026 and (ii) the Consolidated Borrower Leverage Ratio covenant for the period ended March 31, 2025. In addition, the Second Amendment increased the interest rate margin applicable to the SVB Revolving Facility and Term Loan by 10 basis points for the period commencing on the effective date of the Second Amendment through (but not including) April 1, 2026. The Second Amendment also requires us to maintain Balance Sheet Cash (defined as unrestricted cash and cash equivalents held in accounts with the lenders and their affiliates) in an amount greater than one and one half (1.5) times the sum of the aggregate principal amount outstanding under the SVB Revolving Facility (including issued letters of credit) and the aggregate principal amount of the SVB Term Loan outstanding at such time, which requirement applies at all times commencing on the effective date of the Second Amendment until the last day of the fiscal quarter ending March 31, 2026. After such time, the minimum Balance Sheet Cash covenant will no longer apply.

Previous wording

Subsequent to March 31, 2025, the Company made principal payments totaling $20 million on the SVB Term Loan. The total amount of payments made have been reported as current portion of long-term debt on the unaudited condensed balance sheet as of March 31, 2025. No additional principal payments are required until the Maturity Date.

Current wording

In May 2025, the Company made principal payments totaling $20 million on the SVB Term Loan. No additional principal payments are required until the Maturity Date (as defined below).

Previous wording

For the three months ended March 31, 2025, the Company declared and paid$5.3 million of tax distributions to, or on behalf of, members associated with their estimated income tax obligations pursuant to the LLC Agreement. We are committed 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 thesix months ended June 30, 2025, the Company declared and paid$6.7 million of tax distributions to, or on behalf of, members associated with their estimated income tax obligations pursuant to the LLC Agreement. We are committed 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

The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

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

Previous wording

For the three months ended March 31, 2025, net cash used in operating activities was$7.1 million compared to net cash used of$5.8 million for the three months ended March 31, 2024, an increase of $1.3 million. This increase was primarily driven by adecrease in net (loss) income adjusted for non-cash expense addbacks of $4.0 million. This decrease was partially offset by a $2.7 million decrease in cash used from changes in assets and liabilities related to working capital management activ ities. The decrease from changes in working capital was primarily due to an decrease in cash used of $2.0 million in accounts payable, accrued expenses and other current liabilities and other assets. Also impacting the decrease in cash used was an increase in cash generated of $1.6 million in deferred revenue and prepaid expenses and other current assets. These decreases in cash used in operating activities was partially offset by increases in cash used of $0.9 million in inventories and operating lease liabilities.

Current wording

For the six months ended June 30, 2025, net cash provided by operating activities was $1.9 million compared to net cash provided by operating activities of $1.5 million for the six months ended June 30, 2024, an increase of $0.4 million. This increase was primarily driven by a $6.2 million decrease in cash used from changes in assets and liabilities related to working capital management activities. This increase was partially offset by a decrease in net (loss) income adjusted for non-cash expense addbacks of $5.8 million. The decrease from changes in working capital was primarily due to a decrease in cash used of $12.2 million in accounts payable, accrued expenses and other current liabilities. This decrease in cash used in operating activities was partially offset by increases in cash used of $9.8 million in inventories, operating lease liabilities, and other assets. Also impacting the decrease in cash used was an increase in cash generated of $3.8 million in deferred revenue and prepaid expenses and other current assets.

Previous wording

For the three months ended March 31, 2025, net cash used in investing activities was $0.7 million compared to $0.6 million for the three months ended March 31, 2024. The increase of $0.1 million was principally due to a increase in purchases of property and equipment related to new facilities leased during the period.

Current wording

For thesix months ended June 30, 2025, net cash used in investing activities was $1.9 million compared to $1.4 million for the six months ended June 30, 2024. The increase of $0.5 million was principally due to an increase in purchases of property and equipment related to new facilities leased during the period.

Previous wording

For the three months ended March 31, 2025, net cash used in financing activities was$6.7 million compared to$2.0 million for the three months ended March 31, 2024. The increase of $4.7 million was primarily due to higher tax distributions paid to members pursuant to the LLC Agreement of $4.4 million and higher payments made on the SVB Term Loan (as defined below) of $0.4 million.

Current wording

For thesix months ended June 30, 2025, net cash used in financing activities was$28.4 million compared to$3.7 million for thesix months ended June 30, 2024. The increase of $24.7 million was primarily due to higher payments made on the SVB Term Loan of $19.6 million and higher tax distributions paid to members pursuant to the LLC Agreement of $4.9 million.

Previous wording

Regarding the ability of Brilliant Earth, LLC to make distributions to us, the terms of their financing arrangements, including the SVB Credit Facilities, contain covenants that may restrict Brilliant Earth, LLC from paying such distributions, subject to certain exceptions. Further, Brilliant Earth, LLC is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Brilliant Earth, LLC (with certain exceptions), as applicable, exceed the fair value of its assets.

Current wording

The SVB Credit Facilities contained, and future financing arrangements that the Company enters into may contain, covenants that may restrict Brilliant Earth, LLC from paying distributions to us, subject to certain exceptions. Further, Brilliant Earth, LLC is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Brilliant Earth, LLC (with certain exceptions), as applicable, exceed the fair value of its assets.