10q10k10q10k.net

What changed in Brilliant Earth Group, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Brilliant Earth Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+322 added−329 removedSource: 10-K (2026-03-17) vs 10-K (2025-03-13)

Top changes in Brilliant Earth Group, Inc.'s 2025 10-K

322 paragraphs added · 329 removed · 254 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

24 edited+3 added−2 removed127 unchanged
Biggest changeAs part of our commitment to social and environmental responsibility, we offer Beyond Conflict Free Diamonds ® , Pathway to Beyond Conflict Free Diamonds TM repurposed precious metals and FSC-certified wood ring boxes. We strive to offer products sourced in alignment with responsible labor and environmental practices, and continually work with our suppliers to seek to improve standards and traceability.
Biggest changeWe strive to offer products sourced in alignment with responsible labor and environmental practices and continually work with our suppliers to seek to improve standards and traceability. Beyond Conflict Free Diamonds ™ Our Beyond Conflict Free Diamonds ™ have been selected for their ethical and environmentally responsible origins.
Intellectual Property and Other Proprietary Rights Our long-term commercial success is connected to our ability to obtain and maintain intellectual property protection for our brand, products, and technology; defend and enforce our intellectual property rights; preserve the confidentiality of our trade secrets; operate our business without infringing, misappropriating, or otherwise violating 18 Table of Contents the intellectual property or proprietary rights of third parties; and prevent third parties from infringing, misappropriating, or otherwise violating our intellectual property rights.
Intellectual Property and Other Proprietary Rights Our long-term commercial success is connected to our ability to obtain and maintain intellectual property protection for our brand, products, and technology; defend and enforce our intellectual property rights; preserve the 18 Table of Contents confidentiality of our trade secrets; operate our business without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of third parties; and prevent third parties from infringing, misappropriating, or otherwise violating our intellectual property rights.
We were among the first retail jewelers to offer blockchain-verified diamonds at scale, defining next-generation traceability standards in the jewelry industry, and offer thousands of blockchain-verified diamonds. This technology tracks a diamond from its origins at the mining operator, through cutting and polishing, to the customer. This provides even greater transparency into the responsible origins of these blockchain-verified diamonds.
We were among the first retail jewelers to offer blockchain-verified diamonds at scale, defining next-generation traceability standards in the jewelry industry. This technology tracks a diamond from its origins at the mining operator, through cutting and polishing, to the customer. This provides even greater transparency into the responsible origins of these blockchain-verified diamonds.
Our Find My Matching Wedding Band tool offers customers an engaging way to explore and discover rings that match their engagement rings, enables the visualization of the ring set and provides us cross-selling and upselling opportunities.
Our Find My Matching Wedding Band tool offers customers an engaging way to explore and discover rings that match their engagement rings, enables the visualization of the ring set and provides us with cross-selling and upselling opportunities.
Fulfillment and Logistics Many of our products are made-to-order and delivered in as little as six to twelve business days. For products that sell in higher, more consistent volumes, such as certain rings and fine jewelry, we batch produce and stock items to enable even faster customer delivery, typically in just two to five business days.
Fulfillment and Logistics Many of our products are made-to-order and delivered in as little as six to fifteen business days. For products that sell in higher, more consistent volumes, such as certain rings and fine jewelry, we batch produce and stock items to enable even faster customer delivery, typically in just two to five business days.
With our strong brand resonance with Millennials and Gen Z consumers, we also believe our fine jewelry assortment and strategic customer acquisition will continue to drive fine jewelry orders from new customers. Expand Internationally We have sold to customers from over 50 countries despite minimal existing language, logistics and currency support for those geographies.
With our strong brand resonance with Millennial and Gen Z consumers, we also believe our fine jewelry assortment and strategic customer acquisition will continue to drive fine jewelry orders from new customers. Expand Internationally We have sold to customers from over 50 countries despite minimal existing language, logistics and currency support for those geographies.
For more information regarding the risks related to government regulations, see “Risk Factors—Risks Related to Our Legal and Regulatory Environment.” We are also subject to various mandatory substantive and/or disclosure requirements with respect to ESG matters that continue to evolve on the state, federal, and international levels, which may directly or indirectly impact our operations.
For more information regarding the risks related to government regulations, see “Risk Factors—Risks Related to Our Legal and Regulatory Environment.” We are also subject to various mandatory substantive and/or disclosure requirements with respect to ESG matters that continue to evolve on the state, federal, and international levels, which may directly or indirectly impact our 19 Table of Contents operations.
In-House Design Studio Our award-winning in-house design team creates distinctive new jewelry designs and updates classic styles with fresh modern appeal. Over sixty percent of our ring collection is proprietary and available exclusively at Brilliant Earth. Our head of product development has been driving innovation at Brilliant Earth for over ten years.
In-House Design Studio Our award-winning in-house design team creates distinctive new jewelry designs and updates classic styles with fresh modern appeal. A majority of our ring collection is proprietary and available exclusively at Brilliant Earth. Our head of product development has been driving innovation at Brilliant Earth for over ten years.
According to the Bain Report, approximately 65% of the diamond jewelry retail industry is composed of small retailers. Many small jewelry retailers have struggled to address evolving consumer preferences for personalization and e-commerce, and are further limited by reduced purchasing power and an inventory-heavy model.
According to the Bain Report, approximatel y 65% o f the diamond jewelry retail industry is composed of small retailers. Many small jewelry retailers have struggled to address evolving consumer preferences for personalization and e-commerce, and are further limited by reduced purchasing power and an inventory-heavy model.
Our Opportunity Global Jewelry Market The global jewelry industry was estimated to be approxima tely $350 billion i n 2024, according to Statista. Despite its size, the jewelry industry is highly fragmented and includes players like mall jewelers, local independent stores, and department stores, among others.
Our Opportunity Global Jewelry Market The global jewelry industry was estimated to be approxima tely $350 billion in 2024, a ccording to Statista. Despite its size, the jewelry industry is highly fragmented and includes players like mall jewelers, local independent stores, and department stores, among others.
These requirements may not always be uniform across jurisdictions, which may result in increased 19 Table of Contents complexity, and cost, for compliance.
These requirements may not always be uniform across jurisdictions, which may result in increased complexity, and cost, for compliance.
These consultants strive to create lasting connections with customers. As of December 31, 2024, we had 40 showrooms across the United States. Our showrooms are in prime destinations in major metro areas, including ground, mall or upper floor locations in areas with premium retail adjacencies.
These consultants strive to create lasting connections with customers. As of December 31, 2025, we ha d 42 sho wrooms across the United States. Our showrooms are in prime destinations in major metro areas, including ground, mall or upper floor locations in areas with premium retail adjacencies.
Below is a summary of our performance for the year ended December 31, 2024: • Net sales of $422.2 million, compared to $446.4 million for the year ended December 31, 2023; • Net income o f $4.0 million compared to $4.7 million for the year ended December 31, 2023; and • Net income margin o f 0.9% compared to 1.1% for the year ended December 31, 2023.
Below is a summary of our performance for the year ended December 31, 2025: • Net sales of $437.5 million, compared to $422.2 million for the year ended December 31, 2024; • Net loss o f $6.4 million compared to net income of $4.0 million for the year ended December 31, 2024; and • Net loss margin o f 1.5% compared to net income margin of 0.9% for the year ended December 31, 2024.
Our made-to-order capabilities and virtual inventory model generate attractive inventory turns allowing us to operate with negative working capital, which we define as our current assets less cash minus our current liabilities.
Our made-to-order capabilities and virtual inventory model generate attractive inventory turns allowing us to operate wit h negative working capital, w hich we define as our current assets less non-restricted cash minus our current liabilities.
We track over 50 attributes associated with our products to inform our development and merchandising decisions. We create unique, exclusive styles that are expertly crafted to be beautiful from every angle and have been featured in leading publications, including Vogue, Forbes, and Women's Wear Daily .
We track over 50 attributes associated with our products to inform our development and merchandising decisions. We create unique, exclusive styles that are expertly crafted to be beautiful from every angle and have been featured in leading publications, including Vogue, Forbes, and Women's Wear Daily . A majority of our ring collection is proprietary and available exclusively at Brilliant Earth.
We purchase substantially all of the resources for our products including diamonds, gemstones, precious metals, parts, packaging, and raw materials from a limited number of domestic and international suppliers. For example, one supplier of jewelry accounted for 11% of inventory purchases during the year ended December 31, 2024.
We purchase substantially all of the resources for our products including diamonds, gemstones, precious metals, parts, packaging, and raw materials from a limited number of domestic and international suppliers. No individual supplier accounted for more than 10% of total inventory purchases during the year ended December 31, 2025.
Approximately sixty percent of our ring collection is proprietary and available exclusively at Brilliant Earth. Our engagement rings are highly personalized to reflect our customers’ individuality and unique preferences. Through our Design Your Own model, customers choose their ideal ring design, precious metal type, and ring size, and select their diamond or gemstone from our marketplace.
Our engagement rings are highly personalized to reflect our customers’ individuality and unique preferences. Through our Design Your Own model, customers choose their ideal ring design, precious metal type, and ring size, and select their diamond or gemstone from our marketplace.
Our brand values of beauty, quality, and ethics resonate strongly with Brilliant Earth couples. For all of these reasons, we believe we are uniquely positioned in the industry to build on our brand loyalty to increase future purchases.
For all of these reasons, we believe we are uniquely positioned in the industry to build on our brand loyalty to increase future purchases.
We work with a complex, global network of trusted suppliers and manufacturers who agree to our strict Supplier Code of Conduct and with whom we have developed deep relationships, generally over many y ears.
One supplier of jewelry accounted for a total of 11% of inventory purchases during the year ended December 31, 2024. We work with a complex, global network of trusted suppliers and manufacturers who agree to our strict Supplier Code of Conduct and with whom we have developed deep relationships, generally over many y ears.
Our customers typically begin their Brilliant Earth journey with an engagement ring, so we are often the first significant jewelry purchase in our customer’s life, which we believe creates a lasting, emotional connection with the Brilliant Earth brand. While engagement ring purchases have historically been male-dominated, we thoughtfully built our brand messaging and customer experience to appeal to all genders.
Our customers typically begin their Brilliant Earth journey with an engagement ring, so we are often the first significant jewelry purchase in our customer’s life, which we believe creates a lasting, emotional connection with the Brilliant Earth brand.
We offer our customers a wide variety of powerful decision-making tools, including real diamond videos, and dynamic product visualization. Our advanced Virtual Try On tool allows customers to see any ring with any 13 Table of Contents gemstone size, shape, and color on their own hand, then seamlessly shop, save or share their one-of-a-kind creation.
Our advanced Virtual Try On tool allows customers to see any ring with any gemstone size, shape, and color on their own hand, then seamlessly shop, save or share their one-of-a-kind creation.
As of December 31, 2024, we employed 756 full-time employees and 17 part-time employees in the U.S. We are deeply committed to fostering an inclusive work environment, and we strive to embody our values through our internal practices.
As of December 31, 2025, we employ ed 764 full-time employees and 21 part-time employees in the U.S. In addition, we engage independent contractors and temporary personnel to support certain business functions. We are deeply committed to fostering an inclusive work envi ronment, and we strive to embody our values through our internal practices.
Our agile development sprints allow for rapid innovation and testing, and we continually release new functionality to optimize the user experience. For example, our proprietary Diamond Quiz curates recommendations unique to each customer based on an analysis of thousands of diamond demand categories.
Our agile development sprints allow for rapid innovation and testing, and we continually release new functionality to optimize the user experience.
In addition, we are a member of the Responsible Minerals Initiative (“RMI”), a widely utilized resource for companies addressing the responsible sourcing of minerals in their supply chains.
In addition, we are a member of the Responsible Minerals Initiative (“RMI”), a widely utilized resource for companies addressing the responsible sourcing of minerals in their supply chains. As part of our commitment to social and environmental responsibility, we offer Beyond Conflict Free Diamonds™, Pathway to Beyond Conflict Free Diamonds TM repurposed precious metals and FSC-certified wood ring boxes.
Removed
For example, in 2024, we launched the “Rethink Everything You Know About Diamonds” campaign, featuring the debut of The Jane Goodall Collection.
Added
While engagement ring purchases have historically been male dominated, we thoughtfully built our brand messaging and customer experience to appeal to all genders. Our brand values of beauty, quality, and ethics resonate strongly with Brilliant Earth couples.
Removed
Beyond Conflict Free Diamonds ® Our Beyond Conflict Free Diamonds ® have been selected for their ethical and environmentally responsible origins.
Added
For example, in 2025, we launched partnerships, notably with tennis star Madison Keys as our first athlete ambassador and also launched a second jewelry collection with the late Jane Goodall.
Added
For example, our proprietary Diamond Quiz curates recommendations unique to each customer based on an analysis of thousands of diamond demand categories. 13 Table of Contents We offer our customers a wide variety of powerful decision-making tools, including real diamond videos, and dynamic product visualization.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

152 edited+32 added−43 removed438 unchanged
Biggest changeThese provisions provide for, among other things: • a classified board of directors with staggered three-year terms; • the ability of our Board to issue one or more series of preferred stock; • at any time when Mainsail and our Founders beneficially own, in the aggregate, at least a majority of the voting power of our outstanding capital stock, our stockholders may take action by consent without a meeting, and at any time when Mainsail and our Founders beneficially own, in the aggregate, less than the majority of the voting power of our outstanding capital stock, our stockholders may not take action by consent, but may only take action at a meeting of stockholders; • vacancies on our Board will be able to be filled only by our Board and not by stockholders, subject to the rights granted pursuant to the stockholders agreement; • advance notice procedures apply for stockholders (other than the parties to our stockholders agreement for nominations made pursuant to the terms of the stockholders agreement) to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • the inability of our stockholders to call a special meeting of stockholders; • prohibit cumulative voting in the election of directors; • at any time when Mainsail and our Founders beneficially own, in the aggregate, at least a majority of the voting power of our outstanding capital stock, directors may be removed at any time with or without cause upon the affirmative vote of the holders of capital stock representing a majority of the voting power of our outstanding shares of capital stock entitled to vote thereon, and at any time when Mainsail and our Founders beneficially own, in the aggregate, less than the majority of the voting power of our outstanding shares of capital stock entitled to vote generally in the election of directors, in the aggregate, directors may only be removed for cause and only upon the affirmative vote of at least 66 2/3% of the holders of capital stock representing the voting power of our outstanding shares of capital stock entitled to vote thereon; and • that certain provisions of amended and restated certificate of incorporation may be amended only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock.
Biggest changeThese provisions provide for, among other things: • a classified board of directors with staggered three-year terms; • the ability of our Board to issue one or more series of preferred stock; • at any time when Mainsail and our Founders beneficially own, in the aggregate, at least a majority of the voting power of our outstanding capital stock, our stockholders may take action by written consent without a meeting, and at any time when Mainsail and our Founders beneficially own, in the aggregate, less than the majority of the voting power of our outstanding capital stock, our stockholders may not take action by written consent, but may only take action at a meeting of stockholders; 56 Table of Contents • vacancies on our Board may be filled only by the remaining members of our Board (even if less than a quorum), and not by stockholders, subject to the rights of holders of any series of preferred stock and rights granted pursuant to the stockholders agreement; • advance notice procedures apply for stockholders (other than the parties to our stockholders agreement for nominations made pursuant to the terms of the stockholders agreement) to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; • the inability of our stockholders to call a special meeting of stockholders; • prohibit cumulative voting in the election of directors; • subject to the rights of holders of any series of preferred stock to elect directors, our directors may be removed, either with or without cause, only by the affirmative vote of at least 66 2/3% of the holders of capital stock representing the voting power of our outstanding shares of capital stock entitled to vote thereon; and • that certain provisions of articles of incorporation may be amended only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock.
Overall growth of our net sales will depend on a number of factors, including our ability to: • price our products and services effectively so that we are able to attract new customers, expand our relationships with existing customers, and maintain or grow our gross profit margins; • accurately forecast our net sales and plan our operating expenses; • successfully compete with other companies that are currently in, or may in the future enter the markets in which we compete, and respond to developments from these competitors such as pricing changes and the introduction of new products and services; • comply with laws and regulations applicable to our business; • successfully expand in existing markets and enter new markets, including new geographies and categories; 23 Table of Contents • successfully launch new offerings and enhance our products and services and their features, including in response to new trends or competitive dynamics or the needs or preferences of customers or potential customers; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our business; • avoid interruptions or disruptions in distributing our products and services; • manage potential fluctuations in the supply or market conditions for natural or lab-grown diamonds and other inputs that could result in fluctuations in diamond prices and other input costs; • provide customers with high-quality support that meets their needs; • hire, integrate, and retain talented sales, customer service, and other personnel; • effectively manage growth of our business, personnel, and operations, including new showroom openings; • effectively manage our costs related to our business and operations; and • maintain and enhance our reputation and the value of our brand, including our mission-centric approach.
Overall growth of our net sales will depend on a number of factors, including our ability to: • price our products and services effectively so that we are able to attract new customers, expand our relationships with existing customers, and maintain or grow our gross profit margins; • accurately forecast our net sales and plan our operating expenses; 23 Table of Contents • successfully compete with other companies that are currently in, or may in the future enter the markets in which we compete, and respond to developments from these competitors such as pricing changes and the introduction of new products and services; • comply with laws and regulations applicable to our business; • successfully expand in existing markets and enter new markets, including new geographies and categories; • successfully launch new offerings and enhance our products and services and their features, including in response to new trends or competitive dynamics or the needs or preferences of customers or potential customers; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our business; • avoid interruptions or disruptions in distributing our products and services; • manage potential fluctuations in the supply or market conditions for natural or lab-grown diamonds and other inputs that could result in fluctuations in diamond prices and other input costs; • provide customers with high-quality support that meets their needs; • hire, integrate, and retain talented sales, customer service, and other personnel; • effectively manage growth of our business, personnel, and operations, including new showroom openings; • effectively manage our costs related to our business and operations; and • maintain and enhance our reputation and the value of our brand, including our mission-centric approach.
In addition, our efforts to acquire customers through direct marketing may subject us to increased regulatory scrutiny 27 Table of Contents by state regulators pursuant to unfair methods of competition or unfair or deceptive acts or practices laws, which may impact our ability to achieve anticipated net sales growth from increased direct marketing.
In 27 Table of Contents addition, our efforts to acquire customers through direct marketing may subject us to increased regulatory scrutiny by state regulators pursuant to unfair methods of competition or unfair or deceptive acts or practices laws, which may impact our ability to achieve anticipated net sales growth from increased direct marketing.
If we fail to meet or exceed such expectations, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits. 33 Table of Contents Refunds, cancellations, and warranty claims could harm our business.
If we fail 33 Table of Contents to meet or exceed such expectations, the market price of our Class A common stock could fall substantially, and we could face costly lawsuits, including securities class action suits. Refunds, cancellations, and warranty claims could harm our business.
Changes in weather patterns and an increased frequency, intensity and duration of extreme weather events (such as floods, droughts, hurricanes, earthquakes, wildfires, and severe storms) could, among other things, disrupt the operation of our supply chain, disrupt retail operations and foot traffic at our showrooms, damage or destroy our showrooms, cause shipping delays, and increase our product costs.
Changes in weather patterns and an increased frequency, intensity and duration of extreme weather events (such as floods, droughts, hurricanes, earthquakes, wildfires, and severe storms) could, among other things, disrupt the operation of our supply chain and retail operations and foot traffic at our showrooms, damage or destroy our showrooms, cause shipping delays, and increase our product costs.
If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
If some investors find our Class A common stock less attractive and as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
Data Protection Act, and the U.K. and EU General Data Protection Regulations; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs; • tariffs and other non-tariff barriers, such as quotas and local content rules; • differing and potentially adverse tax laws, including resulting from the complexities of foreign corporate income tax systems, value added tax (“VAT”) regimes, tax withholding rules, and other indirect taxes, tax collection or remittance obligations; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; and • political or social unrest or economic instability in a specific country or region in which we operate.
Data Protection Act, and the U.K. and EU General Data Protection Regulations; • varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs; • tariffs and other non-tariff barriers, such as quotas and local content rules; • differing and potentially adverse tax laws, including resulting from the complexities of foreign corporate income tax systems, value added tax (“VAT”) regimes, tax withholding rules, duties and other indirect taxes, tax collection or remittance obligations; • fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; and • political or social unrest or economic instability in a specific country or region in which we operate.
The price of shares of our Class A common stock has fluctuated in the past and may continue to fluctuate in response to a variety of factors, including the following: • technological developments and changes in consumer behavior in our industry; • security breaches related to our systems or those of our affiliates or strategic partners; • changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the jewelry and consumer retail environment; • changes in market valuations of, or earnings and other announcements by, companies in our industry; • declines in the market prices of stocks generally, particularly those of jewelry and consumer retail companies; • strategic actions by us or our competitors; • announcements by us, our competitors or our strategic partners of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships, or capital commitments; • changes in business or regulatory conditions; • future sales of our Class A common stock or other securities; • investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; • the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; • announcements relating to litigation or increases in compliance or enforcement inquiries and investigations by regulatory authorities; • guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance; • changes in accounting principles; • short sales, hedging and other derivative transactions involving our common stock; and effects of recession or economic growth in the United States and abroad, rising high inflation and interest rates, bank failures, 55 Table of Contents fuel prices, international currency fluctuations, corruption, political instability, acts of war, including the conflicts in Europe and the Middle East, acts of terrorism, an outbreak of highly infectious or contagious diseases, or responses to these events; and • the other factors described in this “Risk Factors” section of this Annual Report on Form 10-K.
The price of shares of our Class A common stock has fluctuated in the past and may continue to fluctuate in response to a variety of factors, including the following: • technological developments and changes in consumer behavior in our industry; • security breaches related to our systems or those of our affiliates or strategic partners; • changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the jewelry and consumer retail environment; • changes in market valuations of, or earnings and other announcements by, companies in our industry; • declines in the market prices of stocks generally, particularly those of jewelry and consumer retail companies; • strategic actions by us or our competitors; • announcements by us, our competitors or our strategic partners of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships, or capital commitments; • changes in business or regulatory conditions; • future sales of our Class A common stock or other securities; • investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; • the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; • announcements relating to litigation or increases in compliance or enforcement inquiries and investigations by regulatory authorities; • guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance; • changes in accounting principles; • short sales, hedging and other derivative transactions involving our common stock; and effects of recession or economic growth in the United States and abroad, rising high inflation and interest rates, bank failures, fuel prices, international currency fluctuations, corruption, political instability, acts of war, including the conflicts in Europe and the Middle East, acts of terrorism, an outbreak of highly infectious or contagious diseases, or responses to these events; and • the other factors described in this “Risk Factors” section of this Annual Report on Form 10-K.
Risks Related to Our Business and Industry Fluctuations in the pricing and supply of diamonds, other gemstones, and precious metals, particularly responsibly sourced natural and lab-grown diamonds and repurposed precious metals such as gold, which account for the majority of our merchandise costs, increases in labor costs for manufacturing such as wage rate increases, as well as inflation, and energy prices could adversely impact our sales, earnings and cash availability.
Risks Related to Our Business and Industry Fluctuations in the pricing and supply of diamonds, other gemstones, and precious metals, particularly responsibly sourced natural and lab-grown diamonds and repurposed precious metals such as gold and platinum, which account for the majority of our merchandise costs, increases in labor costs for manufacturing such as wage rate increases, as well as inflation, and energy prices could adversely impact our sales, earnings and cash availability.
Due to concerns about data security and integrity, a growing number of national and international legislative and regulatory bodies have adopted breach notification and other requirements in the event that information subject to such laws is misused or accessed by unauthorized persons and additional regulations regarding the use, access, accuracy and security of such data are possible.
Due to concerns about data security and integrity, a growing number of national and international legislative and regulatory bodies have adopted mandatory breach notification and other requirements in the event that information subject to such laws is misused or accessed by unauthorized persons and additional regulations regarding the use, access, accuracy and security of such data are possible.
Accordingly, we might need or may want to engage in future equity or debt financings to secure additional funds. 37 Table of Contents Our current debt holders and potential future debt holders have or would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock.
Accordingly, we might need or may want to engage in future equity or debt financings to secure additional funds. 37 Table of Contents Any potential future debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock.
Failure to realize (or timely achieve progress on) our aspirational goals and targets could adversely affect our third-party ESG ratings, our reputation, or otherwise adversely affect our business and operating results. In addition, various regulatory authorities have imposed, and may continue to impose, mandatory substantive and/or disclosure requirements with respect to ESG matters.
Failure to realize (or timely achieve progress on) our aspirational goals and targets could adversely affect our third-party ESG ratings, our reputation, or otherwise adversely affect our business and operating results. In addition, various authorities have imposed, and may continue to impose, mandatory substantive and/or disclosure requirements with respect to ESG matters.
There are also specific rules on the use of automated decision making under the GDPR that provide the data subject the right not to be subject to a decision based solely on automated processing, including profiling, which produces legal effects concerning him or her or similarly significantly affects him or her.
There are also specific rules on the use of automated decision making under the GDPR that provide the data subject with the right not to be subject to a decision based solely on automated processing, including profiling, which produces legal effects concerning him or her or similarly significantly affects him or her.
We will need to generate and sustain increased revenue and manage our costs to sustain profitability. Even if we do, we may not be able to sustain or increase our profitability. Our ability to generate sales and profit depends on our ability to grow our number of customers and drive operational efficiencies in our business to generate better margins.
We will need to generate and sustain increased revenue and manage our costs effectively to sustain profitability. Even if we do, we may not be able to sustain or increase our profitability. Our ability to generate sales and profit depends on our ability to grow our number of customers and drive operational efficiencies in our business to generate better margins.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere are causing significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere is causing significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
As a result of (1) potential differences in the amount of net taxable income allocable to us and to Brilliant Earth, LLC’s other equityholders, (2) the lower tax rate applicable to corporations as opposed to individuals, and (3) certain tax benefits that we anticipate from (a) future purchases or redemptions of LLC Interests from the Continuing Equity Owners, (b) payments under the Tax Receivable Agreement and (c) any acquisition of interests in Brilliant Earth, LLC from other equityholders, these tax distributions may be in amounts that exceed our tax liabilities.
As a result of (1) potential differences in the amount of net taxable income allocable to us and to Brilliant Earth, LLC’s other equity holders, (2) the lower tax rate applicable to corporations as opposed to individuals, and (3) certain tax benefits that we anticipate from (a) future purchases or redemptions of LLC Interests from the Continuing Equity Owners, (b) payments under the Tax Receivable Agreement and (c) any acquisition of interests in Brilliant Earth, LLC from other equity holders, these tax distributions may be in amounts that exceed our tax liabilities.
While we employ security measures to prevent, detect, and mitigate potential for harm from the misuse of user credentials on our network, these measures may not be effective in every instance.
While we employ security measures designed to prevent, detect, and mitigate potential for harm from the misuse of user credentials on our network, these measures may not be effective in every instance.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • allocation of expenses to and among different jurisdictions; • changes to our assessment about our ability to realize, or in the valuation of, our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany reorganization; • changes in tax laws, tax treaties, regulations or interpretations thereof; • the outcome of current and future tax audits, examinations, or administrative appeals; • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates; and • limitations or adverse findings regarding our ability to do business in some jurisdictions.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • allocation of expenses to and among different jurisdictions; • changes to our assessment about our ability to realize, or in the valuation of, our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany reorganization; • changes in tax laws, tax treaties, regulations or interpretations thereof; • the outcome of current and future tax audits, examinations, or administrative appeals; 53 Table of Contents • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates; and • limitations or adverse findings regarding our ability to do business in some jurisdictions.
Additionally, if the costs of search engine marketing services, such as Google AdWords, or the costs of other advertisements increase, we may incur additional marketing expenses, we may be required to allocate a larger portion of our marketing spend to this channel or we may be forced to attempt to replace it with another channel (which may not be available at reasonable prices, if at all), and our business, financial condition, and results of operations could be adversely affected.
Additionally, if the costs of search engine marketing services, such as Google Words, or the costs of other advertisements increase, we may incur additional marketing expenses, we may be required to allocate a larger portion of our marketing spend to this channel or we may be forced to attempt to replace it with another channel (which may not be available at reasonable prices, if at all), and our business, financial condition, and results of operations could be adversely affected.
In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include: • our ability to accurately forecast net sales and appropriately plan our expenses, capital expenditures and expenditures on inventory; • the timing, size and effectiveness of our marketing efforts; • the timing and success of new product introductions by us or our competitors or any other change in the competitive landscape of our market; • successful expansion into new markets; • changes to financial accounting standards and the interpretation of those standards, which may affect the way we recognize and report our financial results; • the effectiveness of our internal controls; • the seasonality of our business; • changes in business or macroeconomic conditions, lower consumer spending, recessionary conditions, increased inflation, increased interest rates, increased unemployment rates, stagnant or declining wages, political unrest, armed conflicts, or natural disasters; and • our ability to collect payments from customers on a timely basis.
In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include: • our ability to accurately forecast net sales and appropriately plan our expenses, capital expenditures and our ability to accurately plan and manage our working capital needs, including expenditures on inventory; • the timing, size and effectiveness of our marketing efforts; • the timing and success of new product introductions by us or our competitors or any other change in the competitive landscape of our market; • successful expansion into new markets; • changes to financial accounting standards and the interpretation of those standards, which may affect the way we recognize and report our financial results; • the effectiveness of our internal controls; • the seasonality of our business; • changes in business or macroeconomic conditions, lower consumer spending, recessionary conditions, increased inflation, increased interest rates, increased unemployment rates, stagnant or declining wages, political unrest, armed conflicts, or natural disasters; and • our ability to collect payments from customers on a timely basis.
We rely on a limited number of contract manufacturers and logistics partners for our products. A loss of any of these partners could negatively affect our business. We rely on a limited number of contract manufacturers and logistics partners to manufacture and transport our products.
A loss of any of these partners could negatively affect our business. We rely on a limited number of contract manufacturers and logistics partners to manufacture and transport our products.
In addition, our IT Systems and those of our third-party service providers and business partners may be vulnerable to data breaches, cyberattacks, phishing, social engineering, ransomware, and other security incidents compromising the confidentiality, integrity, and availability of our IT Systems and Confidential Information, acts of vandalism, computer viruses and malware, malicious code embedded in open-source software, or misconfigurations, "bugs" or other vulnerabilities in commercial software that is integrated into our (or our suppliers' or service providers') IT systems, products or services, errors or malfeasance of personnel, security vulnerabilities in the software or systems on which we rely, or other similar events.
In addition, our IT Systems and those of our third-party service providers and business partners may be vulnerable to data breaches, cyberattacks, phishing, social engineering, ransomware, and other security incidents compromising the confidentiality, integrity, and availability of our IT Systems and Confidential Information, acts of vandalism, computer viruses and malware, malicious code embedded in open-source software, or misconfigurations, "bugs" or other vulnerabilities in commercial software that is integrated into our (or our suppliers' or service providers') IT systems, products or services, errors or malfeasance of personnel, security vulnerabilities in the software or systems 29 Table of Contents on which we rely, or other similar events.
Under the Tax Receivable Agreement, we are required to make cash payments to the Continuing Equity Owners equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (1) increases in Brilliant Earth Group, Inc.’s allocable share of the tax basis of Brilliant Earth, LLC’s assets resulting from (a) Brilliant Earth Group, Inc.’s purchase (or deemed purchase) of LLC Interests from each Continuing Equity Owner, (b) any future redemptions or exchanges of LLC Interests for Class A common stock or Class D common stock (or cash), and (c) certain distributions (or deemed distributions) by Brilliant Earth, LLC; and (2) certain tax benefits arising from payments under the Tax Receivable Agreement.
Under the Tax Receivable Agreement, we are required to make cash payments to the Continuing Equity Owners equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as 51 Table of Contents a result of (1) increases in Brilliant Earth Group, Inc.’s allocable share of the tax basis of Brilliant Earth, LLC’s assets resulting from (a) Brilliant Earth Group, Inc.’s purchase (or deemed purchase) of LLC Interests from each Continuing Equity Owner, (b) any future redemptions or exchanges of LLC Interests for Class A common stock or Class D common stock (or cash), and (c) certain distributions (or deemed distributions) by Brilliant Earth, LLC; and (2) certain tax benefits arising from payments under the Tax Receivable Agreement.
Additionally, changes in regulations could limit the ability of search engines, social media platforms, and other advertising partners, including, but not limited to, Google and Facebook, to collect data from users and engage in targeted advertising, making them less effective in disseminating our advertisements to our target customers.
Additionally, changes in regulations could limit the ability of search engines, social media platforms, and other advertising partners, including, but not limited to, Google and Meta, to collect data from users and engage in targeted advertising, making them less effective in disseminating our advertisements to our target customers.
Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanisms or opt-out preference signals as a result of industry regulatory or legal developments, the adoption by consumers of browser settings or “ad-blocking” software, and the development and deployment of new technologies could materially impact our ability to collect data or reduce our ability to deliver relevant promotions or media, which could materially impair the results of our operations.
Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanisms or opt-out preference signals as a result of industry regulatory or legal developments, the adoption by consumers of browser settings or “ad-blocking” software, and the development and deployment of new technologies could 43 Table of Contents materially impact our ability to collect data or reduce our ability to deliver relevant promotions or media, which could materially impair the results of our operations.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and non-accelerated filers as long as we qualify under these categories, even after we are no longer an EGC, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
We may take advantage of certain of the scaled disclosures available to smaller reporting companies and non-accelerated 57 Table of Contents filers as long as we qualify under these categories, even after we are no longer an EGC, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
Securities and Exchange Commission (the “SEC”) of the type and “aggregate value” of user data used by harvesting companies, such as, but not limited to, Facebook, Google, and Amazon, including how net sales is generated by user data and what measures are taken to protect the data.
Securities and Exchange Commission (the “SEC”) of the type and “aggregate value” of user data used by harvesting companies, such as, but not limited to, Meta, Google, and Amazon, including how net sales is generated by user data and what measures are taken to protect the data.
In addition, we must keep up to date with competitive technology trends, including the use of new or improved technology, creative user interfaces, virtual and augmented reality, and other e-commerce marketing tools such as paid search and mobile applications (“apps”), and social media platforms, among others, which may increase our costs and may not increase sales or attract customers.
In addition, we must keep up to date with competitive technology trends, including the use of new or improved technology, creative user interfaces, virtual and augmented reality, and other e-commerce marketing tools such as paid search and mobile applications (“apps”), and social media platforms, among others, which may increase our 32 Table of Contents costs and may not increase sales or attract customers.
As a result of the foregoing, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, based on certain assumptions (including that we earn sufficient taxable income to realize all potential tax benefits that are subject to the Tax Receivable Agreement), which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.
As a result of the foregoing, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, based on certain assumptions (including that we earn sufficient taxable income to realize all potential tax benefits that are subject to 52 Table of Contents the Tax Receivable Agreement), which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.
If any of these events were to occur, our business, financial condition, and results of operations could be materially adversely affected. We occasionally receive orders placed with fraudulent credit cards or other payment data, including stolen credit card numbers, or from clients who have closed bank accounts or have insufficient funds in open bank accounts to satisfy payment obligations.
If any of these events were to occur, our business, financial condition, and results of operations could be materially adversely affected. 49 Table of Contents We occasionally receive orders placed with fraudulent credit cards or other payment data, including stolen credit card numbers, or from clients who have closed bank accounts or have insufficient funds in open bank accounts to satisfy payment obligations.
The possibility of constraints in the supply of diamonds we require to meet our Beyond Conflict Free ® or our Pathway to Beyond 20 Table of Contents Conflict Free TM requirements or our repurposed or lab-grown diamonds requirements may result in changes in our supply chain practices and could substantially impair our ability to acquire such diamonds at commercially reasonable prices, if at all, which could negatively affect our sales and results of operations .
The possibility of constraints in the supply of diamonds we require to meet our Beyond Conflict Free™ or our Pathway to Beyond Conflict Free TM requirements or our repurposed or lab-grown diamonds requirements may result in changes in our supply chain practices and could substantially impair our ability to acquire such diamonds at commercially reasonable prices, if at all, which could negatively affect our sales and results of operations .
Any of the foregoing may require us to make additional investments in facilities and equipment, require us to incur additional 31 Table of Contents costs for the collection of data and/or preparation of disclosures and associated internal controls, may impact the availability and cost of key raw materials used in the production of our products or the demand for our products, and, in turn, may adversely impact our business, operating results, and financial condition.
Any of the foregoing may require us to make additional investments in facilities and equipment, require us to incur additional costs for the collection of data and/or preparation of disclosures and associated internal controls, may impact the availability and cost of key raw materials used in the production of our products or the demand for our products, and, in turn, may adversely impact our business, operating results, and financial condition.
If our number of customers declines or fluctuates for any of these or other reasons, our business would suffer. 22 Table of Contents We have grown rapidly in recent years and have limited operating experience at our current scale of operations. If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer.
If our number of customers declines or fluctuates for any of these or other reasons, our business would suffer. We have grown rapidly in recent years and have limited operating experience at our current scale of operations. If we are unable to manage our growth effectively, our brand, company culture, and financial performance may suffer.
We recognize that consumer tastes cannot be predicted with certainty and are subject to change, which is compounded by the expanding use of digital and social media by consumers and the speed by which information and opinions are shared. Our product development strategy is to introduce new design collections, primarily jewelry, and/or expand certain existing collections regularly.
Consumer tastes cannot be predicted with certainty and are subject to change, which is compounded by the expanding use of digital and social media by consumers and the speed by which information and opinions are shared. Our product development strategy is to introduce new design collections, primarily jewelry, and/or expand certain existing collections regularly.
If any of our infrastructure providers increase the costs of their services, our business, financial condition, or results of operations could be materially and adversely affected. 48 Table of Contents We rely on our suppliers, third-party carriers, and third-party jewelers as part of our fulfillment process, and these third parties may fail to adequately serve our customers.
If any of our infrastructure providers increase the costs of their services, our business, financial condition, or results of operations could be materially and adversely affected. We rely on our suppliers, third-party carriers, and third-party jewelers as part of our fulfillment process, and these third parties may fail to adequately serve our customers.
The Continuing Equity Owners can take actions that have the effect of delaying or preventing a change of control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them.
The Continuing Equity Owners can take actions that have the effect of delaying or preventing a change of control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a 54 Table of Contents premium for their shares. These actions may be taken even if other stockholders oppose them.
Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Continuing Equity Owners that will not benefit holders of our Class A common stock to the same extent that they will benefit the Continuing Equity Owners.
Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Continuing Equity Owners that will not benefit holders of our Class A common stock to the same extent that it will benefit the Continuing Equity Owners.
To the extent 47 Table of Contents such vertical integration efforts are successful, some of the fragmentation in the existing diamond supply chain could be eliminated, our ability to obtain an adequate supply of diamonds and fine jewelry from multiple sources could be limited, and our competitors may be able to obtain diamonds at lower prices.
To the extent such vertical integration efforts are successful, some of the fragmentation in the existing diamond supply chain could be eliminated, our ability to obtain an adequate supply of diamonds and fine jewelry from multiple sources could be limited, and our competitors may be able to obtain diamonds at lower prices.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities. In the future, we may also issue securities in connection with investments, acquisitions or capital raising activities.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities. 59 Table of Contents In the future, we may also issue securities in connection with investments, acquisitions or capital raising activities.
In order to protect our brand, we also expend substantial resources to register and defend our trademarks, and to prevent others from using the same or substantially similar marks. Despite these efforts, we may not always be successful in protecting our trademarks, and we may suffer dilution, loss of reputation, or other harm to our brand.
In order to protect our brand, we also expend substantial resources to register and defend our trademarks, and to prevent others from using the same or substantially similar marks. We may not always be successful in protecting our trademarks, and we may suffer dilution, loss of reputation, or other harm to our brand.
In addition, natural disasters such as hurricanes, tornadoes, earthquakes, or wildfires, or a combination of these or other factors, could damage or destroy our facilities or make it difficult for the salesforce or customers to travel to our showrooms, thereby negatively affecting our business and results of operations.
In addition, natural disasters such as hurricanes, tornadoes, earthquakes, or wildfires, or a combination of these or other factors, could damage or destroy our facilities or make it difficult for the sales force or customers to travel to our showrooms, thereby negatively affecting our business and results of operations.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of 59 Table of Contents operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock.
If unauthorized parties gain access to our networks or databases, or those of our third-party service providers or business partners, they may be able to steal, publish, delete, use inappropriately, or modify information we process, including credit card information and personal identification 29 Table of Contents information.
If unauthorized parties gain access to our networks or databases, or those of our third-party service providers or business partners, they may be able to steal, publish, delete, use inappropriately, or modify information we process, including credit card information and personal identification information.
If we become involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from our business regardless of the outcome of such litigation. Our multi-class structure may have a negative impact on the market price of our Class A common stock.
If we become involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from our business regardless of the outcome of such litigation. 55 Table of Contents Our multi-class structure may have a negative impact on the market price of our Class A common stock.
Many customers locate our platform through internet search engines, such as Google, and advertisements on social networking sites such as Meta (formerly, Facebook), Instagram and TikTok and online streaming services.
Many customers locate our platform through internet search engines, such as Google, and advertisements on social networking sites such as Facebook, Instagram and TikTok and online streaming services.
This means that in the event of a security breach we could face government scrutiny, regulatory 30 Table of Contents fines, remediation costs, or consumer class actions alleging statutory damages amounting to hundreds of millions, and possibly billions of U.S. dollars.
This means that in the event of a security breach we could face government scrutiny, regulatory fines, remediation costs, or consumer class actions alleging statutory damages amounting to hundreds of millions, and possibly billions of U.S. dollars.
In addition to federal laws such as Section 5 of the Federal Trade Commission Act, the Gramm-Leach-Bliley Act, and the Fair Credit Reporting Act, many states have enacted laws regulating the collection, use, and disclosure of personal information and requiring that companies implement reasonable data security measures.
In addition to federal laws such as Section 5 of the Federal Trade Commission Act, and the Fair Credit Reporting Act, many states have enacted laws regulating the collection, use, and disclosure of personal information and requiring that companies implement reasonable data security measures.
The third-party providers provide the cloud computing infrastructure we use to host our website, serve our customers, and support our operations and many of the internal tools we use to operate our business. Our website, mobile apps, and internal tools use computing, storage, data transfer, and other functions and services provided by third parties.
The third-party providers provide the cloud computing infrastructure we use to host our website, serve our customers, and support our operations and many of the internal 47 Table of Contents tools we use to operate our business. Our website, mobile apps, and internal tools use computing, storage, data transfer, and other functions and services provided by third parties.
The continuous development, maintenance and operation of our machine learning models is complex, and may involve significant expense and unforeseen difficulties including material performance problems, and undetected defects or errors, for example, with new capabilities incorporating artificial intelligence.
The continuous development, maintenance and operation of our machine learning models is complex, and may involve significant 22 Table of Contents expense and unforeseen difficulties including material performance problems, and undetected defects or errors, for example, with new capabilities incorporating artificial intelligence.
Any interruption or delay in the supply of any of these parts 24 Table of Contents or materials, or the inability to obtain these materials from alternate sources at acceptable prices and within a reasonable amount of time, would harm our ability to timely ship products to our customers.
Any interruption or delay in the supply of any of these parts or materials, or the inability to obtain these materials from alternate sources at acceptable prices and within a reasonable amount of time, would harm our ability to timely ship products to our customers.
If we fail to maintain, protect, and enhance our brand successfully or to maintain loyalty among customers, or if we incur substantial expenses in unsuccessful attempts to maintain, protect, 26 Table of Contents and enhance our brand, we may fail to attract or increase the engagement of customers, and our business, financial condition, and results of operations may suffer.
If we fail to maintain, protect, and enhance our brand successfully or to maintain loyalty among customers, or if we incur substantial expenses in unsuccessful attempts to maintain, protect, and enhance our brand, we may fail to attract or increase the engagement of customers, and our business, financial condition, and results of operations may suffer.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our articles of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Because we have a short history of operating at our current scale, we may be unable to accurately predict operating results, and may be unable to generate sales growth and profitability. Because we have a relatively short operating history at scale, it is difficult for us to predict our future operating results.
Because we have a short history of operating at our current scale, we may be unable to accurately predict operating results, and may be unable to generate sales growth, profitability and positive cash flow. Because we have a relatively short operating history at scale, it is difficult for us to predict our future operating results.
We can be 45 Table of Contents held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
Under the LLC Agreement, we intend to cause Brilliant Earth, LLC, from time to time, to make distributions in cash to its equityholders (including us) in amounts sufficient to cover the taxes imposed on their allocable share of taxable income of Brilliant Earth, LLC.
Under the LLC Agreement, we intend to cause Brilliant Earth, LLC, from time to time, to make distributions in cash to its equity holders (including us) in amounts sufficient to cover the taxes imposed on their allocable share of taxable income of Brilliant Earth, LLC.
Additionally, a significant change in the balance of supply and demand of natural diamonds, continued increase in the supply of lab-grown diamonds, or both, may influence consumer perception of the value of natural and lab-grown diamonds and has contributed and may continue to contribute to decreases in prices of natural and lab-grown diamonds.
A significant change in the balance of supply and demand of natural diamonds, continued increase in the supply of lab-grown diamonds, or both, may influence consumer perception of the value of natural and lab-grown diamonds and has contributed and may continue to contribute to decreases in prices of natural and lab-grown diamo nds.
Our ability to meet increases in demand has been, and may in the future be, impacted by our reliance on the availability of materials. We have in the past and may in the future experience supply shortages, and the predictability of the availability of these materials may be limited.
Our ability to meet increases in demand has been, and may in the future be, impacted by our reliance on the availability of materials. We have in the past and may in the future experience 24 Table of Contents supply shortages, and the predictability of the availability of these materials may be limited.
We have experienced and may continue to experience theft, loss, or damage to our products during the course of shipment to our customers by third-party shipping carriers or from our inventory. Additionally, as of December 31, 2024, we had 40 showrooms and one operations center across the U.S.
We have experienced and may continue to experience theft, loss, or damage to our products during the course of shipment to our customers by third-party shipping carriers or from our inventory. Additionally, as of December 31, 2025, we had 42 showrooms and one operations center across the U.S.
Any challenge to our intellectual property rights 40 Table of Contents could result in them being narrowed in scope or declared invalid or unenforceable. We do not currently own any issued patents, and even if we seek patent protection in the future, we may be unable to obtain or maintain such protection.
Any challenge to our intellectual property rights could result in them being narrowed in scope or declared invalid or unenforceable. We do not currently own any issued patents, and even if we seek patent protection in the future, we may be unable to obtain or maintain such protection.
Although we will retain 15% of the amount of such tax benefits, 52 Table of Contents this and other aspects of our organizational structure may adversely impact the future trading market for our Class A common stock.
Although we will retain 15% of the amount of such tax benefits, this and other aspects of our organizational structure may adversely impact the future trading market for our Class A common stock.
For more detail, see our risk factor titled “Environmental, social, and governance matters may adversely impact our business and reputation.” As we may take steps to voluntarily mitigate our impact on climate change and other ESG issues, we may experience increases in energy and transportation costs, operating expenses, capital expenditures or insurance premiums and deductibles, and other unforeseen adverse effects.
For more detail, see our risk factor titled “Environmental, social, and governance matters may adversely impact our business and reputation.” As we may take steps to voluntarily mitigate our impact on climate 38 Table of Contents change and other ESG issues, we may experience increases in energy and transportation costs, operating expenses, capital expenditures, insurance premiums and deductibles, and other unforeseen adverse effects.
We have grown rapidly over the last several years, and our recent growth rates and financial performance should not necessarily be considered indicative of our future performance. We were founded in 2005 and since then, we have grown to 40 showrooms across the U.S. as of December 31, 2024.
We have grown rapidly over the last several years, and our recent growth rates and financial performance should not necessarily be considered indicative of our future performance. We were founded in 2005 and since then, we have grown to 42 showrooms across the U.S. as of December 31, 2025.
Investors, employees, customers, governmental and regulatory bodies and other stakeholders are increasingly judging companies’ performance on a variety of environmental, social, and governance (“ESG”) matters, which are considered to contribute to the long-term sustainability of companies’ performance. A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized.
Investors, employees, customers, governmental and regulatory bodies and other stakeholders are judging companies’ performance on a variety of environmental, social, and governance (“ESG”) matters, which are considered to contribute to the sustainability of companies’ performance. A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are publicized.
We may also have to redesign our products so they do not infringe, misappropriate, or otherwise violate third-party intellectual property rights, which may not be possible or may require substantial monetary expenditures and time during which our products may not be available for commercialization or use.
We may also have to redesign our products so they do not infringe, misappropriate, or otherwise violate third-party intellectual property rights, which may not be possible or may require substantial monetary expenditures and time 41 Table of Contents during which our products may not be available for commercialization or use.
Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may have an antitakeover effect and may delay, defer, or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
Certain provisions of Nevada law and our articles of incorporation and bylaws may have an antitakeover effect and may delay, defer, or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
The benefits we currently experience from our supplier relationships could be adversely affected if our suppliers: • discontinue selling resources to us; • enter into arrangements with competitors that could impair our ability to source their products, including by giving our competitors exclusivity arrangements or limiting our access to certain resources; • fail to source ethically or responsibly according to our established guidelines; • raise the prices they charge us; • change pricing terms to require us to pay on delivery or upfront, including as a result of changes in the credit relationships some of our suppliers have with their various lending institutions; or • lengthen their lead times.
The benefits we currently experience from our supplier relationships could be adversely affected if our suppliers: • discontinue selling resources to us; • enter into arrangements with competitors that could impair our ability to source their products, including by giving our competitors exclusivity arrangements or limiting our access to certain resources; • fail to source ethically or responsibly according to our established guidelines; • raise the prices they charge us; • change pricing terms to require us to pay on delivery or upfront, including as a result of changes in the credit relationships some of our suppliers have with their various lending institutions; or • lengthen their lead times. 46 Table of Contents Events that adversely impact our suppliers could impair our ability to obtain adequate and timely supplies.
In addition, we generally offer one complimentary resizing within 60 days of when a purchase is available for shipment or pickup. We could incur significant costs to honor this guarantee. We face the risk of theft, loss, or damage to our products from inventory or during shipment.
In addition, we generally offer one complimentary resizing within 60 days of when a purchase is available for shipment or pickup, regardless of sizing range, and within 1 year within sizing range. We could incur significant costs to honor this guarantee. We face the risk of theft, loss, or damage to our products from inventory or during shipment.
Our brand or reputation could also be adversely impacted if industry organizations were to find we did not or no longer meet their standards or membership criteria.
Our 26 Table of Contents brand or reputation could also be adversely impacted if industry organizations were to find we did not or no longer meet their standards or membership criteria.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of December 31, 2024, we have outstanding a total of 13,843,944 shares of Class A common stock.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of December 31, 2025, we have outstanding a total of 15,518,024 shares of Class A common stock.
In light of investors’ increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet society’s expectations as to our proper role or our own ESG goals and values, including in respect of our diamond sourcing standards.
There can be no certainty that we will manage such issues successfully, or that we will successfully meet society’s varied expectations as to our proper role or our own ESG goals and values, including in respect of our diamond sourcing standards.
In addition, international supply chains may be impacted by events outside of our control and limit our ability to cost-effectively procure timely delivery of supplies or finished goods and services.
In addition, international supply chains may be impacted by events outside of our control, such as the imposition of tariffs, which may limit our ability to cost-effectively procure timely delivery of supplies or finished goods and services.
For example, we may be subject to the requirements of the European Union Corporate Sustainability Reporting Directive (“CSRD”) and its implementing laws and regulations and other directives, regulations, disclosure requirements (such as information on greenhouse gas emissions, climate risks, use of offsets, and emissions reduction claims) such as the State of California as well as the SEC’s climate disclosure rules, among other regulations or requirements.
For example, we may be subject to the requirements of the European Union Corporate Sustainability Reporting Directive (“CSRD”) and its implementing laws and regulations and other directives, regulations, disclosure requirements (such as information on greenhouse gas emissions, climate-related financial risks, use of offsets, and emissions reduction claims) such as the State of California's climate rules, among 31 Table of Contents other regulations or requirements.
Significant estimates and judgments involve: revenue recognition, including revenue-related reserves; equity-based compensation; and income tax related items.
Significant estimates and judgments involve revenue recognition, including revenue-related reserves, and income tax related items.
Similarly, we use primarily repurposed precious metals in our gold and silver fine jewelry. There is a limited supply of repurposed platinum, so we work with our suppliers to source repurposed platinum when available and from refiners that are known to use repurposed materials (as represented to us by our suppliers) in their platinum products.
There is a limited supply of repurposed platinum, so we work with our suppliers to source repurposed platinum when available and from refiners that are known to use repurposed materials (as represented to us by our suppliers) in their platinum products.
Several of the materials that go into the manu facturing of our products are sourced internationally. We have seen, and may continue to see, increased congestion and/or new import/export restrictions implemented at ports that we rely on for our business.
Such actions have introduced significant uncertainty into the market. Several of the materials that go into the manufacturing of our products are sourced internationally. We have seen, and may continue to see, increased congestion and/or new import/export restrictions implemented at ports that we rely on for our business.
Any increase in such attacks on us or our third-party providers or other systems could adversely affect our network systems or other operations. 34 Table of Contents We plan to expand into international markets, which will expose us to significant risks.
Any increase in such attacks on us or our third-party providers or other systems could adversely affect our network systems or other operations. We plan to continue to e xpand into international markets, which will expose us to significant risks.
In addition, as of December 31, 2024, we have reserved 12,593,079 shares of Class A common stock for issuance under our 2021 Incentive Award Plan and 1,847,197 shares of Class A common stock for issuance under our Employee Stock Purchase Plan.
In addition, as of December 31, 2025, we have reserved 13,285,276 shares of Class A common stock for issuance under our 2021 Incentive Award Plan and 1,847,197 shares of Class A common stock for issuance under our Employee Stock Purchase Plan.
If we are listed less prominently or fail to appear in search results or advertisements for any reason, visits to our website could decline significantly, and we may not be able to replace this traffic. Search engines revise their algorithms from time to time in an attempt to optimize their search results.
If we are listed less prominently or fail to appear in search results or advertisements for any reason, visits to our website could decline significantly, and we may not be able to replace this traffic.
In addition, in Europe the EU AI Act (which establishes a comprehensive, risk-based governance framework for AI in the EU market) entered into force in August 2024, and the majority of the substantive requirements will apply two years later.
In addition, in Europe the EU Artificial Intelligence Act (the “EU AI Act”) (which establishes a comprehensive, risk-based governance framework for AI in the EU market) entered into force in August 2024, and the majority of the substantive requirements will apply by August 2026.

… 147 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−1 removed5 unchanged
Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, if appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a third-party risk management process for service providers, suppliers, and vendors; and • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents.
Biggest changeKey elements of our cybersecurity risk management program include, but are not limited to the following: • risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, if appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees; • a third-party risk management process for key service providers, suppliers, and vendors based on our assessment of their criticality to our operations; and • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents.
See “Risk Factors – We rely heavily on our information technology systems, as well as those of our third-party vendors and service providers, for our business to effectively operate and to safeguard confidential information and any significant failure, inadequacy or interruption of these systems, security breaches or loss of data could materially adversely affect our business, financial condition and operations.” 62 Table of Contents Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks.
See “ Risk Factors – We rely heavily on our information technology systems, as well as those of our third-party vendors 61 Table of Contents and service providers, for our business to effectively operate and to safeguard confidential information and any significant failure, inadequacy or interruption of these systems, security breaches or loss of data could materially adversely affect our business, financial condition and operations .” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the "Committee") oversight of cybersecurity, including oversight of management’s implementation of our cybersecurity risk management program.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. 63 Table of Contents
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment. 62 Table of Contents
Our management team, including our Chief Executive Officer, Chief Financial Officer, General Counsel, SVP of Technology, and Senior Director IT & Cybersecurity (“Senior Director”), among others in support roles as needed, are responsible for assessing and managing our material risks from cybersecurity threats.
Presentations on cybersecurity topics are made by our SVP, Technology a nd internal cybersecurity staff. Our management team, including our Chief Executive Officer, Chief Financial Officer, General Counsel, SVP of Technology, and Senior Director, Cybersecurity & IT (“Senior Director”), among others in support roles as needed, are responsible for assessing and managing our material risks from cybersecurity threats.
Our management team members have relevant experience in risk assessment and management, and our Senior Director's experience includes over 11 years of cybersecurity experience, Certified Information Systems Security Professional (CISSP) certification, and prior experience at other publicly traded companies with security frameworks, application security, IT security, Cloud security, SOX IT General Controls audits, and PCI-DSS compliance.
Our management team members have relevant experience in risk assessment and management, and our Senior Director's experience includes over 18 years of cybersecurity experience, Certified Information Systems Security Professional (CISSP) and Certified Data Privacy Solutions Engineer® certifications, and prior experience at other publicly traded companies with security frameworks, application security, IT security, Cloud security, SOX IT General Controls audits, GDPR and CACPA regulations, and PCI-DSS compliance..
The Committee reports to the full Board regarding its activities, including those related to cybersecurity, at every Board meeting. The full Board also receives periodic briefings from management on our risk management activities, which includes our cybersecurity risk management. Presentations on cybersecurity topics are made by our SVP, Technology a nd internal cybersecurity staff.
The Committee receives periodic reports on our cybersecurity risks and processes and material cybersecurity incidents, if any, from management. The Committee reports to the full Board regarding its activities, including those related to cybersecurity, at every Board meeting. The full Board also receives periodic briefings from management on our risk management activities, which includes our cybersecurity risk management.
Removed
The Committee oversees management’s implementation of our cybersecurity risk management program. The Committee receives periodic reports on our cybersecurity risks and processes and material cybersecurity incidents, if any from management. In addition, management updates the Committee, as necessary, with a summary of incidents with an immaterial impact.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeGeographic Location Number of Locations Square Footage Retail Showrooms Arizona 1 3,307 California 8 28,128 Colorado 1 11,153 Florida 2 3,680 Georgia 1 2,950 Illinois 2 4,339 Maryland 2 6,706 Massachusetts 3 6,897 Michigan 1 3,111 Minnesota 1 3,112 Missouri 1 2,365 New York 4 13,623 North Carolina 1 1,663 Ohio 2 4,883 Oregon 1 2,660 Pennsylvania 2 5,150 Tennessee 1 1,800 Texas 3 9,088 Virginia 1 2,500 Washington 1 2,597 Washington, D.C. 1 4,795 Total Retail Showrooms 40 124,507 Operations center Secaucus, New Jersey 1 23,817 All of our executive offices and retail showrooms are leased from third parties, and our leases generally have a term of 5 to 10 years and typically include five-year renewal options.
Biggest changeGeographic Location Number of Locations Square Footage Retail Showrooms and Office Locations Arizona 1 3,307 California 8 28,128 Colorado 1 11,153 Florida 2 3,680 Georgia 2 5,415 Illinois 2 4,339 Maryland 2 6,706 Massachusetts 3 6,897 Michigan 1 3,111 Minnesota 1 3,112 Missouri 1 2,365 New York 4 13,623 North Carolina 1 1,663 Ohio 2 4,883 Oregon 1 2,660 Pennsylvania 2 5,150 Tennessee 1 1,800 Texas 4 11,372 Virginia 1 2,500 Washington 1 2,597 Washington, D.C. 1 4,795 Total Retail Showrooms and Office Locations 42 129,256 Operations center Secaucus, New Jersey 1 23,818 All of our executive offices and retail showrooms are leased from third parties, and our leases generally have a term of 5 to 10 years and typically include five-year renewal options.
We believe that our facilities are adequate for our needs and believe that we should be able to renew any of our leases or secure similar property without an adverse impact on our operations. 64 Table of Contents
We believe that our facilities are adequate for our needs and believe that we should be able to renew any of our leases or secure similar property without an adverse impact on our operations. 63 Table of Contents
Item 2. Properties Our principal executive offices are located in San Francisco, CA and Denver, CO. We lease retail showroom, office and operational locations. As of December 31, 2024, we had 40 showrooms and one operations center in the United States. The table below sets forth certain information regarding these properties, all of which are leased.
Item 2. Properties Our principal executive offices are located in San Francisco, CA and Denver, CO. We lease retail showroom, office and operational locations. As of December 31, 2025, we had 42 showrooms and one operations center in the United States. The table below sets forth certain information regarding these properties, all of which are leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed5 unchanged
Biggest changeThe Company intends to vigorously defend the alleged individual and representative claims, and, at this time, any liability related to the alleged claims is not currently probable or reasonably estimable.
Biggest changeThe Company intends to vigorously defend the alleged individual and representative claims, and, at this time, any liability is not expected to be material to the Company's consolidated financial statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+3 added−2 removed4 unchanged
Biggest changeDividend Policy We have not declared or paid any cash dividends on our common stock, and we do not anticipate declaring or paying any cash dividends on our Class A common stock and Class D common stock in the foreseeable future.
Biggest changeWe do not anticipate declaring or paying any cash dividends on ou r Class A and Cla ss D common stock in the foreseeable future. Holders of our Class B common stock and Class C common stock are not entitled to participate in any dividends declared by our Board.
Stockholders As of March 10, 2025 , there were approxima tely 21 ho lders of record of our Class A common stock, 25 holders of record of our Class B common stock and 1 holder of record of our Class C common stock. No shares of our Class D common stock are outstanding.
Stockholders As of March 6, 2026 , there were approxima tely 19 ho lders of record of our Class A common stock, 24 holders of record of our Class B common stock and 1 holder of record of our Class C common stock. No shares of our Class D common stock are outstanding.
Holders of our Class B common stock and Class C common stock are not entitled to participate in any dividends declared by our Board. Furthermore, because we are a holding company, our ability to pay cash dividends on our Class A common stock and Class D common stock depends on our receipt of cash distributions from Brilliant Earth, LLC.
Furthermore, because we are a holding company, our ability to pay cash dividends on our Class A common stock and Class D common stock depends on our receipt of cash distributions from Brilliant Earth, LLC.
The repurchase program does not obligate the Company to acquire any particular amount of Class A common stock and may be modified, suspended or terminated at any time at the discretion of our Board of Directors.
The repurchase program does not obligate the Company to acquire any particular amount of Class A common stock and may be modified, suspended or terminated at any time at the discretion of our Board. There were no repurchases of our Class A common stock during the three months ended December 31, 2025.
Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, industry trends, and other factors that our Board may deem relevant.
Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, industry trends, and other factors that our Board may deem relevant. 65 Table of Contents Recent Sales of Unregistered Securities There were no unregistered sales of our equity securities during the period covered by this Annual Report on Form 10-K.
Removed
Our ability to pay dividends is restricted by the terms of the SVB Credit Agreement and may be restricted by the terms of any future credit agreement, debt or preferred equity securities issued by us.
Added
Dividend Policy In August 2025, the Board declared a one-time cash dividend of $0.25 per share to holders of our Class A common stock and holders of common units of Brilliant Earth, LLC, respectively. The distribution from Brilliant Earth, LLC totaled approximately $25.0 million, of which a pro rata portion was used by us to fund the dividend.
Removed
Recent Sales of Unregistered Securities There were no unregistered sales of our equity securities during the period covered by this Annual Report on Form 10-K. 66 Table of Contents Purchase of Equity Securities by the Issuer The following table presents information with respect to our repurchases of our Class A common stock during the three months ending December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per share Total Number of shares Purchased as Part of Publicly Announced Plans or Programs 1 Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1 - October 31 41,142 $ 1.80 41,142 $19.5 million November 1 - November 30 35,843 $ 1.75 35,843 $19.4 million December 1 - December 31 30,441 $ 2.01 30,441 $19.4 million (1) On December 8, 2023, the Company announced that the Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20.0 million of the Company's Class A common stock through the expiration of the program on December 8, 2026.
Added
Payment of the dividend was made on September 8, 2025 to holders of record of our Class A common stock as of the close of business on August 22, 2025. Approximately $21.2 million was paid to holders of common units of Brilliant Earth, LLC and approximately $3.8 million was paid to holders of the Company's Class A common stock.
Added
Purchase of Equity Securities by the Issuer On December 8, 2023, the Company announced that the Board approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20.0 million of the Company's Class A common stock through the expiration of the program on December 8, 2026.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

62 edited+30 added−27 removed71 unchanged
Biggest changeComparison of Years Ended December 31, 2024 and 2023 The following table sets forth our statements of operations for the years ended December 31, 2024 and 2023, including amounts and percentages of net sales for each year and the year-to-year change in dollars and percent (amounts in thousands): Year ended December 31, 2024 2023 Year over year change Amount Percent Amount Percent Amount Percent Consolidated statements of operations data*: Net sales $ 422,161 100.0 % $ 446,382 100.0 % $ (24,221) (5.4) % Cost of sales 167,759 39.7 % 189,382 42.4 % (21,623) (11.4) % Gross profit 254,402 60.3 % 257,000 57.6 % (2,598) (1.0) % Operating expenses: Marketing and advertising 108,339 25.7 % 119,341 26.7 % (11,002) (9.2) % General and administrative 142,713 33.8 % 133,177 29.8 % 9,536 7.2 % Total operating expenses 251,052 59.5 % 252,518 56.6 % (1,466) (0.6) % Income from operations 3,350 0.8 % 4,482 1.0 % (1,132) (25.3) % Interest expense (5,031) (1.2) % (5,128) (1.1) % (97) (1.9) % Other income, net 5,835 1.4 % 4,949 1.1 % 886 17.9 % Income before tax 4,154 1.0 % 4,303 1.0 % (149) (3.5) % Income tax (expense) benefit (160) — % 431 0.1 % (591) (137.1) % Net income $ 3,994 0.9 % $ 4,734 1.1 % $ (740) (15.6) % Net income allocable to non-controlling interest 3,453 0.8 % 4,150 0.9 % (697) (16.8) % Net income allocable to Brilliant Earth Group, Inc. $ 541 0.1 % $ 584 0.1 % $ (43) (7.4) % * Amounts may not sum due to rounding Net Sales Net sales for the year ended December 31, 2024 decreased by $24.2 million , or 5.4%, compared to the year ended December 31, 2023.
Biggest changeComparison of Years Ended December 31, 2025 and 2024 The following table sets forth our statements of operations for the years ended December 31, 2025 and 2024, including amounts and percentages of net sales for each year and the year-to-year change in dollars and percent (dollars in thousands): Year ended December 31, 2025 2024 Year over year change Amount Percent Amount Percent Amount Percent Consolidated statements of operations data: Net sales $ 437,483 100.0 % $ 422,161 100.0 % $ 15,322 3.6 % Cost of sales 185,979 42.5 % 167,759 39.7 % 18,220 10.9 % Gross profit 251,504 57.5 % 254,402 60.3 % (2,898) (1.1) % Operating expenses: Marketing and advertising 105,965 24.2 % 108,339 25.7 % (2,374) (2.2) % General and administrative 150,915 34.5 % 142,713 33.8 % 8,202 5.7 % Total operating expenses 256,880 58.7 % 251,052 59.5 % 5,828 2.3 % (Loss) income from operations (5,376) (1.2) % 3,350 0.8 % (8,726) (260.5) % Interest expense (2,282) (0.5) % (5,031) (1.2) % 2,749 54.6 % Other income, net 3,668 0.8 % 5,835 1.4 % (2,167) (37.1) % Gain on TRA liability adjustment 7,804 1.8 % — — % 7,804 100.0 % Loss on extinguishment of debt (573) (0.1) % — 0.0 % (573) (100.0) % Income before income tax expense 3,241 0.7 % 4,154 1.0 % (913) (22.0) % Income tax expense (9,641) (2.2) % (160) — % (9,481) (5925.6) % Net (loss) income $ (6,400) (1.5) % $ 3,994 0.9 % $ (10,394) (260.2) % Net (loss) income allocable to non-controlling interest (2,765) (0.6) % 3,453 0.8 % (6,218) (180.1) % Net (loss) income allocable to Brilliant Earth Group, Inc. $ (3,635) (0.8) % $ 541 0.1 % $ (4,176) (771.9) % Net Sales Net sales for the year ended December 31, 2025 increased by $15.3 million, or 3.6%, c ompared to the year ended December 31, 2024.
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 income that may vary substantially in frequency and magnitude from period to period.
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 income prepared in accordance with GAAP and should be read only in conjunction with financial information presented on a GAAP basis.
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.
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.
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.
Reconciliations of each of Adjusted EBITDA and Adjusted EBITDA margin to its most directly comparable GAAP financial measure, net income and net 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 years presented.
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 years presented.
Further, we will evaluate the likelihood that we will realize the benefit represented by the deferred tax asset and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we will reduce the carrying amount of the deferred tax asset with a valuation allowance.
Further, we evaluate the likelihood that we will realize any benefit represented by the deferred tax asset and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we will reduce the carrying amount of the deferred tax asset with a valuation allowance.
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.
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.
We intend to strategically open showrooms in the future, and we believe we can 69 Table of Contents achieve broad national showroom coverage with far fewer locations than many traditional retailers. We rely on this highly efficient showroom model to complement our digital strategy and to drive future growth and profitability.
We intend to strategically open showrooms in the 68 Table of Contents future, and we believe we can achieve broad national showroom coverage with far fewer locations than many traditional retailers. We rely on this highly efficient showroom model to complement our digital strategy and to drive future growth and profitability.
We have capital commitments of $0.8 million related to new showroom construction and improvements to existing locations as of December 31, 2024. From time to time in the normal course of business, we will enter into agreements with suppliers or service providers.
We have capital commitments of $0.8 million related to new showroom construction and improvements to existing locations as of December 31, 2025. From time to time in the normal course of business, we will enter into agreements with suppliers or service providers.
Income Tax (Expense) Benefit Income tax (expense) benefit represents the federal and st ate income or franchise taxes asse ssed on Brilliant Earth Group, Inc's share of taxable income for the period. 72 Table of Contents Results of Operations The results of operations data in the following tables for the periods presented have been derived from the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Income Tax Expense Income tax expense represents the federal and st ate income or franchise taxes asse ssed on Brilliant Earth Group, Inc's share of taxable income for the period. 71 Table of Contents Results of Operations The results of operations data in the following tables for the periods presented have been derived from the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Interest Expense Interest expense primarily consists of interest incurred under our SVB Credit Agreement (defined below) . Other Income, Net Other income, net consists primarily of interest income earned on certain cash balances and other miscellaneous income, partially offset by expenses such as losses on exchange rates on consumer payments.
Interest Expense Interest expense primarily consists of interest incurred under our SVB Credit Agreement . Other Income, Net Other income, net consists primarily of interest income earned on certain cash balances and other miscellaneous income, partially offset by expenses such as losses on exchange rates on consumer payments.
General and administrative expenses also consist of information technology and other software related costs, rent 71 Table of Contents and lease related expenses, depreciation and amortization expense, merchant processing fees, as well as professional fees, other general corporate expenses and charitable donations in connection with funding the Brilliant Earth Foundation, a donor advised fund, to support our charitable giving efforts.
General and administrative expenses also consist of information technology and other software related costs, rent and lease related expenses, depreciation and amortization expense, merchant processing fees, as well as professional fees, other general corporate expenses and charitable donations in connection with funding the Brilliant Earth Foundation, a donor advised fund, to support our charitable giving efforts.
For additional information regarding our long-term debt activity, see Note 8, Debt to the audited consolidated financial statements included elsewhere in the Annual Report on Form 10-K. Additional Liquidity Requirements We are a holding company and have no material assets other than our ownership of LLC Interests. We have no independent means of generating revenue.
For additional information regarding our long-term debt activity, see Note 8, Debt to the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 78 Table of Contents Additional Liquidity Requirements We are a holding company and have no material assets other than our ownership of LLC Interests. We have no independent means of generating revenue.
Average Order Value We define average order value, or AOV, as net sales in a given period divided by total orders in that period. We believe that AOV is a measure that is useful to investors and management in understanding our ongoing operations and in an analysis of ongoing operating trends.
We believe that total orders is a measure that is useful to investors and management in understanding our ongoing operations and in an analysis of ongoing operating trends. 74 Table of Contents Average Order Value We define average order value, or AOV, as net sales in a given period divided by total orders in that period.
The share repurchase program does not obligate the Company to acquire a specific number of shares of Class A common stock and may be suspended, terminated, or modified at any time without notice, at the discretion of the Board.
The share repurchase program 79 Table of Contents does not obligate the Company to acquire a specific number of shares of Class A common stock and may be suspended, terminated, or modified at any time without notice, at the discretion of the Board.
Payments on operating lease liabilities increased from the prior year due to additional leased showrooms acquired during the year ended December 31, 2024. Investing Activities Net cash used in investing activities was $4.9 million for the year ended December 31, 2024 compared to $11.9 million for the year ended December 31, 2023.
Payments on operating lease liabilities increased from the prior year due to additional leased showrooms acquired during the year ended December 31, 2025. Investing Activities Net cash used in investing activities was $4.0 million for the year ended December 31, 2025 compared to $4.9 million for the year ended December 31, 2024.
The decrease in net income allocable to the NCI was primarily due to a decrease in net income from the prior year. 74 Table of Contents Key Metrics We monitor the key business metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies.
The decrease in net (loss) income allocable to the NCI was primarily due to a decrease in earnings from the prior year. Key Metrics We monitor the key business metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies.
As of December 31, 2024, contractual obligations with a remaining term in excess of 12 months primarily related to marketing and advertising spending as well as software maintenance totaled $8.2 million .
As of December 31, 2025, contractual obligations with a remaining term in excess of 12 months primarily related to marketing and advertising spending as well as software maintenance totaled $2.9 million .
We believe growing and managing our showrooms will drive accelerated growth by increasing our AOV compared to e-commerce orders, improving conversion in the showrooms’ metro regions compared to pre-opening conversion, and raising our brand awareness.
We believe growing and managing our showrooms will drive accelerated growth by increasing our average order value (“AOV”) compared to e-commerce orders, improving conversion in the showrooms’ metro regions compared to pre-opening conversion, and raising our brand awareness.
We define Adjusted EBITDA as net 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 as net (loss) income excluding interest expense, income tax expense (benefit), depreciation expense, amortization of cloud-based software implementation costs, showroom pre-opening expense, equity-based compensation expense, other income, net loss on extinguishment of debt, 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 have been growing our fine jewelry sales a nd believe this represents an opportunity for future growth. 68 Table of Contents Below is a summary of our performance for the year ended December 31, 2024: • Net sales of $422.2 million compared to $446.4 million for the year ended December 31, 2023; • Net income of $4.0 million compared to $4.7 million for the year ended December 31, 2023; • Net income margin of 0.9% co mpared to 1.1% for the year ended December 31, 2023; • Adjusted EBITDA of $21.1 million compared to $26.2 million for the year ended December 31, 2023; and • Adjusted EBITDA margin of 5.0% c ompared to 5.9% for the year ended December 31, 2023.
We have been growing our fine jewelry sales a nd believe this represents an opportunity for future growth. 67 Table of Contents Below is a summary of our performance for the year ended December 31, 2025: • Net sales of $437.5 million compared to $422.2 million for the year ended December 31, 2024; • Net loss of $6.4 million compared to net income of $4.0 million for the year ended December 31, 2024; • Net loss margin of 1.5% co mpared to net income margin of 0.9% for the year ended December 31, 2024; • Adjusted EBITDA of $12.0 million compared to $21.1 million for the year ended December 31, 2024; and • Adjusted EBITDA margin of 2.7% c ompared to 5.0% for the year ended December 31, 2024.
Contractual Obligations and Commitments We lease our showrooms and headquarters office space under non-cancelable lease agreements whereby $8.4 million is due in the year ended December 31, 2025. Total future lease payments as of December 31, 2024 are $50.9 million .
Contractual Obligations and Commitments We lease our showrooms and headquarters office space under non-cancelable lease agreements whereby $9.0 million is due in the year ended December 31, 2026 . Total future lease payments as of December 31, 2025 are $45.2 million .
The overall decrease in operating cash flows was driven by higher cash outflows for working capital compared to the prior year as discussed above. The Company had an increase in inventory purchases and an increase in spend on prepaid expenses and cloud computing assets.
The overall decrease in operating cash flows was primarily driven by a decrease in earnings and higher cash outflows for working capital compared to the prior year as discussed above. The Company had increases in inventory purchases and prepaid expenses and cloud computing assets.
Other Income, Net Other income, net for the year ended December 31, 2024 increased by $0.9 million , or 17.9%, compared to the year ended December 31, 2023, primarily due to increased interest income earned on our cash balances. Additionally, this amount includes immaterial losses on exchange rates on consumer payments and other miscellaneous income.
Other Income, Net Other income, net for the year ended December 31, 2025 decreased by $2.2 million, or 37.1% , compared to the year ended December 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.
We maintain a returns asset account, less any expected costs to recover, and a refund liabilities account to record the effects of estimated product returns and sales returns and allowances, which are updated at the end of each financial reporting period with the effect of such changes accounted for in the period in which such changes occur.
There are no additional performance obligations in relation to the third-party plan. 80 Table of Contents We maintain a returns asset account, less any expected costs to recover, and a refund liabilities account to record the effects of estimated product returns and sales returns and allowances, which are updated at the end of each financial reporting period with the effect of such changes accounted for in the period in which such changes occur.
We also typically provide one complimentary resizing for standard ring styles within 60 days of when an order is available for shipment or pickup, a lifetime manufacturing warranty (except center diamonds/gemstones), and a lifetime diamond upgrade program on all diamonds that meet certain criteria.
We also typically provide one complimentary resizing within 60 days of when a purchase is available for shipment or pickup, regardless of sizing range, and within 1 year within sizing range, a lifetime manufacturing warranty (except center diamonds/gemstones), and a lifetime diamond upgrade program on all diamonds that meet certain criteria.
AOV varies depending on the product type and number of items per order. AOV may also fluctuate as we expand into and increase our presence in additional product lines and price points, and open additional showrooms. Non-GAAP Financial Measures We report our financial results in accordance with GAAP.
AOV may also fluctuate as we expand into and increase our presence in additional product lines and price points, and open additional showrooms. Non-GAAP Financial Measures We report our financial results in accordance with GAAP.
Net Income Allocable to Non-Controlling Interests The net income allocable to the non-controlling interests (“NCI”) of Brilliant Earth, LLC was $3.5 million , and 86.5% of net income of the Company for the year ended December 31, 2024, compared to $4.2 million and 87.7% of net income of the Company for the year ended December 31, 2023.
Net (Loss) Income Allocable to Non-Controlling Interests The net loss allocable to the non-controlling interests (“NCI”) of Brilliant Earth, LLC was $2.8 million for the year ended December 31, 2025, compared to net income of $3.5 million for the year ended December 31, 2024.
For the twelve months ended December 31, 2024, the Company declared and paid $1.8 million of tax distributions and TRA payments to, or on behalf of, members associated with their estimated income tax obligations.
For the twelve months ended December 31, 2025, the Company declared and paid $6.8 million of tax distributions to, or on behalf of, members associated with their estimated income tax obligations pursuant to t he LLC Agreement.
The following table sets forth our key performance metrics for the periods presented (amounts in thousands, except for total orders and AOV): For the years ended December 31, 2024 2023 Change % Change Net Sales $ 422,161 $ 446,382 $ (24,221) (5.4) % Total Orders 186,030 174,576 11,454 6.6 % AOV $ 2,269 $ 2,557 $ (288) (11.3) % Net Sales Net sales is defined above in “ Components of Results of Operations. ” Total Orders We define total orders as the total number of customer orders delivered less total orders returned in a given period (excluding those repair, resize, and other orders which have no revenue).
The following table sets forth our key performance metrics for the periods presented (dollars in thousands, except for AOV): For the years ended December 31, 2025 2024 Change % Change Net Sales $ 437,483 $ 422,161 $ 15,322 3.6 % Total Orders 210,158 186,030 24,128 13.0 % AOV $ 2,082 $ 2,269 $ (187) (8.2) % Net Sales Net sales is defined above in “ Components of Results of Operations. ” Total Orders We define total orders as the total number of customer orders delivered less total orders returned in a given period (excluding those repair, resize, and other orders which have no revenue).
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.
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.
The commission that the Company receives from the third party is recognized at the time of sale less an estimate of cancellations based on historical experience. There are no additional performance obligations in relation to the third-party plan.
The commission that the Company receives from the third party is recognized at the time of sale less an estimate of cancellations based on historical experience.
Any additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations.
Any additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations. We cannot ensure that we could obtain refinancing or additional financing on favorable terms or at all.
Risk Factors –Risks related to the Ownership of Our Class A Common Stock – If our estimates or judgments relating to our critical accounting policies and estimates prove to be incorrect, our results of operations could be adversely affected . 81 Table of Contents Our critical accounting estimates include the following: Revenue Recognition Net sales primarily consists of revenue from the sale of inventory, and we recognize revenue as control of promised goods is transferred to customers, which generally occurs upon delivery if the order is shipped, or at the time the customer picks up the completed product at a showroom.
Our critical accounting estimates include the following: Revenue Recognition Net sales primarily consists of revenue from the sale of inventory, and we recognize revenue as control of promised goods is transferred to customers, which generally occurs upon delivery if the order is shipped, or at the time the customer picks up the completed product at a showroom.
This decrease was primarily driven by $10.6 million from changes in assets and liabilities related to changes in working capital and an increase in net income adjusted for non-cash addbacks of $2.0 million.
This decrease was primarily driven by a decrease in cash provided from net (loss) income adjusted for non-cash addbacks of $7.5 million. There was also an increase in cash used from changes in assets and liabilities related to working capital management activities of $0.4 million.
The decrease from changes in working capital was primarily due to an increase in cash used of $3.4 million in other assets and inventories, an increase in cash used of $2.8 million in accounts payable, accrued expenses and other current liabilities, and an increase in cash used of $1.4 million in operating lease liabilities.
The increase in cash used from changes in working capital 77 Table of Contents was primarily due to an increase in cash used of $18.4 million in inventories, prepaid expenses and other current assets, other assets, and operating lease liabilities.
Gross margin, expressed as a percentage and calculated as gross profit divided by net sales, increa sed by 270 basis points for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Gross margin, expressed as a percentage and calculated as gross profit divided by net sales, decreased by 280 basis points for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily driven by higher gold and platinum costs.
Also impacting the decrease was an increase in cash used of $1.6 million in deferred revenue and a decrease in cash provided of $1.4 million in prepaid expenses and other current assets when compared to the year ended December 31, 2023.
This was partially offset by a decrease in cash used of $13.6 million in accounts payable, accrued expenses and other current liabilities, and an increase in cash generated of $4.4 million in deferred revenue when compared to the year ended December 31, 2024.
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.
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. Macroeconomic Trends We believe we are well positioned at the intersection of key macro-level trends impacting our industry.
The following table presents a reconciliation of net income and net income margin, the most comparable GAAP financial measures , to Adjusted EBITDA and Adjusted EBITDA margin, respectively, for the years presented (in thousands): For the years ended December 31, 2024 2023 Net income $ 3,994 $ 4,734 Interest expense 5,031 5,128 Income tax expense (benefit) 160 (431) Depreciation expense 5,312 4,200 Amortization of cloud-based software implementation costs 817 583 Showroom pre-opening expense 1,705 4,953 Equity-based compensation expense 9,934 9,952 Other income, net (1) (5,835) (4,949) Transaction costs and other expenses (2) — 2,012 Adjusted EBITDA $ 21,118 $ 26,182 Net income margin 0.9 % 1.1 % Adjusted EBITDA margin 5.0 % 5.9 % (1) Other income, net con sists primarily of interest and other miscellaneous income, partially offset by expenses such as losses on exchange rates on consumer payments.
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. 75 Table of Contents 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 years presented (dollars in thousands): For the years ended December 31, 2025 2024 Net (loss) income $ (6,400) $ 3,994 Interest expense 2,282 5,031 Income tax expense 9,641 160 Depreciation expense 6,109 5,312 Amortization of cloud-based software implementation costs 770 817 Showroom pre-opening expense 1,248 1,705 Equity-based compensation expense 8,920 9,934 Other income, net (1) (3,668) (5,835) Gain on TRA liability adjustment (7,804) — Loss on extinguishment of debt 573 — Other expenses (2) 300 $ — Adjusted EBITDA $ 11,971 $ 21,118 Net (loss) income margin (1.5) % 0.9 % Adjusted EBITDA margin 2.7 % 5.0 % (1) Other income, net con sists primarily of interest and other miscellaneous income, partially offset by expenses such as losses on exchange rates on consumer payments.
Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes. 75 Table of Contents Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures, are included in this Annual Report on Form 10-K because they are used by management and our Board to assess our financial performance.
Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures, are included in this Annual Report on Form 10-K because they are used by management and our Board to assess our financial performance.
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. 80 Table of Contents See “Risk Factors—Risks Related to Our Organizational Structure.” In December 2023, the Board approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20.0 million of the Company's Class A common stock through the expiration of the program in December 2026.
See “Risk Factors—Risks Related to Our Organizational Structure.” In December 2023, the Board approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20.0 million of the Company's Class A common stock through the expiration of the program in December 2026.
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.
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.
A change in the assessment of such consequences, such as realization of deferred tax assets, changes in tax laws or interpretations thereof could materially impact our results. 82 Table of Contents Recent Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies to our accompanying financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K for additional information regarding recent accounting developments and their impact on our results.
Recent Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies to our accompanying financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K for additional information regarding recent accounting developments and their impact on our results. 81 Table of Contents JOBS Act We qualify as an “emerging growth company” pursuant to the provisions of the JOBS Act, enacted on April 5, 2012.
We cannot ensure that we could obtain refinancing or additional financing on favorable terms or at all. 77 Table of Contents Cash Flows from Operating, Investing, and Financing Activities — Comparison of Years Ended December 31, 2024 and 2023 The following table summarizes our cash flows for the years ended December 31, 2024 and 2023 (in thousands): Years ended December 31, 2024 2023 Net cash provided by operating activities $ 17,595 $ 26,214 Net cash used in investing activities (4,907) (11,944) Net cash used in financing activities (6,567) (13,104) Net increase in cash, cash equivalents, and restricted cash 6,121 1,166 Cash, cash equivalents and restricted cash at beginning of year 156,020 154,854 Cash, cash equivalents and restricted cash at end of year $ 162,141 $ 156,020 Operating Activities For the year ended December 31, 2024, net cash provided by operating activities was $17.6 million compared to net cash provided by operating activities of $26.2 million for the year ended December 31, 2023, a decrease of $8.6 million.
Cash Flows from Operating, Investing, and Financing Activities — Comparison of Years Ended December 31, 2025 and 2024 The following table summarizes our cash flows for the years ended December 31, 2025 and 2024 (in thousands): Years ended December 31, 2025 2024 Net cash provided by operating activities $ 9,718 $ 17,595 Net cash used in investing activities (3,966) (4,907) Net cash used in financing activities (88,455) (6,567) Net (decrease) increase in cash, cash equivalents, and restricted cash (82,703) 6,121 Cash, cash equivalents and restricted cash at beginning of year 162,141 156,020 Cash, cash equivalents and restricted cash at end of year $ 79,438 $ 162,141 Operating Activities For the year ended December 31, 2025, net cash provided by operating activities was $9.7 million compared to net cash provided by operating activities of $17.6 million for the year ended December 31, 2024, a decrease of $7.9 million.
The decrease in tax distributions paid to members was partially offset by an increase in payments made on the SVB Credit Agreement (defined below) of $0.8 million, repurchases of $0.6 million of our Class A common stock under the share repurchase program, and the payment of debt issuance costs of $0.1 million in connection with the First Amendment (as defined below). 78 Table of Contents Silicon Valley Bank Credit Facilities On May 24, 2022 (the “Closing Date”), Brilliant Earth, LLC, as borrower, and SVB, as administrative agent and collateral agent for the lenders, entered into a credit agreement (the “SVB Credit Agreement”) which provides for a secured term loan credit facility of $65.0 million (the “SVB Term Loan”) and a secured revolving credit facility in an amount of up to $40.0 million (the “SVB Revolving Facility”, and together with the SVB Term Loan, the “SVB Credit Facilities”).
Silicon Valley Bank Credit Facilities On May 24, 2022, Brilliant Earth, LLC, as borrower, and SVB, as administrative agent and collateral agent for the lenders, entered into a credit agreement (the “SVB Credit Agreement”) which provided for a secured term loan credit facility of $65.0 million (the “SVB Term Loan”) and a secured revolving credit facility in an amount of up to $40.0 million (the “SVB Revolving Facility”, and together with the SVB Term Loan, the “SVB Credit Facilities”).
For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies.
For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Total orders may fluctuate based on the number of visitors to our website and showrooms, and our ability to convert these visitors to customers. We believe that total orders is a measure that is useful to investors and management in understanding our ongoing operations and in an analysis of ongoing operating trends.
We believe that AOV is a measure that is useful to investors and management in understanding our ongoing operations and in an analysis of ongoing operating trends. AOV varies depending on the product type and number of items per order.
The decrease in operating expenses was primarily driven by a decrease in marketing expenses partially offset by an increase in general and administrative expenses. The decrease in marketing expenses, which decreased by $11.0 million or 9.2%, from the prior year was a result of our continued focus on improving the effectiveness and efficiency of our marketing spend.
The decrease in marketing expenses from the prior year was a result of our continued focus on improving the effectiveness and efficiency of our marketing spend.
Cost of sales includes merchandise costs, inbound freight charges, costs of shipping orders to customers, certain fulfillment and inventory-related compensation costs, repair costs and related labor expenses. Our cost of sales includes reserves for disposal of obsolete, slow-moving or defective items, and shrinkage, which we estimate and record on a periodic basis.
Cost of sales includes merchandise costs, inbound freight charges, costs of shipping orders to customers, certain fulfillment and inventory-related compensation costs, repair costs and related labor expenses.
The 6.6% 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. 73 Table of Contents Gross Profit Gross profit for the year ended December 31, 2024 decreased by $2.6 million, or 1.0%, compared to the year ended December 31, 2023.
The increase in net sales was due to an increase of 13.0% in order volumes, partially offset by a decrease of 8.2% in AOV. The 13.0% 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.
The decrease of $7.0 million was principally due to a decrease in purchases of property and equipment related to new facilities leased during the year ended December 31, 2024. There were three new showroom openings during the year ended December 31, 2024 as opposed to twelve new showroom openings during the year ended December 31, 2023.
The decrease of $0.9 million was principally due to a decrease in purchases of property and equipment related to new facilities leased during the year ended December 31, 2025. Financing Activities Net cash used in financing activities was $88.5 million for the year ended December 31, 2025 compared to $6.6 million for the year ended December 31, 2024.
We also have scheduled principal payments on our SVB Credit Agreement as presented below (in thousands): Principal Years ending December 31, 2025 $ 5,688 2026 6,500 2027 43,875 Total aggregate future principal payments $ 56,063 We believe based on our current projections, that we have sufficient sources of liquidity to meet our projected operating, debt service, and tax distribution requirements for at least the next 12 months following the filing of this Annual Report on Form 10-K.
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 Annual Report on Form 10-K.
Our proof-points from localizing our website for Canada, Australia, and the United Kingdom, and our sales to customers fr om over 50 countries, pro vide 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.
International Expansion 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 fr om over 50 countries, pro vide encouraging signs for future global expansion.
Operating Expenses Operating expenses consist primarily of marketing and advertising expenses through various online platforms including digital, website, social media, search engine optimization, paid search and product advertisements, influencers and in showroom branding. Ope rating expenses also consist of general and administrative expenses related to employee costs such as payroll and related benefit costs, including equity-based compensation expense.
Ope rating expenses also consist of general and administrative expenses related to employee costs such as payroll and related benefit costs, including equity-based compensation expense.
Operating Expenses Operating expenses for the year ended December 31, 2024 decreased by $1.5 million , or 0.6%, compared to the year ended December 31, 2023. Operating expenses as a percentage of net sales increased by 290 basis points for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Operating expenses as a percentage of net sales decreased by 80 basis points for the year ended December 31, 2025 compared to the year ended December 31, 2024 . The increase in operating expenses was primarily driven by an increase in employment expenses of $5.4 million and an increase in other general and administrative expenses of $2.8 million.
For the year ended December 31, 2023, these costs included a $1 million charitable contribution. 76 Table of Contents Liquidity and Capital Resources Overview 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.
(2) These expenses are those that we did not incur in the normal course of business. Liquidity and Capital Resources Overview 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.
These increases were partially offset by a decrease in pre-opening expenses from new showrooms and a decrease in charitable contributions compared to the year ended December 31, 2023.
The increase in other general and administrative expenses was a result of increases in rent and lease-related expenses, professional fees, information technology and other software-related costs, and depreciation expense. These increases were partially offset by decreases in product development costs and pre-opening expenses from new showrooms compared to the year ended December 31, 2024.
Income Tax (Expense) Benefit Brilliant Earth Group, Inc.’s income tax expense was $0.2 million fo r the year ended December 31, 2024 compared to an income tax benefit of $0.4 million for the year ended December 31, 2023 .
As a result, the Company reduced the TRA liability to zero and recognized a gain on TRA liability adjustment of $7.8 million in the Company's consolidated statement of operations for the year ended December 31, 2025. 73 Table of Contents Income Tax Expense Brilliant Earth Group, Inc.’s income tax expense was $9.6 million fo r the year ended December 31, 2025 compared to income tax expense of $0.2 million for the year ended December 31, 2024 .
Interest Expense Interest expense for the year ended December 31, 2024 decreased by $0.1 million , or 1.9%, compared to the year ended December 31, 2023, primarily due to a decrease in the average principal debt outstanding during the year ended December 31, 2024 as compared to the prior year.
Interest Expense Interest expense for the year ended December 31, 2025 decreased by $2.7 million, or 54.6%, compared to the year ended December 31, 2024, primarily due to the prepayment of all principal amounts outstanding of $34.8 million under the SVB Term Loan in August 2025.
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.
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. 76 Table of Contents Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of the Board, subject to the requirements of applicable law, compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness.
We currently believe that all deferred tax assets will be recovered based upon the projected profitability of our operations. Judgment is required in assessing the future tax consequences of events that have been recognized in Brilliant Earth Group, Inc.’s financial statements.
As a result, the Company reduced the TRA liability to zero and recognized a gain on TRA liability adjustment of $7.8 million in the Company's consolidated statement of operations for the year ended December 31, 2025. Judgment is required in assessing the future tax consequences of events that have been recognized in Brilliant Earth Group, Inc.’s financial statements.
Removed
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. International Expansion We are in the early stages of selling globally, and a larger geographic footprint will help drive future growth.
Added
For a comparison of our results of Operations for the fiscal years ended December 31, 2024 and 2023 see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 13, 2025.
Removed
Costs of Operating as a Public Company The costs of operating as a public company are significant as we are subject to the reporting, listing, and compliance requirements of various governing bodies and applicable securities laws and regulations.
Added
In addition, many of the materials that go into our products are sourced and manufactured internationally.
Removed
Since becoming a public company, compliance with rules and regulations has increased and may continue to increase our legal, financial, and technology compliance costs, and to make some activities more difficult, time-consuming, and costly.
Added
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.
Removed
Remaining compliant and satisfying our obligations as a public company, while maintaining forecasted gross margins and operating results, and attracting and retaining qualified persons to serve on our Board, our Board committees, or as our executive officers is critical to our future success. 70 Table of Contents Macroeconomic Trends We believe we are well-positioned at the intersection of key macro-level trends impacting our industry.
Added
Similarly, increases in prices of gold, platinum and other precious 69 Table of Contents metals have also had an impact on our materials costs and have the potential to further impact our business.
Removed
The decrease in net sales was due to a decrease of 11.3% in AOV, partially offset by an increase in order volumes of 6.6%. The decrease in AOV was driven by a higher mix of lower price point products, including fine jewelry.
Added
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, or delays or disruptions in the delivery of materials could adversely impact our business, financial condition, and operating results.
Removed
The increase in gross margin was primarily driven by the continued optimization of our pricing engine, procurement efficiencies, and benefits from our extended warranty program. The gross margin improvements were partially offset by certain repair and fulfillment-related costs.
Added
The U.S. federal government has in the past experienced, and may in the future experience, shutdowns, funding gaps, or other fiscal disruptions. Such disruptions may result in broader economic uncertainty that could affect demand for our products, disrupt supply chains, or result in reduced discretionary spending by our customers.
Removed
The increase in general and administrative expenses was primarily due to an increase in employment expenses, which increased $8.5 million or 12.3%, from additional staff to support our growth initiatives, and annual compensation increases. The remaining increase in general and administrative expenses was a result of increases in rent, lease-related expenses, information technology and other software-related costs, and depreciation expense.
Added
Our cost of sales includes reserves for disposal of obsolete, slow-moving or defective items, and shrinkage, which we estimate and record on a periodic basis. 70 Table of Contents Operating Expenses Operating expenses consist primarily of marketing and advertising expenses through various online platforms including digital, website, social media, search engine optimization, paid search and product advertisements, influencers and in showroom branding.
Removed
The increase in income tax expense was primarily due to additional taxes related to additional taxable income from Brilliant Earth, LLC, as well as additional deferred tax expense due to basis movements related to the TRA, as compared to the year ended December 31, 2023.
Added
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. 72 Table of Contents Gross Profit Gross profit for the year ended December 31, 2025 decreased by $2.9 million, or 1.1%, co mpared to the year ended December 31, 2024 .
Removed
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.
Added
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. Operating Expenses Operating expenses for the year ended December 31, 2025 increased by $5.8 million , or 2.3% , compared to the year ended December 31, 2024.

… 39 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. 83 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. 82 Table of Contents

Other BRLT 10-K year-over-year comparisons