Brilliant Earth (BRLT) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales for Q1 2025 were $93,884,000, a decrease of 3.5% compared to$ 97,337,000 in Q1 2024[25] - Gross profit for Q1 2025 was $55,042,000, down from$ 58,306,000 in Q1 2024, reflecting a decline of 5.0%[25] - The company reported a net loss of $3,267,000 in Q1 2025, compared to a net income of$ 1,067,000 in Q1 2024[25] - Basic earnings per share for Q1 2025 were $(0.03), down from$ 0.01 in Q1 2024[25] - The net loss for the period ending March 31, 2025, was $3,267,000, compared to a net loss of$ 2,801,000 for the same period in the previous year, indicating a deterioration in financial performance[28] - For the three months ended March 31, 2025, the net loss was $3.267 million compared to a net income of$ 1.067 million for the same period in 2024, indicating a significant decline in profitability[31] - The company reported a net loss of $3.3 million for the three months ended March 31, 2025, which is a decline of 406.2% compared to a net loss of$ 1.1 million for the same period in 2024[96] - Adjusted EBITDA for the three months ended March 31, 2025, was $1.1 million, down 78.8% from$ 5.1 million for the same period in 2024[96] - The adjusted EBITDA margin for the three months ended March 31, 2025, was 1.1%, compared to 5.2% for the same period in 2024[96] Operating Expenses - Total operating expenses increased to $58,565,000 in Q1 2025, compared to$ 57,429,000 in Q1 2024, representing a rise of 1.98%[25] - Operating expenses increased by $1.1 million, or 2.0%, for the three months ended March 31, 2025, with operating expenses as a percentage of net sales rising by 340 basis points[115] Assets and Liabilities - Total current assets decreased to$ 197,956,000 as of March 31, 2025, from $211,413,000 as of December 31, 2024, a decline of 6.3%[20] - Total liabilities as of March 31, 2025, were$ 166,678,000, down from $171,863,000 at the end of 2024, a decrease of 3.0%[21] - Cash and cash equivalents decreased to$ 147,338,000 as of March 31, 2025, from $161,925,000 as of December 31, 2024, a decline of 9.0%[20] - The company’s total stockholders' equity decreased to$ 102,972,000 as of March 31, 2025, from $109,382,000 at the end of 2024, a decrease of 5.8%[22] - Current portion of long-term debt increased significantly to$ 20,000,000 as of March 31, 2025, compared to $5,688,000 at the end of 2024, an increase of 251.5%[21] - The company's total debt as of March 31, 2025, was$ 54.844 million, down from $56.063 million as of December 31, 2024[65] Cash Flow - The company reported a net cash used in operating activities of$ 7.127 million for Q1 2025, an increase from $5.790 million in Q1 2024[31] - Net cash used in investing activities was$ 0.7 million for the three months ended March 31, 2025, compared to $0.6 million in 2024, primarily due to increased purchases of property and equipment[140] - Net cash used in financing activities increased to$ 6.7 million in the first quarter of 2025 from $2.0 million in 2024, mainly due to higher tax distributions of$ 4.4 million[141] Shareholder Activities - The company repurchased 102,460 shares of common stock during the period, which is a strategic move to manage equity and enhance shareholder value[28] - The average price paid per share for the repurchases was $1.56, with the highest being$ 1.84 and the lowest at $1.47[165] - The Board of Directors approved a share repurchase program authorizing up to$ 20.0 million of Class A common stock purchases, effective until December 8, 2026[165] Revenue Recognition - The company recognized $17.6 million of revenue that was previously deferred as of December 31, 2024, compared to$ 16.2 million for the same period in 2024[54] - As of March 31, 2025, total deferred revenue was $23.1 million, an increase from$ 18.9 million as of December 31, 2024[53] Market and Economic Conditions - The current inflationary environment and changes in macro-level consumer spending trends have negatively impacted sales and could further affect operating results[106] - Net sales for the three months ended March 31, 2025, decreased by $3.5 million, or 3.5%, compared to the same period in 2024, primarily due to a 14.2% decrease in Average Order Value (AOV) despite a 12.4% increase in order volumes[111] Internal Controls and Compliance - The company has identified a material weakness in internal controls related to information technology general controls, which could impact financial reporting[155] - The company intends to remediate the identified material weakness through various measures, including hiring a director of ITGC and enhancing training and access management procedures[157]