Q4 2024 Brilliant Earth Group Inc Earnings Call
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Colin Bourland: I would now like to hand the call over to Colin Bourland, Vice President of Strategy, Business Development, and Investor Relations. Please go ahead.
Speaker Change: I would now like to hand, the call over to Colin Borland, Vice President of strategy business development and Investor Relations. Please go ahead.
Colin Bourland: Thank you and good afternoon, everyone. Welcome to the Brilliant Earth fourth quarter 2024 earnings conference call.
Thank you and good afternoon, everyone welcome to the brilliant Earth fourth quarter 2024 earnings conference call.
Colin Bourland: My name is Colin Bourland, Vice President of Strategy, Business Development and Investor Relations.
Speaker Change: My name is Colin Borland, Vice President of strategy business development and Investor Relations. Joining me today are Beth Gerstein, our Chief Executive Officer, and Jeff <unk>, Our Chief Financial Officer.
Colin Bourland: Joining me today are Beth Gerstein, our Chief Executive Officer, and Jeff Kuo, our Chief Financial Officer. During the call today, management will make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that can cause actual results to differ materially. Please refer to our SEC filings for a description of the risks that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements.
During the call today management will make certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 995.
Speaker Change: These forward looking statements are subject to risks and uncertainties that could cause actual results could differ materially.
Speaker Change: Please refer to our SEC filings for a description of the risks that could cause our actual performance and results to differ materially from those expressed or implied in these forward looking statements. These forward looking statements reflect our opinion only as of the.
Colin Bourland: These forward-looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events unless required by law.
Speaker Change: Date of this call and we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events unless required by law.
Colin Bourland: Also, during this call, management will refer to certain non-GAAP financial measures. A reconciliation of Brilliant Earth's non-GAAP measures to comparable GAAP measures is available in today's earnings release, which can be found on the Brilliant Earth Investor Relations website.
Speaker Change: Also during this call management will refer to certain non-GAAP financial measures. A reconciliation of pro are non-GAAP measures to comparable GAAP measures is available in today's earnings release, which can be found on the brilliant Earth Investor Relations website I.
Beth Gerstein: I'll now turn the call over to Beth.
Beth: I'll now turn the call over to Beth.
Beth Gerstein: Good afternoon, everyone, and thank you for joining our Q4 and full year FY24 earnings call. I'm pleased to share that we had a strong finish to 2024, delivering solid performance and setting us up well for 2025. We achieved Q4 net sales at the high end of our expectations, and our Q4 profitability far exceeded our guidance, marking our 14th consecutive quarter of profitability as a public company. This is a direct result of our disciplined execution and our commitment to building sustainable value over the long term.
Beth: Good afternoon, everyone and thank you for joining our Q4 and full year FY 'twenty four earnings call.
Beth: I'm pleased to share that we had a strong finish to 2020 for delivering solid performance and setting us up well for 2025.
We achieved Q4 net sales at the high end of our expectations and our Q4 profitability far exceeded our guidance, marking our 14th consecutive quarter of profitability as a public company.
Beth: This is a direct result of our disciplined execution and our commitment to building sustainable value over the long term.
Beth Gerstein: Let me walk you through our key financial highlights. We delivered Q4 net sales of $119.5 million at the higher end of our guidance. representing a 4% decline year-over-year. For the full year, net sales reached $422.2 million. a 5% decline year over Total orders grew by 10% year-over-year in Q4, contributing to a 7% year-over-year growth for the full year. Notably, repeat order growth outpaced total order growth, with repeat orders growing 18% year-over-year in Q4, and 17% year-over-year for the year. This trend reaffirms the resonance of our strong brand and compelling product design. As more consumers discover our joyful shopping experience.
Beth: Let me walk you through our key financial highlights.
Beth: We delivered Q4 net sales of $119 $5 million at the higher end of our guidance range, representing a 4% decline year over year.
Beth: For the full year net sales reached $422 $2 million, a 5% decline year over year.
Beth: Total orders grew by 10% year over year in Q4 contributing to a 7% year over year growth for the full year.
Beth: Notably repeat order growth outpaced total order growth with repeat orders growing 18% year over year in Q4, and 17% year over year for the year.
Beth: This trend reaffirms the residents of our strong brands and compelling product designs.
Beth: As more consumers discover our joyful shopping experience, it's gratifying to see them, returning time and time again, especially in a peak gifting quarter.
Beth Gerstein: It's gratifying to see them returning time and time again, especially in a peak gifting We expanded our gross margin by 90 basis points year-over-year in Q4, and a robust 270 basis points year-over-year for the full year. Our strong gross margin reflects our premium brand. Our nimble approach to marketing continued to yield results. In Q4, marketing expenses as a percentage of net sales saw leverage of 340 basis points year-over-year, with 100 basis points year-over-year improvement for fiscal year 2020. This was achieved one year ahead of our goal of driving leverage starting in 2025, and it demonstrates the ability of our agile, ROI focused allocation of marketing spend to drive efficiency and top line.
We expanded our gross margin by 90 basis points year over year in Q4, and a robust 270 basis points year over year for the full year.
Beth: Our strong gross margin reflects our premium brand positioning.
Beth: Our nimble approach to marketing continued to yield results in Q4 marketing expenses as a percentage of net sales saw a leverage of 340 basis points year over year.
Beth: With a 100 basis points year over year improvement for fiscal year 'twenty four.
Beth: This was achieved one year ahead of our goal of driving leverage starting in 2025 and it demonstrates the ability of our agile rois focus allocation of marketing spend to drive efficiency and top line performance.
Beth Gerstein: We delivered $6.9 million in adjusted EBITDA in Q4, or a 5.8% adjusted EBITDA margin. a performance that significantly exceeded our guidance. For fiscal year 24, we achieved $21.1 million in adjusted EBITDA, or a 5% adjusted EBITDA margin. Again, highlighting our ability to deliver profitability and capture efficiency.
Beth: We delivered $6 $9 million and adjusted EBITDA in Q4, or a five 8% adjusted EBITDA margin our.
Beth: Our performance that significantly exceeded our guidance for fiscal year 'twenty, four we achieved $21 $1 million and adjusted EBITDA or a 5% adjusted EBITDA margin again, highlighting our ability to deliver profitability and capture efficiencies, even as we make long term strategic investments in the business.
Beth Gerstein: Even as we make long-term strategic investments in the In our last call, I told you how excited and prepared we were to bring our brand to life for the holiday season. I'm happy to say that performance exceeded our expectations with sequential year-over-year bookings improvement as we move through the quarter. and we were pleased with our results and execution during cyber week both online and in our 40 share. In fact, Black Friday was our biggest day of bookings in company history. underscoring the strength of our execution in one of the most competitive periods of the year.
Beth: Yeah.
Beth: In our last call I told you how excited and prepared we were to bring our brand to life for the holiday season.
Beth: I'm happy to say that performance exceeded our expectations with sequential year over year bookings improvement as we move through the quarter.
Beth: And we were pleased with our results and execution during cyber week, both online and in our 40 showrooms in fact, Black Friday was our biggest day of bookings in company history, underscoring the strength of our execution and one of the most competitive periods of the year.
Beth Gerstein: These results are particularly gratifying in what was a highly promotional environment and again demonstrate our ability to leverage our agile business model to drive high quality revenue.
Beth: These results are particularly gratifying in what was a highly promotional environment and again demonstrate our ability to leverage our agile business model to drive high quality revenue.
Beth Gerstein: Turning towards engagement rings, we were encouraged with our best year-over-year units comp in Q4, compared to prior quarters in the year. We believe that the trajectory of our bridal business can be improved over last year as we amplify our brand with continued success in differentiated designs, diamond leadership, and an industry-leading omni-channel experience. In fact, our signature engagement ring collection shined in Q4, delivering year-over-year bookings growth that outpaced the overall engagement ring business by double digits. illustrating how our proprietary designs continue to be a premium differentiator for Brilliant Earth. Overall, Engagement Ring ASP was down in Q4, as we saw comparatively stronger performance in price ranges under $5,000, where we see some of the strongest consumer demand.
Beth: Turning towards engagement rings, we were encouraged with our best year over year unit comp in Q4 compared to prior quarters in the year.
Beth: We believe that the trajectory of our bridal business can be improved over last year as we amplify our brand with continued success and differentiated designs Diamond leadership and an industry, leading omnichannel experience in fact, our signature engagement ring collection shined in Q4 delivery.
Beth: Year over year bookings growth that outpaced the overall engagement ring business by double digits illustrating how our proprietary designs continue to be a premium differentiator for brilliant earth.
Beth: Overall engagement ring ASP was down in Q4, as we saw comparatively stronger performance and price ranges under $5000, where we see some of the strongest consumer demand.
Beth Gerstein: And we continue to see growth opportunities with our fleet of 40 showrooms and counting, with year-over-year growth in showroom engagement ring units in the fourth quarter. Additionally, we continue to invest in growing our core bridal business. Through our Rethink Everything You Know About Diamonds campaign, focused on our diamond leadership, we launched the Flawless Collection, a curation of flawless or internally flawless diamonds, those with the highest grades in clarity, cut, and color. Less than 0.1% of the world's diamonds are graded flawless or internally flawless, and even fewer are sourced to our exacting standards. The performance of this collection has been very strong, and again, demonstrates customers' trust and confidence in Brilliant.
And we continued to see growth opportunities with our fleet of 40, showrooms and counting with year over year growth and showroom engagement ring units in the fourth quarter.
Beth: Additionally, we continue to invest in growing our core bridal business through our rethink everything you know about diamonds campaign focused on our Diamond leadership, we launched the flawless collection.
Beth: Curation of flawless or internally flawless diamonds, those with the highest grades in clarity cut and color.
Beth: Lesson, 0.1% of the world's diamonds are greeted flawless or internally flawless and even fewer our source to our exacting standards.
Beth: The performance of this collection has been very strong and again demonstrates customers' trust and confidence and brilliant Earth and.
Beth Gerstein: In addition to continuing to build Brilliant Earth as a leading trusted brand, the recent campaign has resulted in over 1 billion earned media impressions to date. Within wedding and anniversary bands, we delivered another quarter of year-over-year bookings growth with continued outperformance in men's wedding bands. And finally, our fine jewelry assortment experienced another banner quarter, underscoring our ability to capture customers' hearts during the holiday season. We recorded strong double-digit bookings growth in the quarter, with December fine jewelry contributing a record-breaking share of total bookings at 27%, an approximately 600 basis point expansion over December last year.
Beth: In addition to continuing to build brilliant earth as a leading trusted brand. The rethink campaign has resulted in over 1 billion earned media impressions to date.
Beth: Within wedding and anniversary bands, we delivered another quarter of year over year bookings growth with continued outperformance in men's wedding bands.
Beth: And finally, our fine jewelry assortment experienced another banner quarter underscoring our ability to capture customers Hearts during the holiday season, we recorded strong double digit bookings growth in the quarter with December fine jewelry, contributing a record breaking share of total bookings at 27% and.
Approximately 600 basis point expansion over December last year.
Beth Gerstein: Our fine jewelry results for the quarter were led by continued success in trend-leading collections such as diamond tennis jewelry, key diamond essentials including studs and hoops, iconic products from our sole collection, and the success of our Jane Goodall collection. The Jane Goodall Collection has been our most successful fine jewelry collection launch to date and further reinforces our confidence in our long-term opportunities to grow in fine jewelry. In addition, we also doubled down on our strategy to expand our gifting options to respond to growing consumer demand across our assortment. We expanded our assortment priced under $1,000, ideal for gifting and self-purchase, with resounding customer success during the holiday season.
Beth: Our fine jewelry results for the quarter were led by continued success in trend leading collections, such as Diamond tennis jewelry key diamond essentials, including studs and hoops.
Beth: Connick products from our cell collection and the success of our Jane Goodall collection. The Jane Goodall collection has been our most successful fine jewelry collection launched to date and further reinforces our confidence in our long term opportunities to grow in fine jewelry.
Beth: <unk>, we also doubled down on our strategy to expand our gifting options to respond to growing consumer demand across our assortment.
Beth: We expanded our assortment priced under $1000 ideal for gifting and self purchase with resounding customer success during the holiday season.
Beth Gerstein: As we've discussed in quarters past, we've been growing our showroom presence while simultaneously elevating our retail experience overall. In Q4, we open our first street level location in New York City, in the prime shopping neighborhood of Nolita, as well as our Boston Seaport location. We celebrated our opening in Nelida with a launch event featuring the artist Klim Evernden and several influencer partners, which generated strong buzz and awareness. All three of our new locations in 2024 include our new Tryon Bar, featuring an expanded fine jewelry shopping format, and so far we're seeing promising results. In total, we had record fine jewelry bookings within our showrooms in both Q4 and 2020.
Beth: As we've discussed in quarters past, we've been growing our showroom presence, while simultaneously elevating our retail experience overall.
Beth: In Q4, we opened our first street level location in New York City, and the Prime shopping neighborhood of Nevada, as well as our Boston Seaport location, we celebrated our opening in a leader with a launch event featuring the artist Klim, <unk> and several Influencer partners, which generated strong buzz and awareness.
All three of our new locations in 2024 include our new Tri on bar, featuring an expanded fine jewelry shopping format and so far we're seeing promising results.
Beth: In total we had record fine jewelry bookings within our showrooms in both Q4 and 2024.
Beth Gerstein: Building upon our success in seasonal activations in Q4, we executed our most comprehensive holiday campaign ever, Be Together, Be Brilliant, across our physical and digital channels, including visually compelling and high-performing physical and digital storefronts from our showroom windows to our homepages. We also generated strong engagement through our VIP bridal partnerships in Q4.
Beth: Building upon our success in seasonal Activations in Q4.
Beth: Executed our most comprehensive holiday campaign ever be together be brilliant across our physical and digital channels, including visually compelling and high performing physical and digital storefronts from our Chevron windows to our homepage. We also generated strong engagement through our VIP bridal partnerships in Q4.
Beth Gerstein: Together, these activations drove high customer engagement and elevated customer experiences in As we reflect on our accomplishments in Q4 and FY24, I am proud of what we achieved in this highly dynamic environment and remain highly optimistic about our direction. Looking forward to 2025, we remain committed to driving sustainable, long-term growth. This includes focusing on delighting customers by setting new standards with our omni-channel experience, offering premium, distinctive products, investing in continued brand amplification, and continuing to capture data-driven operational excellence. As always, we plan to do so in a disciplined and responsible manner, being cognizant of the industry and macroeconomic environment.
Beth: Together these activations drove high customer engagement and elevated customer experiences in Q4.
Beth: As we reflect on our accomplishments in Q4 and fiscal year 'twenty four.
Beth: Proud of what we achieved in this highly dynamic environment.
Beth: And remain highly optimistic about our direction looking.
Beth: Looking forward to 2025, we remain committed to driving sustainable long term growth. This includes focusing on delighting customers by setting new standards with our omnichannel experience offering premium distinctive products.
Beth: Investing in continued brand amplification.
Beth: And continuing to capture data driven operational efficiencies.
Beth: As always we plan to do so in a disciplined and responsible manner being cognizant of the industry and macroeconomic environment.
Beth Gerstein: We are already making significant progress on our 2025 Product Innovation and Brand We will continue to lead in design and innovation, building on recent successful collections, while further expanding our showroom footprint. 2-3 new locations this year, including our recently opened location in South Lake, TX. We continue to draw on learnings from recent showroom openings and will be planning for the next phase of our expansion. These efforts, including enhancements like our try-on bars, will continue to create unforgettable customer experience.
Beth: We are already making significant progress on our 2025 product innovation and brand amplification goals. We will continue to lead in design and innovation building on recent successful collections, while further expanding our showroom footprint with two to three new locations this year, including our recently.
<unk> location in Southlake, Texas, we continue to draw on learnings from recent showroom openings and we'll be planning for the next phase of our expansion.
Beth: These efforts, including enhancements like our Tri on bars, we will continue to create unforgettable customer experiences.
Beth Gerstein: We continue to operate in a highly dynamic environment, encompassed by pricing shifts in both lab and natural diamonds, normalizing engagement trends, and changing trends in consumer sentiment. As we look ahead, we feel confident that our premium brand positioning combined with our ongoing investments will allow us to take advantage of any environment and achieve our goal of being the most loved and trusted jeweler for today's and tomorrow's Returning to our Q1 outlook, we anticipate Q1 net sales to be slightly down year-over-year. A slight sequential improvement We continue to see improvement in sequential engagement ring unit trends, with similar performance by price point, as we saw in We also continue to drive robust growth across wedding and anniversary bands and find and Healthy Overall Order and Repeat Order.
Beth: We continue to operate in a highly dynamic environment encompassed by pricing shifts in both lab and natural diamonds, normalizing engagement trends and changing trends in consumer sentiment.
Beth: As we look ahead, we feel confident that our premium brand positioning combined with our ongoing investments will allow us to take advantage of any environment and achieve our goal of being the most loved and trusted jeweler for today's and Tomorrow's consumer.
Beth: Turning to our Q1 outlook, we anticipate Q1 net sales to be slightly down year over year.
Beth: Slight sequential improvement to Q4.
Beth: We continue to see improvement in sequential engagement ring unit trends with similar performance by price point as we saw in Q4.
Beth: We also continued to drive robust growth across a wedding and anniversary bands and fine jewelry and healthy overall order and repeat order growth.
Beth Gerstein: While the overall macro environment is dynamic, we remain confident that the investments we are making today and our ability to execute will drive future share gains and profits. For the full year, we expect net sales to be slightly up year over year, with profitability slightly lower than in 2020. As we make targeted strategic investments that we expect will generate compelling returns in both the near and long term.
Beth: While the overall macro environment is dynamic we remain confident that the investments we are making today and our ability to execute will drive future share gains and profitability.
Beth: For the full year, we expect net sales to be slightly up year over year with profitability is slightly lower than in 2024, as we make targeted strategic investments that we expect will generate compelling returns in both the near and long term.
Beth Gerstein: Before concluding, I want to extend my heartfelt thanks to the entire Brilliant Earth community. Their dedication and hard work have been instrumental in achieving these outstanding results.
Beth: Before concluding I want to extend my heartfelt thanks to the entire brilliant Earth team.
Jeff: Their dedication and hard work have been instrumental in achieving these outstanding results now I'll hand, the call over to Jeff who will walk you through our financials and outlook for the year ahead in more detail.
Colin Bourland: Now I'll hand the call over to Jeff who will walk you through our financials and outlook for the year ahead in more detail.
Jeff Kuo: Thanks, Beth, and good afternoon everyone. As Beth mentioned, we're pleased to report a quarter where we continue to successfully drive our strategic initiatives. Innovate, meet our top-line expectations, and far exceed our profitability expectations.
Jeff: Thanks, Beth and good afternoon, everyone.
Jeff: Beth mentioned, we're pleased to report a quarter, where we continued to successfully drive our strategic initiatives.
Jeff: Innovate meet our topline expectations and far exceed our profitability expectations. Let me take you through the details for Q4.
Jeff Kuo: Let me take you through the details for Q4. Q4 net sales were $119.5 million at the high end of our guidance. down 4% year-over-year and representing a sequential improvement over Q3's year-over-year Full year 2024 net sales were $422.2 million or a decline of 5% year of Total orders grew 10% year-over-year in the fourth quarter and 7% year-over-year for 2024. In addition, repeat orders increased by 18% and 17% year over year in Q4 and the full year 2024 respectively. demonstrating the effectiveness of our customer acquisition and retention efforts and the resonance of our brand and products with consumers.
Jeff: Q4, net sales were $119 5 million.
Jeff: At the high end of our guidance range.
Jeff: <unk>, 4% year over year, and representing a sequential improvement over Q3's year over year performance.
Jeff: Full year 2024, net sales were $422 2 million or a decline of 5% year over year.
Jeff: Total orders grew 10% year over year in the fourth quarter and 7% year over year for 2024.
Jeff: In addition, repeat orders increased by 18% and 17% year over year in Q4, and the full year 2024, respectively, demonstrating the effectiveness of our customer acquisition and retention efforts and the resonance of our brand and products with consumers.
Jeff Kuo: Average order value, or AOV, was $2,048 in Q4 and $2,269 in 2020. This represents a decline of 13% and 11% year over year in Q4 and the full year 2024, respectively. As we continue to broaden and diversify our overall assortment, including in our fine jewelry collection, and drive comparatively strong performance in bridal price ranges below $5,000, where we are seeing some of the strongest consumer. Q4 gross margin was 59.6%, a 90 basis point expansion over Q4 last year, and full year 2024 gross margin was 60.3%, a 270 basis point expansion over full year 2025. Our gross margin this quarter and for the full year was again principally driven by our premium brand and proprietary products.
Jeff: Average order value or <unk>.
Jeff: It's $2048 in Q4 and $2269 in 2020 for.
Jeff: This represents a decline of 13% and 11% year over year in Q4, and the full year 2024, respectively. As we continue to broaden and diversify our overall assortment, including in our fine jewelry collection and drive comparatively strong performance in bridal price ranges below five.
Jeff: <unk> thousand dollars, where we are seeing some of the strongest consumer demand.
Q4 gross margin was 59, 6% a 90 basis point expansion over Q4 last year and full year 2024 gross margin was 63% a 270 basis point expansion over full year 2023.
Jeff: Our gross margin this quarter and for the full year was again, principally driven by our premium brand and proprietary products.
Jeff Kuo: Our Price Optimization Procurement Efficiencies, and our Enhanced Extended Warranty Program. This gross margin strength is particularly rewarding as we maintain our focus on our premium brand positioning in an environment where others continue to lean into discount and Gold Prices are at all-time highs. We deliver Q4 adjusted EBITDA of $6.9 million, or a 5.8% adjusted EBITDA margin, significantly exceeding our guidance. Full Year 2024 Adjusted EBITDA was $21.1 million, or a 5% adjusted EBITDA. Our strong gross margin and prudent management of our marketing spend and other operating expenses all contributed to our strong profitability. Q4 operating expense was 57.6% of net sales, compared to 57.8% of net sales in Q4 2023, as we continue to balance making investments to drive long term growth, with discipline in expense management.
Our price optimization engine.
Procurement efficiencies and our enhanced extended warranty program.
Jeff: This gross margin strength is particularly rewarding as we maintain our focus on our premium brand positioning in an environment, where others continue to lean into discounting.
Jeff: And gold prices are at all time highs.
Jeff: We delivered Q4, adjusted EBITDA of $6 $9 million or a five 8% adjusted EBITDA margin significantly exceeding our guidance range.
Jeff: Full year 2024, adjusted EBITDA was $21 $1 million or a 5% adjusted EBITDA margin.
Our strong gross margin and prudent management of our marketing spend and other operating expenses all contributed to our strong profitability.
Q4 operating expense was 57, 6% of net sales compared to 57, 8% of net sales in Q4 2023, as we continue to balance making investments to drive long term growth with discipline and expense management.
Jeff Kuo: full year operating expense was 59.5% of net sales compared to 56.6% of net sales in full year 2023. Q4 adjusted operating expense was 53.9% of net sales compared to 54.5% in Q4 2023. Full year adjusted operating expense was 55.4% of net sales compared to 51.7% of net sales in full year 2020. Adjusted operating expense does not include items such as equity-based compensation, depreciation and amortization, showroom pre-opening expenses, and other non-recurring expenses. For Q4 marketing expenses, we maintained our disciplined approach and drove leverage of approximately 340 basis points as a percentage of net sales, compared to Q4 last year, while still delivering net sales at the higher end of our guidance and making investments in our For more information, visit www.fema.gov For the full year, we drove leverage of approximately 100 basis points as a percentage of net sales compared to full year 2023, which is one year ahead of our plan, the previously stated medium term out.
Jeff: Full year operating expense was 59, 5% of net sales compared to 56, 6% of net sales in full year 2023.
Q4, adjusted operating expense was 53, 9% of net sales compared to 54, 5% in Q4 2023.
Jeff: Full year adjusted operating expense was 55, 4% of net sales compared to 51, 7% of net sales in full year 2023.
Jeff: Adjusted operating expense does not include items, such as equity based compensation depreciation and amortization showroom pre opening expenses and other non recurring expenses.
Jeff: For Q4 marketing expenses, we maintained our disciplined approach and drove leverage of approximately 340 basis points as a percentage of net sales compared to Q4 last year, while still delivering net sales at the higher end of our guidance and making investments in our brand for.
For the full year, we drove leverage of approximately 100 basis points as a percentage of net sales compared to full year 2023, which is one year ahead of our plan. The previously stated medium term outlook, where we expect it to drive marketing leverage in 2025.
Jeff Kuo: where we expected to drive marketing leverage in 2025. And, as noted in our medium term outlook, we expect to continue driving marketing leverage in 2025 for the full year. Employee costs as a percentage of net sales were higher in the fourth quarter by approximately 200 basis points as adjusted year over year. This includes growth in showroom employees, including from newly opened showrooms. and other employee related accruals. For the full year, employee costs as a percentage of net sales were approximately 290 basis points higher as adjusted year over year. We continue to manage these expenses in a disciplined and responsible manner.
Jeff: And as noted in our medium term outlook, we expect to continue driving marketing leverage in 2025 for the full year.
Employee cost as a percentage of net sales were higher in the fourth quarter by approximately 200 basis points as adjusted year over year.
This includes growth in showroom employees, including from newly opened showrooms.
Jeff: And other employee related accruals.
Jeff: For the full year employee costs as a percentage of net sales were approximately 290 basis points higher as adjusted year over year. We continue to manage these expenses in a disciplined and responsible manner.
Jeff Kuo: Other G&A as a percentage of net sales increased year over year by approximately 80 basis points as adjusted for the quarter as we continue to prudently invest in our business. This includes investments in showroom rent and expenses, as well as technology. OtherGNA as a percentage of net sales increased year over year by approximately 180 basis points as adjusted for the full year 2024. Our data-driven, capital-efficient, and inventory-light operating model continues to provide competitive advantages, and our inventory turns continue to be significantly higher than the industry average. Our year-over-year inventory grew by just one percent, even with our significant growth in fine jewelry and a larger showroom footprint.
Jeff: Other G&A as a percentage of net sales increased year over year by approximately 80 basis points as adjusted for the quarter as we continue to prudently invest in our business.
Jeff: This includes investments in showroom rent and expenses as well as technology.
Jeff: Other G&A as a percentage of net sales increased year over year by approximately 180 basis points as adjusted for the full year 2024.
Jeff: Our data driven capital efficient and inventory light operating model continues to provide competitive advantages and our inventory turns continue to be significantly higher than the industry average.
Jeff: Our year over year inventory grew by just 1%, even with our significant growth in fine jewelry and a larger showroom footprint.
Jeff Kuo: Our lower risk, agile inventory model and strong balance sheet continue to differentiate us from the rest of the industry. We ended the fourth quarter with approximately $162 million in cash, which reflects a year-over-year increase of approximately $6 million, even after reductions in debt principal balance. Expansion of our showroom footprint and investments in technology to drive expansion and efficiency across the business. As Beth previously mentioned, we ended the year with a strong net cash position of approximately $106 million, a year-over-year increase of approximately $10 million, and our highest net cash position since Q4 2021, which was shortly after our IPO.
Jeff: Our lower risk agile inventory model and strong balance sheet continue to differentiate us from the rest of the industry.
Jeff: We ended the fourth quarter with approximately $162 million in cash, which reflects a year over year increase of approximately $6 million, even after reductions in debt principal balance expansion of our showroom footprint and investments in technology to drive expansion and efficiency across the business.
Jeff: As Beth previously mentioned, we ended the year with a strong net cash position of approximately $106 million a year over year increase of approximately $10 million and our highest net cash position since Q4, 2021, which was shortly after our IPO.
Jeff Kuo: Our ability to generate cash further differentiates us from many others in the industry and highlights the benefit of our asset light, data driven business. Our financial strength allows us to continue to make prudent investments in the business to drive long-term growth. In Q4, we spent approximately $200,000 repurchasing our common stock. This takes our total spend on stock repurchases to date to approximately $638,000 as of the end of Q4. We intend to continue using this program strategically while balancing our overall investment decisions, including consideration of factors such as trading volumes and our public flows.
Jeff: Yeah.
Jeff: Our ability to generate cash further differentiates us from many others in the industry and highlights the benefit of our asset light data driven business model, our financial strength allows us to continue to make prudent investments in the business to drive long term growth.
Jeff: In Q4, we spent approximately $200000 repurchasing our common stock. This takes our total spend on stock repurchases to date to approximately $638000 as of the end of Q4.
Jeff: We intend to continue using this program strategically while balancing our overall investment decisions, including consideration of factors such as trading volumes and our public float.
Jeff Kuo: Turning to our outlook for 2025 and beyond. We expect to continue making investments with a compelling ROI that set the stage for both near and long-term sustainable, profitable growth in the context of a dynamic macro environment. Our outlook includes the assumption that the path towards a more normalized bridal market continues over the next few years, and that the broader economic environment remains relatively unchanged. For the year, we expect that our net sales will grow year over year in the range of 1 to 3%. We expect adjusted EBITDA margin to be approximately 3 to 4%. We will continue to make medium and longer term investments in 2025, including in employee costs and other G&A.
Jeff: Turning to our outlook for 2025 and beyond we expect to continue making investments with a compelling ROI that set the stage for both near and long term sustainable profitable growth in the context of a dynamic macro environment.
Jeff: Our outlook includes the assumption that the path towards a more normalized bridal market continues over the next few years and that the broader economic environment remains relatively unchanged.
For the year, we expect that our net sales will grow year over year in the range of 1% to 3%.
We expect adjusted EBITDA margin to be approximately 3% to 4%.
Jeff: We will continue to make medium and longer term investments in 2025, including in employee costs and other G&A.
Jeff Kuo: We believe that these investments, including in our premium brand, product assortment and innovative omnichannel experience, drive compelling ROI and will begin to show returns starting in the second half of 2025 and beyond as we drive towards our previously stated medium term target of a low teens year over year net sales growth rate and double digit adjusted EBITDA margin in 2027. We would also like to remind you of the expected seasonal cadence of our business, given that the macro environment has affected the normal seasonal shape of the last few years. We expect that revenue growth for 2025 will be back half-weighted with a mid to high single-digit year-over-year growth rate in the second half.
Jeff: We believe that these investments, including in our premium brand <unk>.
Jeff: Product Assortments and innovative Omnichannel experience drive compelling ROI and will begin to show returns starting in the second half of 2025 and beyond.
As we drive towards our previously stated medium term target of a low teens year over year net sales growth rate and double digit adjusted EBITDA margin in 2027.
We would also like to remind you of the expected seasonal cadence of our business given that the macro environment has affected the normal seasonal shape up the last few years, we expect that revenue growth for 2025 will be back half weighted with a mid to high single digit year over year growth rate in the second half.
Jeff Kuo: Driven by the investments we are making, the growth and annualization of our showrooms, a more favorable comp from Q3 2024, and strong fine jewelry performance, particularly in Q4. We expect that a little more than two thirds of our adjusted EBITDA will come from H2, given our progressive sequential revenue growth, and that we don't expect significant seasonal incremental employee and other G&A costs, which we expect will allow us to capture higher adjusted EBITDA margins in H2. For Q1, we expect that our net sales will be in the range of $93.5 million to $95.5 million. And we expect Adjusted EBITDA to be between break-even to $1.5 million.
Jeff: Given by the investments we are making the growth in annualized <unk> of our showrooms are more favorable comp from Q3, 2024, and strong fine jewelry performance, particularly in Q4.
Jeff: We expect that a little more than two thirds of our adjusted EBITDA will come from age to given our progressive sequential revenue growth and that we don't expect significant seasonal incremental employee and other G&A costs, which we expect will allow us to capture higher adjusted EBITDA margins.
Jeff: In each two.
Jeff: For Q1, we expect that our net sales will be in the range of $93 5 million to 95 5 million.
And we expect adjusted EBITDA to be between breakeven to one $5 million.
Jeff Kuo: In closing, our premium brand and differentiated business model, including our data-driven decision-making, seamless omnichannel platform, and asset-light structure, demonstrate our ability to deliver profitability and achieve our strategic and financial objectives in a variety of different environments.
Jeff: In closing, our premium brand and differentiated business model, including our data driven decision making.
Jeff: Seamless omnichannel platform and asset light structure demonstrate our ability to deliver profitability and achieve our strategic and financial objectives.
Jeff: A variety of different environments, our performance in the fourth quarter reinforces our ability to execute and capitalize on the opportunities that drive long term sustainable and profitable growth.
Jeff Kuo: Our performance in the fourth quarter reinforces our ability to execute and capitalize on the opportunities that drive long-term, sustainable, and profitable growth.
Operator: With that, I will turn the call over to the operator for questions. Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.
Jeff: With that I will turn the call over to the operator for questions.
Jeff: Thank you as a reminder to ask a question you will need to press star one on your telephone to remove yourself from the queue. You May Press Star one one again, we ask that you limit yourself to one question and one follow up to allow everyone the opportunity to participate please.
Operator: We ask that you limit yourself to one question and one follow up to allow everyone the opportunity to participate. Please stand by while we compile the Q&A roster.
Jeff: Please standby, while we compile the Q&A roster.
Jeff: Okay.
Jeff: Yes.
Ashley Owens: Our first question comes from Ashley Owens of KeyBank Capital Markets.
Jeff: Our first question.
Speaker Change: Comes from Ashley <unk> of Keybanc capital markets. Please go ahead Ashley.
Ashley Owens: Please go ahead, Ashley. Good afternoon, and thanks for taking our questions. Maybe just to start, if we could touch on gross margin guidance for the year, what you're embedding for that in 2025. And if there's anything to comment regarding contributions from fine jewelry, with the normalization of engagement, if that's shifting the mix at all, into leveraging the gross margin line closer to that high 50s, just any color there you could provide. We're continuing to for the medium term model, and that includes this year, a guide to a high 50s gross margin, as you pointed out, and that's going to be driven by same factors that have been driving our, our strong gross margin that we've had, including the strength of our brand, our proprietary and differentiated products.
Ashley: Good afternoon, and thanks for taking my question, maybe just to start if we could touch on gross margin guidance for the year, what you're embedding for that in 2025, and if theres anything to comment regarding contributions from fine jewelry with the normalization of engagement and start shifting the mix at all.
Leveraging the gross margin line closer to the high Fifty's just any color there you could provide.
We're continuing to.
Ashley: For the medium term model and that includes this year a guide to a high <unk> gross margin as you pointed out and that's going to be driven by same factors that have been driving.
Ashley: Our strong gross margin that we've had including the strength of our brand our proprietary and differentiated product.
Jeff Kuo: Continuing to optimize our price optimization engine, procurement efficiencies and factors like we've been able to leverage before. So I think that we continue to believe that we have a lot of strengths that will allow us to capture that strong gross margin. And that extends across engagement, wedding and finder. Okay, gotcha.
Ashley: Continuing to optimize our price optimization engine.
Ashley: Procurement efficiencies.
And factors like we've.
Being able to leverage before so I think that we continue to believe that we have a lot of strengths that will allow us to capture that strong gross margin and that extends across.
Ashley: Engagement wedding and fine jewelry.
Ashley Owens: And then quickly to follow up, I know we touched on this a little bit last quarter too, but just really strong momentum within that repeat order growth still. And that's been a strong point for you guys for some time now.
Ashley: Okay, Gotcha, and then quickly to follow up.
Ashley: You touched on this a little bit last quarter too, but just really strong momentum within that repeat order growth still and that's been a strong point for you guys for some time now.
Ashley Owens: Looking at 2025, maybe if you could touch on anything you're doing strategically to continue to drive that repeat order, whether it be more collaborations or expanding the fine jewelry assortment.
Ashley: Looking at 2025, maybe if you could touch on anything you're doing strategically to continue to drive that repeat order whether it being our collaborations are expanding the fine jewelry assortment and then additionally, with the consumer and by environment remaining shaky.
Ashley Owens: And then additionally, with the consumer environment remaining shaky, what levers you can pull to bring in and really attract that new customer base as well?
Ashley: Levers you can pull to bring in and really attract that new customer base as well.
Beth Gerstein: Great, I'm happy to address that, Ashley. So as it relates to how we think about repeat, we're really pleased with the strong repeat order growth that we've seen. Part of this is just due to the brand resonance that we have with our customer base, as well as the very strong customer experience that we're delivering and continuing to invest in. As it relates to our assortment, we continue to introduce new and compelling collections. I mentioned our Jane Goodall Collection introduction being the strongest launch that we've had as a company. So clearly, I think the compelling assortment coupled with the really nice marketing campaigns that we're supporting those assortment with has been very effective.
Speaker Change: Great I'm happy to address that Ashley so as it relates to how we think about repeat we're really pleased with the strong repeat order growth that we've seen.
Speaker Change: Part of this is just due to the brand residents that we have with our customer base as well as the very strong customer experience that we're delivering and continuing to invest in.
As it relates to our assortment, we continue to introduce new and compelling collections I mentioned are Jane Goodall collection introduction being the strongest launch that we've had as a company. So clearly I think the compelling assortment coupled with the really nice marketing campaign.
Speaker Change: That we're supporting those assortment web has been very effective I think we're going to continue with this playbook, we're seeing very strong fine jewelry growth.
Beth Gerstein: I think we're going to continue with this playbook. We're seeing very strong fine jewelry growth and continuing to create a very curated assortment for our consumers and making sure that we couple that with great showroom experiences and seeing really nice, compelling growth from our fine jewelry in our showrooms. I think all of that is contributing to the very strong repeat order growth that we continue to expect to see in 2025.
Speaker Change: And continuing to create a very curated assortment for our consumers and making sure that we couple that with great showroom experiences and seeing really nice compelling growth from our fine jewelry and our showrooms I think all of that it is.
Speaker Change: <unk> to the very strong repeat order growth that we continue to expect to see.
Beth Gerstein: As it relates to how we think about acquiring new customers, I think this is something that we think of from a variety of different angles. One, how do we think about driving marketing efficiencies? And I think the fact that we have marketing leverage and continuing to see that leverage is a testament to a lot of the activity we're doing behind the scenes. Just that data-driven, very efficient use of our marketing span. And we're continuing to just to be the compelling brand for this generation and the next generation. So continuing to make sure that we have compelling influencer opportunities.
Speaker Change: 2025, now as it relates to how we think about acquiring new customers. I think this is something that we think of them from a variety of different angles.
Speaker Change: One how do we think about driving marketing efficiencies and I think the fact that we have marketing leverage and continuing to see that leverage is a testament to a lot of the activity we're doing behind the scenes.
Speaker Change: That data driven.
Speaker Change: Very efficient.
Speaker Change: Our marketing spend.
Speaker Change: And we're continuing to just to be the compelling brand for this generation and the next generation. So continuing to make sure that we have compelling influencer opportunities I talked about VIP brides and.
Ashley Owens: I talked about VIP brides in my earlier remarks, but continuing to have big social moments, which is really where our customers are right now. Okay, great. I'll pass it along. Thank you.
Speaker Change: In my earlier remarks, but continuing to have big social moments, which is really where our customers are right now.
Speaker Change: Okay, Great I'll pass it along thank you.
Oliver Chen: Our next question comes from Oliver Chen of TD Cohen.
Speaker Change: Thank you.
Speaker Change: Our next question.
Comes from Oliver Chen of TD Cowen. Please go ahead Oliver.
Oliver Chen: Please go ahead, Oliver. Thanks so much. Hi, Beth and Jeff.
Speaker Change: Thanks, So much hi, Beth and Jeff regarding the guidance.
Oliver Chen: Regarding the guidance of plus one to three, your longer term guidance calls for low teens. Just would love your thoughts on what might get you there over time. And related to that is what are you seeing with engagement trends and what's embedded in that guidance? And as we model the year ahead, would love the color on average order value relative to order count would be great too. Thank you.
Speaker Change: 1% to three your longer term guidance called for low teens, just would love your thoughts on.
Speaker Change: What might get you there over time and related to that is what are you seeing with engagement trends and what's embedded in that guidance.
Speaker Change: As we model the year ahead would love the color on average order value relative to order count would be great too. Thank you.
Beth Gerstein: Sure, so maybe I can start a little bit with engagement ring trends. While we still believe it's going to be a multi-year normalization, we're happy to have our best year-over-year unit comp in Q4 compared to prior quarters in the year. We also had good year-over-year unit growth in showroom engagement rings in Q4 from units. So I think we're starting to see that normalization. We continue to see improvement in sequential engagement ring unit trends in Q1 to date with similar performance by price point as we saw in Q4. So I think very promising trends overall.
Speaker Change: Sure. So maybe I can start a little bit with engagement ring trends.
Speaker Change: While we still believe it's going to be a multiyear normalization, we're happy to have our best year over year unit comp in Q4 compared to prior quarters in the year.
Speaker Change: We also had good year over year unit growth in showroom engagement rings in Q4 from units. So I think we're starting to see that normalization. We continue to see improvement in sequential engagement ring unit trends in Q1 to date with similar performance by price point as we saw in Q4.
Speaker Change: So I think very promising trends overall.
Beth Gerstein: I think as it relates to what's going to drive our growth, we have a lot of conviction in the overall strategy where we are investing in our showroom growth for the future, investing in our fine jewelry growth and the compelling products that we're known for, and continuing to invest in being the premium brand and the most loved jeweler for our consumer base. So all of those are going to drive our growth, and we've seen very strong growth as it relates to non-engagement, and we're going to continue to lean in there and continue to invest in bridal, which is really the entry point for our customers.
Speaker Change: As it relates to what's going to drive our growth we have a lot of conviction in the overall strategy, where we are investing in our showroom growth for the future investing and our fine jewelry growth and the compelling products that we're known for and continuing to invest.
Speaker Change: And being the premium brand in the most loved jeweler for our consumer base. So all of those are going to drive our growth and we've seen very strong growth as it relates to non engagement and we're going to continue to lean in there and.
And continue to invest in bridal, which is really the entry point for our consumer base.
Jeff Kuo: Jeff, do you want to talk about AOV? I think that was the last question that Oliver had. Sure. Thanks, Beth. Hi, Oliver. So with respect to AOV, I think this is something that we do expect to see moderate over time with the success that we're having in fine jewelry in particular. I think that's just a factor that we expect will continue to be a strategic driver success factor for us. We're having the growth in orders in fine jewelry, and as you know, fine jewelry orders tend to have a lower average order value. And so this is something that is expected.
Speaker Change: Jeff do you want to talk about <unk> I think that was the last question that I'll ever had.
Speaker Change: Sure.
Beth: Thanks, Beth Hi, Oliver so with respect to <unk>.
Is something that we do expect to see moderate over time with the success that we're having in fine jewelry in particular I think that's just a factor that we expect.
Beth: We'll continue to be a strategic driver success factor for us.
Beth: Having.
Beth: Having the growth in orders and fine jewelry and as you know fine jewelry orders tend to have a lower average order value and this is something that is expected and it is.
Jeff Kuo: concurrent with the success that we're having in fine jewelry.
Beth: Current with the success that we're having in fine jewelry. So we do expect that.
Jeff Kuo: So we do expect that AOVs will continue to moderate over time as we're driving that success in fine jewelry. And the only other thing I would add is, as it relates to Bridal, the we are seeing strongest demand below $5,000. And so that's the customer demand that we're seeing. And that's another contributing factor.
Beth: <unk> will continue to moderate over time as we're driving that success in fine jewelry.
Beth: And the only other thing I would add is.
Beth: As it relates to bridal.
Beth: We are seeing strongest demand below $5000 and so that's the customer demand that we're seeing and that's another contributing factor.
Oliver Chen: Okay, one quick follow up. You have a really strong physical showroom. Experience, as well as a digital first experience, but what are your debates in terms of different puts and takes on the margin profile of the speed of physical showroom rollouts and what decisions you're making?
Beth: Okay.
One quick follow up you have a really strong physical showroom.
Beth: Experienced as well as the digital first experience, but what are your debates in terms of.
Beth: Different puts and takes on the margin profile of the speed of physical showroom.
Beth: <unk>.
Beth Gerstein: And finally, this is pretty open-ended, Beth, but what are features you think are less appreciated about the investment story that should be more appreciated? Great. So as it relates to physical and digital, I think that we continue to believe there's a lot of opportunity as this premium omni-channel provider. And as it relates to how we think about physical rollout, we're being very strategic about the locations that we are investing in. We've always been very data-driven, but continuing to focus on delivering that exceptional customer experience. And that's something I'm really excited about this year, particularly is innovating with the customer experience in the big install base that we have with the over 40 showrooms. So I think we're just trying to be very deliberate about our decision-making, but continue to see really nice opportunity in both physical and digital and think that it's really the combination of both that makes us so special.
Beth: And what decisions you are making.
This is pretty open ended that but what are the features you think or less appreciated about the investment story that should be more appreciated.
Beth: Great.
As it relates to physical and digital I think that we continue to believe there is a lot of opportunity as that premium omnichannel provider and as it relates to how we think about physical rollout, we're being very strategic about the locations that we are investing and we've always been very data driven.
But continuing to focus on delivering that exceptional customer experience and that's something I'm really excited about this year, particularly is innovating with the customer experience and the big installed base that we have with the over 40 showrooms.
Beth: I think we're just trying to be.
Very deliberate about our decision, making but continue to see really nice opportunity in both physical and digital and think that that it's really the combination of both that makes us so special.
Beth Gerstein: In terms of what's not appreciated in the investment story, you know, I think that, you know, We continue to deliver profitability. It's the 14th consecutive quarter. The cash balance that we have is the highest it's been, as we mentioned. really early days of going public. So I think perhaps the investments that we're making coupled with the profitability is something that not everyone is completely appreciating and just the brand resonance that we have. So I think the opportunity we have in fine jewelry is something we're really excited about. And the experience that we have that's so differentiated from our peers is also very, very compelling.
In terms of what's not appreciated in the investment story.
That you know.
Beth: Yeah.
We continue to deliver profitability, it's the 14th consecutive quarter. The cash balance that we have is the highest it's been as we mentioned since.
Beth: Really early days of going public so I think perhaps the investments that we're making coupled with the.
Beth: Profitability is something that not everyone is completely appreciating and just the brand residents that we have.
Beth: So I think the opportunity we have in fine jewelry is something we're really excited about and the experience that we have the so differentiated from our peers is also very very.
Oliver Chen: But those are a few of the, I think what makes us very special and perhaps isn't quite as appreciated in the investment. Thank you for that.
Beth: Calling but.
Beth: Those are a few of the I think what makes us very special and perhaps isn't quite as appreciated in the investment community.
Unknown Attendee: Best regards.
Beth: Thank you for that best regards thanks.
Beth: Thank you.
Dylan Carden: comes from Dylan Carden of William Blair.
Beth: Our next question.
Speaker Change: It comes from Dylan Carden of William Blair. Please go ahead Dylan.
Dylan Carden: Please go ahead, Dylan. Thank you. Really impressive marketing leverage here. I'm kind of curious, it sounds like it kind of came in or did come in even ahead of some of your own expectations there. Can you kind of unpack that? If there's been a shift in strategy or cost? I'm curious if it plays a part in some of the better retention metrics that you're citing and have been citing. Has there been sort of a shift more for retention versus acquisition?
Dylan Carden: Thank you.
Dylan Carden: Really impressive marketing.
Dylan Carden: Leverage here.
Dylan Carden: Just curious it sounds like you kind of came in where it did come in.
Dylan Carden: Even ahead of some of your own expectations. There can you kind of unpack that.
Dylan Carden: If theres been a shift in strategy or cost.
Dylan Carden: And I'm curious if it plays a part in some of the better retention metrics that your site and have been citing has there been sort of a shift more for retention versus acquisition.
Beth Gerstein: I'll leave it there, thanks. I wouldn't say it's necessarily a shift. I think that we're constantly optimizing as it relates to the marketing efficiency. I think the fact that we have a very data driven approach, the fact that we have diversified channels within our marketing mix, and the fact that we have invested in our social media platforms, all of that has, I think, provided us with nice efficiencies. In addition to that, the showrooms themselves are nice drivers to improve the marketing efficiency. So I think it's everything combined, the strong repeat rate, the brand resonance is creating nice leverage.
Dylan Carden: I'll leave it there thanks.
Dylan Carden: I wouldn't say, it's necessarily a shift I think that we're constantly optimizing as it relates to the marketing efficiency I think the fact that we have a very data driven approach. The fact that we have diversified channels within our marketing mix and the fact that we have invested in our social media platforms. All of that has I think provided us.
Dylan Carden: With nice efficiencies. In addition to that the showrooms themselves are nice drivers to improve the marketing efficiencies. So I think it's everything combined the strong repeat rate the brand rather than answers is creating nice leverage and it's something we watch very closely we're very nimble.
Beth Gerstein: And it's something we watch very closely. We're very nimble. But we're really proud of the fact that we've been able to achieve that, continuing to invest in quality revenue, not chasing unprofitable growth. That's been nice.
Dylan Carden: But we're really proud of the fact that we've been able to achieve that continuing to invest in quality revenue.
Dylan Carden: Not chasing unprofitable growth.
Jeff Kuo: The behind the scenes is terms of what's driving that. And would you expect, I guess, I don't know, similar levels of leverage, but how should we think about this year? You mentioned you're investing behind growth, but you do have showrooms kind of ramping back up. Any color you can give us sort of how that line item might trend this year? Yeah, so We, as you correctly stated, are looking at this year as optimizing that mix between making near and long term investments that we think we have compelling ROI, as well as still being cognizant of driving profitability.
Dylan Carden: That's been kind of the the behind the scenes in terms of what's driving that.
Dylan Carden: And would you expect I guess similar levels of leverage, but how should we think about this year you mentioned you're investing behind.
Dylan Carden: Growth, but you do have showrooms kind of ramping back up.
Dylan Carden: Any color you can give us sort of how that line item might trend this year.
Dylan Carden: Yes so.
Dylan Carden: As you correctly stated are looking at this year as optimizing that mix between making near and long term investments that we think we have a compelling ROI as well as still being cognizant of driving profitability. I think marketing is one of the levers that we have here and we are looking to continue to build upon the.
Jeff Kuo: I think marketing is one of the levers that we have there, and we are looking to continue to build upon the success that we had in 2024, and continue that into 2025. And so we are guiding to continuing to expect to drive leverage in marketing for 2025, by some of the factors that Beth was just talking about. balanced with making investments and growing awareness of the brand.
Dylan Carden: <unk> that we had in 2024 and continue that into 2025 and so we are guy.
Speaker Change: <unk> two continuing to expect to drive leverage in marketing for 2025 by some of the factors that Beth was just talking about and then still thats.
Speaker Change: Balanced with making investments in growing awareness of the brand and so really continuing the playbook that we've had.
Dylan Carden: And so really continuing the playbook that we've had of profitability as one of our key guiding principles, but also making the investments that we think are the right things to do both for the near I think that, you know, that's one potential hypothesis, you know, overall, the demand that we're seeing under 5000 is kind of a result of just I think, changing consumer behavior. And we continue to see puts and takes quarter to quarter regarding consumer behavior. What I think is helpful for us is we have a very broad assortment and compelling assortment across different price points.
Speaker Change: Profitability.
Speaker Change: One of our key guiding principles, but also making the investments that we think are the right things to do both for the near and the long term.
Speaker Change: Great and then last one for me the ship in here about I think historically or in the last year. So it was strength in kind of the 10000 and above.
Speaker Change: Uh huh.
Speaker Change: Sort of engagement ring categories, and now Youre seeing strength below five.
Speaker Change: Is that actually just indication that youre seeing a broader recovery in engagement because it's not just a certain income cohort that's coming into the category or what's the best way to interpret that chip.
Speaker Change: I think that that's one potential hypothesis overall the demand that we're seeing under 5000 is kind of a result of just the.
I think changing consumer behavior, and we continue to see puts and takes quarter to quarter regarding consumer behavior. What I think is helpful. For us as we have a very broad assortment and compelling assortment across different price points. So we were happy to see that under 5000 b comparatively stronger.
Dylan Carden: So we were happy to see that under 5000 be comparatively stronger.
Dylan Carden: Great. Thanks a lot, guys. Nice work.
Speaker Change: <unk>.
Speaker Change: Great. Thanks, a lot guys nice work.
Unknown Attendee: Thank you.
Speaker Change: Thanks Steven.
Dana Telsey: Our next question comes from Dana Telsey of Telsey Advisory Group.
Thank you.
Speaker Change: Our next question.
Comes from Dana Telsey of Telsey Advisory Group. Please go ahead Dana.
Dana Telsey: Please go ahead, Dana.
Dana Telsey: Good afternoon, everyone. As you think about for the year and for the for the fourth quarter, your repeat orders, the fourth quarter of 18%, your total orders of 10% compared to 17% repeat orders for the year, and 7% for total orders for the year. What are you seeing with the attachment rate of fine jewelry going to engagement or engagement going to fine jewelry with the repeat orders?
Dana Telsey: Good afternoon, everyone. As you think about for the year and for the for the fourth quarter Youre repeat orders in the fourth quarter up 18%. Your total orders up 10% compared to 17% repeat orders for the year and 7% for total orders for the year. What are you seeing with the attachment rate of fine jewelry going to engagement.
Speaker Change: Our engagement go into fine jewelry with repeat orders and is there any shifts in demographics going on given the shift to fine jewelry in terms of whether it's income level or the guys versus women men versus women anything on that demographic profile and how that informs you for planning for <unk>.
Dana Telsey: And is there any shifts in demographics going on, given the shift to fine jewelry in terms of whether it's income level or guys versus women, men versus women, anything on that demographic profile and how that informs you for planning for AOV and AOV and total orders for the upcoming quarter in the year?
Dana Telsey: <unk> and.
Speaker Change: <unk> total orders for the upcoming quarter and the year. Thank you.
Beth Gerstein: Thank you. Great, well, maybe I can start with the shift in terms of fine jewelry. You know, I think that we haven't necessarily seen a shift. You know, we remain relatively small in a very big category here. And I think a lot of the efforts that we're making resonate well with the customer base that we have as it relates to both gifting and self-purchase. And I think we've been leaning in to that assortment under $1,000, having a really compelling trend forward assortment. Certainly, I think diamonds are highly coveted for every day as well as those special occasions.
Speaker Change: Great well, maybe I can start with the shift in terms of fine jewelry.
Speaker Change: I think that we haven't necessarily seen a shift we remain relatively small in a very big category here and I think a lot of the efforts that we're making.
Speaker Change: Resonate well with the customer base that we have as it relates to both gifting and self purchase and I think we've been leaning in to that assortment under a thousand dollars, having a really compelling trend forward Assortments certainly I think diamonds are highly coveted for every day is as well.
Speaker Change: So special occasions.
Beth Gerstein: I think that we're continuing to see nice AOVs within our fine jewelry category as we've been investing in the assortment. I'm not sure we have anything specific as it relates to attach with with fine jewelry and engagement or vice versa. You know, one of the things that we're really pleased to see is strong repeat from fine jewelry to just buying additional fine jewelry and seeing people come back there, which I think will will be a big driver in terms of the overall. Got it.
Speaker Change: And I think that we're continuing to see nice <unk> within our fine jewelry category.
Speaker Change: As we've been investing in the assortment.
Speaker Change: Im not sure we have anything specific as it relates to attach with fine jewelry and engagement or vice versa. You know one of the things that we're really pleased to see strong repeat from fine jewelry to just buying additional fine jewelry and seeing people come back.
Speaker Change: There.
Speaker Change: Which I think will will be a big driver in terms of the overall for Pete.
Beth Gerstein: And then the cadence of this year, any shifts in cadence, what you're seeing either, or what you expect, whether it's with Mother's Day timing, or even Easter timing, anything in terms of how you're planning with any changes in or reader crosses from last year, with sales, growth and operated and adjusted EBITDA profile. I think one, maybe, Jeff, you can talk through some of the different cadences with the quarters. But, you know, I think one thing to note is obviously the fine jewelry tends to be more concentrated around the holidays. And we've been performing really nicely across key holiday moments, like the Christmas holiday, for example.
Speaker Change: Got it and then the cadence of this year any shift in cadence what youre seeing either.
Speaker Change: What you expect whether it's with mothers day timing or even Easter timing anything in terms of how you are planning.
Speaker Change: Any changes or re the cost is from last year with sales growth and operate it and adjusted EBITDA profile.
Speaker Change: I think one maybe Geoff you can talk through some of the different cadences with the quarters, but I think one thing to note is obviously the fine jewelry tends to be more concentrated around the holidays and we've been performing really nicely across key holiday moments like.
Jeff Kuo: So that's part of what's informing how we're thinking about the year. But Jeff, I don't know if you have additional commentary there. Yeah, I think with respect to cadence for the year, kind of, as I discussed during some of the, some of the remarks about how we're thinking about, for example, H1 versus H2, I think we do expect that on the top lines, top line side, the growth will be more back half weighted. And that's really driven by the investments that we're making, driving returns starting in H2, annualization and growth of showrooms, and then also kind of keeping in mind just some of the factors such that, such as more favorable comp, if you're looking at Q3 specifically, and that Q4 is a big fine jewelry, fine jewelry quarter.
Like the Christmas Holiday for example.
So that's part of what's informing how we're thinking about the year, but Jeff I don't know if you have additional commentary there.
Jeff: Yes, I think with respect to cadence for the year.
Jeff: As I discussed during some of the.
Jeff: Some of the remarks about how we're thinking about for example, H one versus each too I think we do expect that.
On the topline topline side <unk> growth will be more back half weighted.
Jeff: And that's really driven by the investments that we're making hub driving returns starting in <unk> two.
Jeff: Nation and growth of showrooms and then also kind of keeping in mind you. Some of the factors such that such as a more favorable comp if youre looking at Q3, specifically and that Q4 is a big <unk>.
Jewelry fine jewelry quarter, and so I think that those are some of the considerations as we're thinking about.
Jeff Kuo: And so I think that those are some of the considerations as we're thinking about the shape, the shape of the year and and how we're planning.
Jeff: The shape of the year and how we're planning.
Unknown Attendee: Thank you.
Jeff: Thank you.
David: Thanks, David.
Beth Gerstein: I would now like to turn the conference back to Beth for closing remarks.
Thank you I would now like to turn the conference back to Beth for closing remarks Madam.
Beth Gerstein: Madam. Thank you everyone for your thoughtful questions. We look forward to talking to you in our next quarterly earnings call.
Beth: Thank you everyone for your thoughtful questions. We look forward to talking to you in our next quarterly earnings call.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Unknown Attendee: Thanks for watching!
Speaker Change: Okay.
Speaker Change: Yes.