Executive Summary

Q1 2025 delivered net sales of $93.9M within guidance, with GAAP diluted EPS of $(0.03) and Adjusted Diluted EPS of $0.00; gross margin was 58.6% amid headwinds from higher gold costs and fulfillment/occupancy expenses . Management reiterated FY25 guidance (net sales +1% to +3% YoY; Adjusted EBITDA margin 3%–4%) and issued Q2 outlook (net sales -3% to 0% YoY; Adjusted EBITDA -$1.5M to +$2M) .
Mix shift and strategy: total orders +12% YoY and repeat orders +13% YoY, with positive engagement ring unit growth and strong double-digit fine jewelry bookings; AOV declined 14% YoY to $2,062 due to customer strength below $5,000 and fine jewelry mix .
Balance sheet/cap structure: ended Q1 with ~$92.5M net cash and ~$147.3M cash; company plans to prepay $20M of term loan in Q2 and amend covenants to increase flexibility .
Estimate context: revenue slightly missed S&P Global consensus ($93.88M vs $94.42M), EPS was essentially in line ($0.00 vs -$0.003), while company-reported Adjusted EBITDA of $1.1M landed within guidance; management flagged a limited Q2 gross margin impact from tariffs/gold, embedded in outlook . Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well
- Demand breadth and repeat: total orders +12% YoY and repeat orders +13% YoY, with positive engagement ring unit growth; “most successful Valentine’s Day ever,” with 2-week bookings up mid-to-high single digits and fine jewelry bookings +40% .
- Gross margin resilience: Q1 gross margin of 58.6% was within the high-50s medium-term target despite input headwinds, supported by pricing and procurement discipline .
- Liquidity and strategic flexibility: ended Q1 with ~$92.5M net cash and ~$147.3M cash, planning $20M prepayment and covenant amendments to bolster flexibility .
What Went Wrong
- Net sales and profitability pressure: net sales fell 3.5% YoY to $93.9M; Adjusted EBITDA declined to $1.1M (1.1% margin) vs $5.1M (5.2%) in Q1 2024 as AOV fell 14.2% YoY to $2,062 .
- Margin headwinds: gross margin down 130 bps YoY to 58.6% on higher gold and fulfillment/occupancy costs, partially offset by pricing optimization and procurement efficiencies .
- Operating leverage: marketing was 24.5% of sales (+~80 bps YoY) and adjusted operating expenses rose as a percent of sales due to showroom staffing, rent, and tech investments .

Financial Results

Actuals by period (oldest → newest)

Metric	Q1 2024	Q4 2024	Q1 2025
Net Sales ($M)	$97.3	$119.5	$93.9
GAAP Diluted EPS	$0.01	$0.02	$(0.03)
Adjusted Diluted EPS	$0.03	$0.04	$0.00
Gross Margin %	59.9%	59.6%	58.6%
Adjusted EBITDA ($M)	$5.1	$6.9	$1.1
Adjusted EBITDA Margin %	5.2%	5.8%	1.1%

Q1 2025 vs S&P Global consensus

Metric	Actual	S&P Consensus	Result
Revenue ($M)	$93.88	$94.42*	Miss (~$0.54M)
Primary EPS	$0.00	-$0.00337*	In line/slight beat
EBITDA ($M)	Company Adj. EBITDA: $1.08	EBITDA cons.: $1.20*	Mixed (definitions differ)

Values retrieved from S&P Global.*

Key KPIs (trend view)

KPI	Q3 2024	Q4 2024	Q1 2025
Total Orders (units)	—	58,357	45,535
AOV ($)	—	$2,048	$2,062
Repeat Orders YoY (%)	+11%	+18%	+13%

Notes: Q1 2025 ended with cash and cash equivalents of ~$147.3M and net cash of ~$92.5M .

Guidance Changes

Metric	Period	Previous Guidance (3/12/25)	Current Guidance (5/6/25)	Change
Net Sales YoY	Q2 2025	N/A	-3% to 0%	New
Adjusted EBITDA	Q2 2025	N/A	-$1.5M to +$2M	New
Net Sales YoY	FY 2025	+1% to +3%	+1% to +3%	Maintained
Adjusted EBITDA Margin	FY 2025	3% to 4%	3% to 4%	Maintained

Management expects H2 to drive growth and profitability, with limited Q2 gross margin impact from tariffs/gold embedded in outlook .

Earnings Call Themes & Trends

Topic	Q-2 (Q3 2024)	Q-1 (Q4 2024)	Current (Q1 2025)	Trend
Engagement ring demand	Market normalizing; sequential improvement; maintained profitability amid promotions	Best YoY unit comp of 2024; showroom units up	Positive YoY unit growth; momentum continued into Q2-to-date	Improving
Fine jewelry growth	Strong; Jane Goodall launch “most successful”	Double-digit growth; Dec fine jewelry 27% of bookings	Double-digit growth; Valentine’s fine jewelry bookings +40%	Improving
Gross margin	60.8% (+230 bps YoY)	59.6% (+90 bps YoY)	58.6% (-130 bps YoY) on gold/occupancy; within target	Stable to slightly lower
Tariffs/supply chain	Diversified supply chain; agility stressed	Emphasis on pricing engine/operational nimbleness	Limited Q2 impact assumed; limited China exposure; mitigations in place	Managed risk
Marketing efficiency	Leverage ~10 bps YoY	Leverage 340 bps YoY; plan to keep leveraging	24.5% of sales (+~80 bps YoY) in Q1; expect FY leverage	Improving FY, Q1 seasonal uptick
Showrooms	Expanding; toward 40 by YE	40 showrooms; try-on bars; strong showroom fine jewelry	41 showrooms; 1–2 more in 2025	Expanding

Management Commentary

“We delivered our 15th consecutive quarter of profitability as a public company... total orders [up] 12%... positive engagement ring unit year-over-year growth... and our most successful Valentine's Day ever” — Beth Gerstein, CEO .
“Q1 gross margin was 58.6%... decline primarily driven by higher gold costs and labor and occupancy... partially offset by pricing optimization and procurement efficiencies” — CFO .
“We expect net sales [Q2] -3% to 0% YoY; Adjusted EBITDA -$1.5M to +$2M... limited impact on Q2 gross margin from higher gold costs and tariffs... included in our outlook” — CFO .
“Ended the period with a strong net cash position of approximately $92.5M... planning to prepay $20M of our term loan in Q2... amend covenants to add a liquidity covenant through Q1 2026” — CFO .

Q&A Highlights

Engagement trends: Management reiterated positive engagement ring unit growth in Q1 and continued into Q2-to-date; strongest demand below $5,000 persists, indicating value-seeking behavior .
AOV dynamics: AOV pressure driven by mix (fine jewelry growth and sub-$5,000 bridal); strategy is to pursue multi-pronged growth via proprietary collections and showroom-driven uplift .
Tariffs/gold headwinds: Limited Q2 margin impact assumed; mitigations via pricing optimization, procurement, and diversified suppliers with limited China exposure .
Marketing/OpEx: Q1 marketing at 24.5% of sales with expectation of FY leverage; ongoing investments in tech, showrooms, and brand continue but targeted for ROI and H2 margin capture .
Showroom cadence: 1–2 openings in 2025; focus on ROI and enhancing existing locations with try‑on bars and increased fine jewelry capacity .

Estimates Context

Revenue: $93.88M actual vs $94.42M S&P Global consensus — slight miss (~0.6%). EPS: $0.00 actual vs -$0.003 S&P — essentially in line/slight beat. Consensus counts: 5 EPS and 5 revenue estimates for Q1 2025. Values retrieved from S&P Global.*
EBITDA: S&P Global shows EBITDA consensus ~$1.2M vs S&P actual -$2.04M; company reported Adjusted EBITDA of $1.1M (within its guidance). Differences reflect definition (company’s Adjusted EBITDA excludes certain items) .
Implication: Given in-line EPS and a small revenue shortfall, estimate revisions should be modest; reiteration of FY guide and explicit Q2 outlook likely anchor near-term models toward H2 weighting .

Key Takeaways for Investors

Mix-driven growth: Unit momentum and fine jewelry outperformance offset lower AOV; durable repeat behavior (+13% YoY) underpins lifetime value .
Margin management credible: Despite gold/tariff headwinds, gross margin held in high 50s aided by pricing engine and procurement; limited Q2 margin impact embedded, with H2 mitigation targeted .
FY guide intact with H2 skew: Reiterated +1%–3% revenue and 3%–4% Adjusted EBITDA margin for FY25; management expects mid‑ to high‑single digit H2 revenue growth and ~2/3 of EBITDA in Q4 .
Capital strength and flexibility: ~$92.5M net cash and planned $20M debt prepayment/covenant amendments enhance optionality for investments and shareholder value .
Near-term trading lens: Modest revenue miss vs S&P offset by in-line EPS and reaffirmed FY; watch Q2 margins (tariff/gold) and order momentum (engagement units, fine jewelry bookings) as stock catalysts .
Medium-term thesis: Premium brand, omnichannel scale, data-driven pricing, and fine jewelry expansion support margin durability and multi-year growth—even as engagement normalizes .

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Footnote: Values retrieved from S&P Global.*

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