Brilliant Earth Group Q3 2025 Earnings Call Transcript

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Provided by Quartr
November 5, 2025

Key Takeaways

  • Positive Sentiment: Q3 results beat expectations — Net sales were $110.3M (+10.4% YoY), total orders grew 17%, and adjusted EBITDA was $3.6M, and management raised full‑year net sales guidance to 3–4.5% with ~2–3% adjusted EBITDA margin targeted.
  • Positive Sentiment: Engagement and fine‑jewelry momentum — Engagement ring bookings returned to year‑over‑year growth with sequential ASP gains, while fine jewelry bookings grew 45% YoY, supporting mix diversification and repeat customer trends.
  • Positive Sentiment: Margin and marketing efficiency resilience — Gross margin held at 57.6% (within the company’s target range) despite record gold/platinum prices, and the company delivered ~300 bps of marketing leverage and 380 bps of OpEx leverage.
  • Negative Sentiment: Continued input‑cost and tariff headwinds — Management warned that elevated metal prices and a new 25% India tariff will likely pressure Q4 (and into Q1) gross margins despite ongoing mitigation efforts.
  • Neutral Sentiment: Cash, debt and inventory mix — The company is debt‑free with about $73M in cash (pro forma higher after a one‑time $25M distribution), but inventory rose ~28% from strategic purchases, a mixed signal for working capital.
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Earnings Conference Call
Brilliant Earth Group Q3 2025
00:00 / 00:00

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Operator

Good day, and thank you for standing by. Welcome to the Brilliant Earth Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star one one again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Colin Borland, Vice President of Strategy, Business Development, and Investor Relations. Please go ahead.

Colin Bourland
Colin Bourland
VP of Strategy, Business Development, and Investor Relations at Brilliant Earth

Thank you, and good morning, everyone. Welcome to the Brilliant Earth Third Quarter 2025 Earnings Conference Call. 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 Kuo, our Chief Financial Officer. During today's call, 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 could 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.

Colin Bourland
Colin Bourland
VP of Strategy, Business Development, and Investor Relations at Brilliant Earth

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. Also, during this call, management will refer to certain non-GAAP financial measures. A reconciliation of Brilliant Earth's non-GAAP measures to the comparable GAAP measures is available in today's earnings release, which can be found on the Brilliant Earth Investor Relations website. I'll now turn the call over to Beth.

Beth Gerstein
CEO and Director at Brilliant Earth

Good morning, everyone, and thank you for joining us today. As always, we're pleased to share our Third-Quarter results with you, and this quarter is more special than usual as it marks the 20-year anniversary of Brilliant Earth's founding. Two decades ago, Eric Grossberg and I set out to create a company that reimagined our industry with impact at its core. Over the years, we've created industry-leading practices that set new standards for how jewelry is sourced and manufactured, and we have revolutionized how consumers shop for and experience jewelry with a highly personalized and seamless omnichannel shopping experience. I am incredibly proud of our achievements over the past 20 years, and today's results reflect both the consistency and the resilience with which we've built our company.

Beth Gerstein
CEO and Director at Brilliant Earth

We've built something truly extraordinary that has redefined what luxury means: creating a globally loved brand with beautifully designed collections, and we've shown that purpose and profit can be a powerful force for good. We've been able to do this with an innovative, asset-light, data-driven business model while achieving consistent profitability quarter after quarter. As we look to the next 20 years, our optimism and ambition are as strong as ever. As one of the largest standalone jewelers, we are uniquely positioned to continue challenging the status quo, capturing market share, and leading the transformation of the highly fragmented $350 billion jewelry industry. Now, turning to our third-quarter performance, I'm pleased to report that we delivered exceptional results across the board. Our net sales grew 10% year-over-year, surpassing our guidance and exceeding expectations.

Beth Gerstein
CEO and Director at Brilliant Earth

This strong performance included a return to growth in engagement ring bookings, our largest quarter ever in wedding and anniversary band bookings, and an impressive 45% year-over-year growth in fine jewelry. We believe that we are continuing to outpace industry growth and build brand awareness, and we were able to do this all while delivering another quarter of profitability with Q3 adjusted EBITDA landing at $3.6 million, near the midpoint of our guidance range. I'm particularly proud of how we delivered this profitability with two key operational advantages that demonstrate the strength and differentiation of our business model. First, we showed our ability to maintain strong gross margins despite facing some of the most challenging input cost pressures our industry has ever seen. During the quarter, on average, gold and platinum prices were up approximately 40% year-over-year at or near all-time highs, while we also navigated new industry-wide tariff impacts.

Beth Gerstein
CEO and Director at Brilliant Earth

Despite these significant industry-wide headwinds, we maintained our gross margin within our medium-term target range of the high 50s. This speaks directly to the strength of our geographically diversified supply chain, our strong vendor relationships, our price optimization engine, and our ability to adapt quickly in dynamic environments, advantages that truly set us apart from competitors. Second, we achieved remarkable marketing efficiency, driving 300 basis points of year-over-year marketing leverage while still increasing traffic and delivering double-digit revenue growth. Our ability to continually optimize our model and to leverage technology, including AI and machine learning, has enabled us to keep refining how we allocate our marketing spend while also driving increased awareness and quality traffic. Now, let me take you through some other highlights from the quarter.

Beth Gerstein
CEO and Director at Brilliant Earth

For Q3, total orders grew 17% year-over-year, while repeat orders grew 16% year-over-year, demonstrating strong brand resonance in attracting new customers as well as driving long-term customer loyalty. As you know, engagement rings are an important first purchase for our customer, as well as a meaningful portion of our sales. Over the past several years, you've heard me speak about the multi-year market normalization following the peaks in engagement during 2021 and 2022. I'm thrilled to share that this quarter marks an inflection point in our engagement business with a return to year-over-year bookings growth. We've also seen continued stabilization in engagement ring average selling prices, with sequential ASP growth in the last two quarters this year. This reflects the strength of our brand positioning and product assortment, especially our exclusive signature collections.

Beth Gerstein
CEO and Director at Brilliant Earth

These signature collections, exclusive collections that we are known for, grew nearly three times faster than our total engagement ring assortment. This tells us that customers are increasingly seeking Brilliant Earth as a design leader for one of the most meaningful purchases in their lives. Together, our engagement ring acceleration demonstrates that the investments we have been making over the last few years are delivering strong returns as the bridal market recovers. This momentum extends beyond our bridal portfolio. Our wedding and anniversary band assortment delivered double-digit year-over-year bookings growth, including growth in both men's and women's collections, resulting in our largest quarter of wedding and anniversary band bookings ever. Fine jewelry, which was 14% of our bookings in Q3, continues to be a standout growth driver.

Beth Gerstein
CEO and Director at Brilliant Earth

Bookings grew an impressive 45% year-over-year, driven by both unit and ASP growth, reinforcing the increasing resonance that we have as a fine jewelry destination of choice. As in engagement rings, our iconic fine jewelry collections significantly outpaced our total fine jewelry growth. This quarter, we added breathtaking new pieces to our design-leading Soul and Jane Goodall collections, collections that are increasingly establishing Brilliant Earth as the go-to brand for unique and distinctive fine jewelry. The Jane Goodall collection remains our best-performing new collection launch to date and is a testament to how customers connect with jewelry that combines exceptional design with meaningful purpose. Sadly, Jane passed away just a week after we launched our second collection with her. Our hearts go out to her family and the Jane Goodall Institute. Over the past two years, I had the honor of getting to know Jane personally.

Beth Gerstein
CEO and Director at Brilliant Earth

She was an innovator, disruptor, and champion for good. We couldn't have asked for a better partner for Brilliant Earth. We're so proud to continue honoring her legacy through our ongoing partnership with the Institute. Our business results reflect our continued strategic brand investments, which are delivering awareness and resonance. This quarter alone, we achieved incredible celebrity placements with stars like Justin Bieber, Sabrina Carpenter, Sydney Sweeney, Halsey, and Britney Snow, choosing Brilliant Earth for everything from music videos to the red carpet. These celebrity moments resulted in over 200 placements and generated over 13 billion impressions in Q3. Additionally, our partnership with tennis champion Madison Keys as our first athlete ambassador continues to resonate powerfully. These authentic brand moments, combined with our strategic marketing investments, are driving outsized success across earned marketing channels, ultimately translating to accelerated order growth and strong brand recognition.

Beth Gerstein
CEO and Director at Brilliant Earth

As we enter the holidays, I'm confident we're more prepared than ever to deliver another successful season. We've approached this quarter with exceptional focus across the business to ensure we maximize this critical opportunity and build on our track record of strong holiday performance. We're exceptionally well-positioned for the season, from our showroom experiences and marketing strategy to a strong pipeline of new products, including our recent Love Decoded collection and the expansion of our incredibly popular 20th anniversary Pacific Green Diamond into a new fine jewelry collection. We've curated an incredible range of giftable products under $1,000 that we believe will resonate strongly this holiday season. As the holidays are also a peak engagement season, we're leading bridal design trends with new styles, including wider widths, bezel settings, and fancy shapes, alongside our timeless bestsellers and ready-to-ship preset engagement rings.

Beth Gerstein
CEO and Director at Brilliant Earth

This holiday, you will see us execute elevated visual merchandising, targeted showroom events like trunk shows, and increased inventory to continue elevating our overall showroom experience. These investments reflect the application of our continuous test-and-learn approach and the growing sophistication of our omnichannel model. Our captivating delight-in-the-details holiday campaign celebrates the artistry and craftsmanship behind our jewelry through whimsical illustrations by renowned French illustrator Geoffroy de Crousaz, capturing both the precision of our collections and the joy of the season. We're still early in the season, but I'm pleased with the performance we're seeing across the business through October, including year-over-year bookings growth in engagement and wedding and anniversary bands, strong outperformance in fine jewelry, and year-over-year growth in both new and repeat orders.

Beth Gerstein
CEO and Director at Brilliant Earth

While metal prices and tariffs continue to present industry-wide headwinds, our agile, data-driven business model and globally diversified supply chain position us to navigate these challenges and deliver successful business performance this holiday season, just as we've done throughout the year. Before I hand the call over to Jeff, I want to thank our incredible team whose dedication and execution continue to drive these outstanding results. This is just the beginning of what we can achieve as we leverage our 20 years of expertise of designing beautiful collections, driving brand strength, and executing with industry-leading operational excellence to capture the enormous opportunity ahead in the global jewelry market.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Thanks, Beth, and good morning, everyone. As Beth mentioned, we're pleased to report Q3 results where we continue to successfully drive our strategic initiatives, deliver strong top-line growth, and continued profitability and cash generation.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Let me take you through the details for Q3. Q3 net sales were $110.3 million, up 10.4% year-over-year, exceeding the top end of our guidance range by approximately 40 basis points. Total orders grew 17% year-over-year, and repeat orders grew 16% year-over-year in the third quarter, demonstrating the effectiveness of our customer acquisition and retention efforts and the resonance of our brand and products with consumers. Average order value, or AOV, was $2,209 in Q3. This represents a decline of 5.5% year-over-year in Q3 and up 6.5% quarter-over-quarter. Our AOV reflects the great success we have had broadening our overall assortment, including strong performance in our fine jewelry collection, which carries a comparatively lower price point. Growth in engagement rings and the increases that we've seen in engagement ring ASPs this year.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Q3 gross margin was 57.6%, within our medium-term gross margin target in the high 50s and a 320 basis point decline over Q3 last year. We were able to drive this robust gross margin even in the face of record gold and platinum prices and dramatic changes in the tariff environment that were not included in our Q3 guidance. This highlights the agility and resilience of our business model, including our data-driven approach to decision-making and our globally diversified supply chain. We delivered Q3 adjusted EBITDA of $3.6 million, or a 3.2% adjusted EBITDA margin, within the midpoint of our guidance range, driven by our compelling gross margins, significant year-over-year marketing leverage, and overall OpEx discipline. This marks our 17th consecutive quarter of positive adjusted EBITDA and highlights the strength and sustainability of our business model.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Q3 operating expense was 58.1% of net sales compared to 61.9% of net sales in Q3 2023. Our disciplined management of expenses, while also driving growth and investing in the business, is strongly demonstrated in the 380 basis points of leverage year-over-year. Q3 adjusted operating expense was 54.4% of net sales compared to 57.3% in Q3 2023. Adjusted operating expense does not include items such as equity-based compensation, depreciation and amortization, showroom pre-opening expenses, and other non-recurring expenses. Q3 marketing expense was 23.7% of net sales compared to 26.7% of net sales in Q3 2023. This represents approximately 300 basis points of year-over-year leverage, demonstrating our capabilities to drive significant marketing efficiencies while delivering strong top-line growth ahead of expectations. Employee costs, as a percentage of net sales, were higher in the third quarter by approximately 30 basis points as adjusted year-over-year.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

This includes growth in showroom employees, including from newly opened showrooms, as we continue to strategically focus on our showroom expansion. Other G&A, as a percentage of net sales, decreased year-over-year by approximately 20 basis points as adjusted for the quarter, as we continue to prudently invest in our business while driving strong top-line growth. Our year-over-year inventory grew approximately 28%, principally as a result of strategic procurement opportunities in Q3 to purchase inventory at advantageous prices in light of the current tariff environment, as we did in Q2. Even with this year-over-year increase, our inventory turns continue to be significantly higher than the industry average, and we maintain conviction that the agility of our data-driven, capital-efficient, and inventory-light operating model continues to be a compelling competitive advantage. We ended the third quarter with approximately $73 million in cash.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

On a trailing 12-month basis, we've generated approximately $12 million of free cash flow, demonstrating our ability to generate cash. On a pro forma basis, adjusting for the one-time dividend and distribution of approximately $25 million completed in Q3, net cash would have ended the period approximately $4 million higher year-over-year. As you know, our Q3 results also include paying down our term loan, leaving us with no debt on the balance sheet. In Q3, we spent approximately $96,000 repurchasing our common stock. This takes our total spend on stock repurchases to date to approximately $1.1 million as of the end of Q3. Turning to our outlook for fiscal year 2025, we are raising our full-year net sales guidance to 3-4.5% growth year-over-year.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Drivers include improvements in engagement ring bookings year-over-year performance, strong fine jewelry performance, coupled with the fact that Q4 is the seasonally biggest fine jewelry quarter, and the growth and annualization of our showrooms. In terms of year-over-year comps, our guidance also considers the fact that 2024 Q4 year-over-year net sales were comparatively stronger than 2024 Q3. For full-year adjusted EBITDA margin, we expect that to be approximately 2-3% as we continue to manage for strong gross margins, drive marketing leverage for the year, and balance making investments with driving near-term profitability. For Q4 gross margin, we do expect some impact from gold and platinum spot prices, which are both near all-time highs, with gold and platinum spot prices up 19% and 20% respectively, just in the time from our last earnings call to the end of October.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

We are also now incorporating the additional 25% tariff on India announced in August 2025. We continue to believe that we are better positioned than most to nimbly navigate this environment with our agile, data-driven approach and globally diversified supply chain. As mentioned before, we expect to drive year-over-year leverage in marketing spend for the year, including through the use of AI and machine learning to capture efficiencies. We expect to continue to make near and longer-term investments through the end of the year, including in employee costs and other G&A, while managing the business for profitability. We expect that some metal and tariff headwinds will continue into Q1. We will provide further perspectives on 2026 in our next earnings call. Our data-driven approach, including agile price optimization, disciplined expense management, and our asset-light business model, position us well to outperform the industry while delivering profitable growth.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

This quarter's strong execution reinforces our capability to identify and capture opportunities to drive sustainable, profitable growth and create value for our shareholders. With that, I'll turn the call over to the operator for questions.

Operator

Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press Star one one on your telephone and wait for your name to be announced. To withdraw your question, please press Star one one. We'll please ask you to limit your questions to one question with one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Oliver Chen of TD Securities. Your line is now open.

Operator

Hi, Beth and Jeff. Great quarter. As we think about engagement ring bookings, it was exciting that they returned to growth this quarter.

Operator

How sustainable do you think the inflection here is and what are your expectations for bridal recovery versus fine jewelry mix over the next year? Second follow-up is the cost of goods sold and inflation that you're seeing now. You maintain some really high gross margins. What do you think will happen in terms of what you're trying to do with hedging going forward? It's a pretty dynamic environment. How are customers feeling and executing around pricing from what you see in the market? It's a bifurcated consumer with money to spend, but a consumer that's being choiceful, in our view. Thanks.

Beth Gerstein
CEO and Director at Brilliant Earth

Thank you, Oliver. Maybe we can start with that in terms of the consumer. We have been pleased with the consumer demand that we have been seeing. I think you're right that we typically do have a higher-income customer.

Beth Gerstein
CEO and Director at Brilliant Earth

In that bifurcation, we haven't necessarily seen some of the volatility in the lower end of the market. We have been really encouraged by the response that we've seen in terms of the products, the brands, the overall experience. Generally speaking, we're pleased with what we're seeing on the consumer side. As it relates to kind of the mix that we're seeing around the assortment, I think what we were really excited about during the quarter is just strength across the assortment. From engagement rings to wedding bands and anniversary rings to fine jewelry, we really saw strength kind of across all of what we were intending to do. That was, I think, something that we were excited by as well. I think engagement rings, we were really happy to see that bookings increase.

Beth Gerstein
CEO and Director at Brilliant Earth

I think you remember last quarter we saw the unit increase as well. We are not going to call it. We do recognize there are puts and takes in any given quarter as it relates to bridal recovery, but we are pleased with what we are seeing. We expect to continue taking share, outperforming the industry with the broader market as it continues to recover. We are very well positioned. I would just say we continue to think we have very strong fine jewelry opportunity. It is a massive market. The growth that we are seeing is extraordinary, with plus 45% in Q3. We continue to think that there is an outsized opportunity there across all of our channels. I would expect to see that mix continue to increase. Jeff, I do not know if I think maybe why do we not stop it there?

Oliver Chen
Oliver Chen
Retail and Luxury Analyst at TD Securities

Thanks a lot, Beth Gerstein.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Thanks, Oliver.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Thank you.

Operator

Our next question comes from the line of Anna Glaessgen of B. Riley Securities. Your line is now open.

Anna Glaessgen
Anna Glaessgen
Senior Research Analyst at B. Riley Securities

Hey, good morning. Thanks for taking my question. I'd like to start with the shift in adjusted EBITDA margin guidance. Could you put a finer point on how you're contemplating the various headwinds between the metals pricing and the incremental tariffs, and to what extent you've taken price already to help compensate for some of these, or could that be layering onto the model in the future? Thanks.

Beth Gerstein
CEO and Director at Brilliant Earth

Maybe I can start a little bit on the price. As you know, we continually optimize on our pricing. It's basically part of the test-and-learn culture that we have as a company. I will say that we've taken selective pricing increases.

Beth Gerstein
CEO and Director at Brilliant Earth

I think especially as we're leaning more into signature styles that are proprietary to Brilliant Earth, we've seen strong demand even as we've been increasing some of those prices. Generally speaking, I think we're on the journey. Q4 we find to be a more promotional season. I think as we're thinking about price increases, we're much more selective as it relates to the Q4 environment. Generally speaking, I think we've done a really good job in terms of being able to absorb some of the costs, especially in Q3. If you look at how costs increased throughout the quarter, and yet we were still able to maintain the margin that we expected and gave guidance to, I think that's a testament to the strong operational excellence that we have in order to do so. Jeff, maybe you can.

Beth Gerstein
CEO and Director at Brilliant Earth

Talk a little bit about adjusted EBITDA guidance.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Sure. I'd be glad to. I think I'd just like to build on what Beth was saying in that we're able to adapt and adjust very quickly to dramatic changes in input costs. You can really see that in the success of our Q3 results. We are factoring in ongoing metal and tariff changes into our Q4 guidance. As you know, both metal and tariff costs continue to change significantly since our last Earnings Call. As I mentioned, gold and platinum were up 19%-20% even in time just since our earnings call to the end of October. We're also now factoring in the 25% additional India tariff, which went into effect in August. I think those factors are significant. We're able to adapt and mitigate significantly.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

For outlook for a gross margin for the quarter, we do expect a similar year-over change in gross margin as we saw in Q3 as we continue to work to mitigate these changes that we're seeing. We do believe that over time, we have additional tools at our disposal to continue to adjust and be nimble and really deliver strong top-line and gross margin performance. We think that we're better positioned than most. Results that we've demonstrated over the last couple of quarters, I think, are a real great illustration of our agility.

Anna Glaessgen
Anna Glaessgen
Senior Research Analyst at B. Riley Securities

Thanks. Turning back to the bridal category, could you remind us what the typical lag is between engagement and wedding bands, if there is one? Just trying to think through if there's a possible tailwind into Q4 and beyond from the inflection in engagement in Q3. Thanks.

Beth Gerstein
CEO and Director at Brilliant Earth

Sure.

Beth Gerstein
CEO and Director at Brilliant Earth

I would say that typically people get married about a year after they get engaged. There's a very wide range there, including people who will buy a matching set upfront. That's typically what the profile looks like.

Anna Glaessgen
Anna Glaessgen
Senior Research Analyst at B. Riley Securities

Thanks. I'll hop back in the queue

Beth Gerstein
CEO and Director at Brilliant Earth

Great. I think the only thing I would add also is just that we're seeing nice repeat behavior. It's very important for us to be able to convert that engagement customer to wedding band and then nurture them to other life stage moments. We're happy to see the repeat business that we've been seeing. I think it's a testament to a lot of the activities that we're doing to drive brand loyalty.

Anna Glaessgen
Anna Glaessgen
Senior Research Analyst at B. Riley Securities

Thanks.

Operator

Thank you. Our next question comes from the line of Ashley Owens of KeyBanc Capital Markets. Your line is now open.

Ashley Owens
Ashley Owens
VP and Senior Equity Research Analyst at KeyBanc Capital Markets

Hi. Great. Thanks.

Ashley Owens
Ashley Owens
VP and Senior Equity Research Analyst at KeyBanc Capital Markets

Good morning. Maybe just to start, Jeff, could you talk a little bit about the top-line guidance for the full year? I know comp, and then just backing into 4Q as well, I know comp is not as favorable as 3Q, but I believe we are looking at a range of about 2%-7% top-line growth in the quarter, if my math is correct. Just anything to call out in terms of headwinds you are embedding, then any insight as to how we should bridge between those two goalposts? It sounds like October is off to a good start, if I am not mistaken. Is there some caution embedded in that top-line number? Thank you.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

I would say that in terms of the top-line guidance that we have provided, we are factoring in.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Things that Beth was saying about what we've seen through October, including growth in engagement and wedding and anniversary bands and the strong outperformance in fine jewelry. And so we were glad to be able to raise our outlook for the year. We've seen good performance in the business overall. And it's a big quarter for us. The bulk of the holiday still lies ahead. So there's naturally some range in terms of possible outcomes. But I think we've seen strong performance. We're glad to see the inflection in engagement rings. And we think that we're very well positioned to deliver a strong holiday.

Beth Gerstein
CEO and Director at Brilliant Earth

I would just add that, yeah, the comps on Q3 were a little bit weaker than Q4 as well. That's something that we factored in.

Ashley Owens
Ashley Owens
VP and Senior Equity Research Analyst at KeyBanc Capital Markets

Okay. Gotcha. And then just as a follow-up, I noticed AOV declined less sharply this quarter.

Ashley Owens
Ashley Owens
VP and Senior Equity Research Analyst at KeyBanc Capital Markets

I think it was mid-single-digit declines versus the double digits we've been seeing for a few quarters now. How much of that improvement is driven by engagement recovery versus a broader normalization within that KPI? Just as we look ahead, should we think of mid-single-digit declines as a more sustainable run rate moving forward?

Beth Gerstein
CEO and Director at Brilliant Earth

Jeff, do you want to take that one?

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Yeah. I would say that factored into that is, of course, underlying, we've had outperformance in fine jewelry, which is a comparatively lower price point. We've seen that nice inflection in terms of engagement rings, and so that's contributing as well to the overall AOV mix. I think one other thing that's noteworthy is just the sequential increases in engagement ring ASPs that we've seen in each of the last couple of quarters. I think that really speaks to.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

How people are resonating with our brand and our products. We do not have a specific number out there in terms of forward-looking AOV percents, but we do think that those factors like growth and success in fine jewelry will continue to contribute to what happens to overall AOV. We are glad to see the strength that we are having in engagement, both bookings and ASP.

Ashley Owens
Ashley Owens
VP and Senior Equity Research Analyst at KeyBanc Capital Markets

Okay. Great. Thank you. I will pass it along.

Jeff Kuo
Jeff Kuo
CFO at Brilliant Earth

Thanks, Ashley.

Operator

Thank you. Our next question comes from the line of Dylan Cardin of William Blair. Your line is now open.

Operator

Hi, Beth and Jeff. This is Anna on for Dylan Cardin. Thanks for taking our question. Could you just elaborate further on what efficiencies you are seeing in marketing to allow better sales and leverage in that line item? Thank you.

Beth Gerstein
CEO and Director at Brilliant Earth

Yeah. Thanks, Anna, for the question.

Beth Gerstein
CEO and Director at Brilliant Earth

We were really pleased to see the marketing efficiencies. As you picked up, we had about 300 basis points of marketing leverage. I would say that we have driven this efficiency in a variety of different ways. We have been getting smarter about the allocation of spend across channels. We have a lot of sophistication across our team with machine learning models to help drive increased site conversion. We are seeing strength in the showrooms, which are always a nice lever there as it relates to driving marketing efficiencies as well. Overall, we were really happy to see that we had such strong sales growth, even as we were able to be much more efficient about deploying our marketing spend and continuing to drive that brand awareness. It is so important strategically for us.

Beth Gerstein
CEO and Director at Brilliant Earth

Great. Thank you. I will pass it along.

Operator

Thank you.

Operator

As a reminder, to ask a question, you'll need to press star 1 on your telephone and wait for your name to be announced. For our next question, we welcome back Oliver Chen with TD Securities. Please go ahead.

Oliver Chen
Oliver Chen
Retail and Luxury Analyst at TD Securities

Hi. Thanks, Beth and Jeff. The cash position is also attractive and brilliant. What are your capital priorities as you think ahead, as you think about marketing versus collections and international expansion in terms of cash and CapEx? And then on this quarter that we just had, what factors drove the upside in terms of fine versus engagement or existing versus new customers, if there were factors that you'd call out? Thank you.

Beth Gerstein
CEO and Director at Brilliant Earth

Sure. Maybe I can start with that. Overall, I feel like we've been doing a really fantastic job in terms of driving an optimized curated assortment.

Beth Gerstein
CEO and Director at Brilliant Earth

The products that we're offering are really resonating with our customers, both in terms of the key diamond collections, those essentials that everybody wants in their jewelry box, as well as the designs that we're increasingly known for with our iconic new collections, for example, our Soul collection expansion, the Jane Goodall collaboration. All of those, I think, were really received very well by our consumers. I think the marketing campaigns that we do behind them have been also a standout and helped really break through and are resonant in today's environment, especially for that key consumer that we have. Really, in terms of driving upside, it was fine. In fine jewelry, it was repeat. It was new. It was really across the collection. I would say that there were bright spots all around.

Beth Gerstein
CEO and Director at Brilliant Earth

As it relates to how we think about our investments, maybe I can start, and Jeff, you can please add on. I think you're right that we have a really strong balance sheet with a nice cash position. That gives us a lot of flexibility. We continue to invest in opportunities that we see a strong return on investment. That continues to be expanding our showroom footprint, looking at how we drive brand awareness, but we do it all with a very keen eye towards that ROI. We have high benchmarks. We continue to see opportunity to invest and have seen good returns on those investments. I would say that that's really how we think about overall that allocation going forward.

Oliver Chen
Oliver Chen
Retail and Luxury Analyst at TD Securities

Okay. On the lab diamond trends that you're seeing now, lab's been an important gifting factor and more.

Oliver Chen
Oliver Chen
Retail and Luxury Analyst at TD Securities

What are the latest lab diamond demand and pricing trends that you'd highlight in your forecast for how that market is growing? Thank you.

Beth Gerstein
CEO and Director at Brilliant Earth

Sure. What I would say about the lab diamond products is that there's very wide consumer awareness at this point. I think consumers love the product. On the fine jewelry side, we see a lot of opportunity there and have seen really nice sales growth as it relates to the lab-grown assortment. I think it provides accessible price points for consumers. That's why you see so many tennis bracelets and, more and more, I think, embracing some of the fine jewelry trends with layering, multiple earrings, etc. Overall, I think that it's been great at expanding that accessible market. Because we've been leaders introducing lab diamonds over a decade ago, I think we've been at the forefront of that.

Beth Gerstein
CEO and Director at Brilliant Earth

I think one more thing I would just add is that I mentioned we are really excited about the holiday season. Part of that is we've curated an exceptional collection under $1,000. And I think the lab diamond component of that is really exciting.

Oliver Chen
Oliver Chen
Retail and Luxury Analyst at TD Securities

That was the last question, Beth. On this holiday, you called it out. Why was this different this year? Or what are your thoughts on the environment that make it conducive to the strategy you're speaking to?

Beth Gerstein
CEO and Director at Brilliant Earth

I'm not sure it's necessarily different. I just think that we continue to see opportunity, and we're very prepared in terms of the holiday season. We've been doing really well across some of the key moments. Valentine's Day, Mother's Day, I think we just do a really fantastic job with the team of executing well in key holiday moments.

Oliver Chen
Oliver Chen
Retail and Luxury Analyst at TD Securities

Thanks a lot. Best regards.

Beth Gerstein
CEO and Director at Brilliant Earth

Thank you.

Operator

Thank you.

Operator

I'm showing no further questions at this time. I would now like to turn it back to Beth for closing remarks.

Beth Gerstein
CEO and Director at Brilliant Earth

Thank you, everyone, for joining us for our Q3 quarterly call. Hope you all have a fantastic holiday, and we look forward to talking to you in Q1.

Operator

All right. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you.

Analysts
    • Colin Bourland
      VP of Strategy, Business Development, and Investor Relations at Brilliant Earth
    • Oliver Chen
      Retail and Luxury Analyst at TD Securities
    • Analyst at William Blair
    • Jeff Kuo
      CFO at Brilliant Earth
    • Beth Gerstein
      CEO and Director at Brilliant Earth
    • Anna Glaessgen
      Senior Research Analyst at B. Riley Securities
    • Ashley Owens
      VP and Senior Equity Research Analyst at KeyBanc Capital Markets
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