Good day, and thank you for standing by. Welcome to the Brilliant Earth second quarter 2022 earnings 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Allison Malkin with ICR. Please go ahead.
Thank you. Good afternoon, everyone. Thank you for joining us for our second quarter 2022 earnings conference call. Joining me today are Beth Gerstein, Chief Executive Officer, and Jeff Kuo, Chief Financial Officer. For this morning's call, Beth will begin with highlights of our second quarter financial and operational performance and the drivers of our future growth. Jeff will follow with more details on the second quarter financial results and guidance. Following this, the operator will begin the Q&A session with our presenters. Beth and Jeff available to answer the questions you have for us today. Before we start, I would like to remind you that management will make certain remarks today that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These future 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 the results to differ materially from those expressed or implied in these forward-looking statements. These forward-looking statements reflect our opinions 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. Also, during this call, we will discuss both GAAP and non-GAAP financial measures. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's earnings release, which is available at the investor relations section of our website at investors.brilliantearth.com. A live broadcast of this call is also available at the investor relations section of our website. With that, I'll turn the call over to Beth.
Good afternoon, everyone, and thank you for joining us today. As we approach our one-year anniversary as a publicly traded company, we are pleased to report our fourth consecutive quarter of strong, profitable growth. It's been an incredible year for our company, one in which we've grown the reach and impact of our mission to cultivate a more transparent, sustainable, compassionate, and inclusive jewelry industry. We're proud of the progress our outstanding team has made to date, and we're intently focused on the future. With a clear mission, a proven track record, and significant opportunities for expansion, we are excited about our near and long-term potential. We're pleased with our second quarter results as they demonstrate our continuing ability to navigate in a rapidly changing macroeconomic environment.
By staying focused on nimbly and prudently executing our strategy while optimizing our asset-light business model to grow the brand, we are in a strong position to continue to take share in a fragmented industry and to prudently manage our costs so that we continue to deliver profitable growth. A high-level review of our Q2 results demonstrates the effectiveness of this approach. We grew revenue 18% to $108.8 million. We delivered record gross margin of 53.1%, a 460 basis point improvement over the prior year. We delivered $9.6 million in adjusted EBITDA, representing an adjusted EBITDA margin of 9%.
Recent highlights include the continued expansion of our omnichannel strategy with the opening of showrooms in Bethesda, Columbus, Houston, Minneapolis, Cleveland, and Detroit to bring our reach to 21 showrooms in which our customers can experience a personalized, joyful shopping experience. With each new showroom opening, we bring more consumers to our brand while also deepening our relationships with both new and returning customers. Technology is a big part of delivering an exceptional omnichannel customer experience. Our continued investment in technology and data is helping us in multiple ways. Our seamless experience allows customers to shop how and when they want. For example, we recently launched an online wait list to ensure customers can get the right appointment for their schedules, even if we are fully booked. Equally important, our showrooms deliver strong ROI. Going forward, we are maintaining our line of sight to nearly doubling our showrooms this year.
Our showroom strategy has been and will continue to be a major catalyst for building our brand. Whether in our showrooms or on our website, in Q2, we continue to deliver design-led proprietary products that our customers loved across our curated assortment. Today, I'll start with fine jewelry, a fast-growing small percentage of our total mix with huge growth potential. As a reminder, for us, fine jewelry consists of earrings, necklaces, bracelets, and fashion rings. For Mother's Day, we enjoyed strong success, delivering over 350 basis points of growth in fine jewelry mix over the prior year. We also launched men's fine jewelry, including necklaces, bracelets, chains, and cufflinks, to an enthusiastic response. This is a new collection we launched in time for Father's Day, and customers were so excited they found the products on our site even before we marketed them.
When we did launch, our strategy included key influencers, media, and social content, and generated nearly 80 million impressions while introducing new consumers to our brand. One of the drivers of this enthusiasm for our brand is how we are executing on social platforms where our customers are, including TikTok, to extend our brand reach. While millions of views are impressive, it's our engagement and community building that we're most excited about. In fact, in a recently conducted brand survey, 13% of customers indicated they learned about Brilliant Earth on TikTok. You've heard me say it for the past two quarters. 2022 is the year of the wedding, and we continue to capitalize on this.
Both men's and women's wedding bands have grown faster than our overall business year to date, led by the strength of our product assortment and a record number of weddings that have driven demand. As you know, bridal and wedding are highly considered purchases where consumers normally shop with a budget. During the quarter, our AOVs were generally in line with past quarters, and we continued to consistently realize profit on first purchase and see growth across our price points. As our brand grows, new and returning customers look to us for trend-leading proprietary product, design, and craftsmanship. In concert with our deep supplier integrations and technology, we added thousands of new lab and natural color diamonds, offering our customers an even broader on-trend assortment of colors, shapes, and price points from which to choose. We know that consumers want choice.
Our ability to leverage data to understand our customers' preferences and then to optimize the breadth and depth of our diamond assortment, which today includes over 200,000 lab and natural beyond conflict-free diamonds, enables us to effectively serve the broad needs of our customers. Finally, true to our mission, we launched Truly Brilliant, an expertly curated collection of diamonds with the perfect balance of cut, color, and clarity and verified sustainable sourcing. The assortment includes natural diamonds with blockchain-powered mine-to-market traceability for industry-leading transparency. This collection is targeted for the discerning luxury consumer, one who we are increasingly attracting, who is seeking premium quality and highly differentiated characteristics. These product and brand stories and the results that they drove illustrate what makes Brilliant Earth special. Our mission, our brand, our unique and powerful business model, and our team, one whose hard work and commitment is truly exceptional.
In fact, the number one reason employees join Brilliant Earth is because of our mission. In any environment, and as we have since our founding in 2005, we focus on creating the future by serving our customers joyfully and responsibly, creating trend-leading sustainable products, and delivering profitable, sustainable long-term growth. We are pleased that we are able to profitably grow and increase market share in a volatile environment and remain confident in our outlook for the full year. As we look ahead to the rest of the year, we will remain cognizant of ongoing macroeconomic uncertainty, and you can expect that we will continue to manage the business as we always have in a nimble fashion to deliver profitable growth and extend our leadership in the fine jewelry industry. Now I'll turn it over to Jeff.
Thanks, Beth, and good afternoon, everyone. We're pleased to share our second quarter fiscal 2022 results with you today. During the quarter, we continued to execute our mission-driven growth strategy focused on scaling our business and building our brand to be the jeweler for the next generation consumer while simultaneously delivering strong, profitable growth. Our second quarter results demonstrate the disciplined execution of our approach. Revenue grew to $108.8 million, which represents 18% year-over-year growth and up 31% on a three-year CAGR compared to Q2 2019. Gross margin expanded to 53.1%, a 460 basis point increase compared to Q2 2021, and our highest quarterly gross margin percentage on record. Adjusted EBITDA was $9.6 million or 9% of revenue.
These results again illustrate and reinforce the power and distinction of our brand, growth across our product lines, and our agile, highly efficient business model. Q2 revenue grew 18% year-over-year, which was consistent with our expectations in Q2's rapidly changing macroeconomic environment. This was driven by new and repeat customers, reflecting the increasing strength and awareness of Brilliant Earth, which led to growth across our product lines. We continue to see outsized performance within our fine jewelry assortment, with growth that far outpaces the business as a whole. Wedding band sales were also particularly strong in Q2 this year as the strength of our product assortment and historically robust year of the wedding fueled sales.
The outperformance of fine jewelry and wedding bands led to a mid-single-digit % decline in our total company blended AOV for Q2, as both fine jewelry and wedding bands have a lower average price point than our overall business. As Beth mentioned, we recently opened our twenty-first showroom, reflecting the ongoing successful execution of our omnichannel growth strategy. As we have shared in the past, our showroom strategy continues to perform well. In addition to providing customers with even greater access to our unique and joyful shopping experience, our showrooms continue to generate robust uplift in metro bookings after opening. As we look ahead to expanding our showroom presence in additional cities, we will continue to do so with a sharp focus on delivering strong ROI.
Consistent with the plans we shared since our public offering almost one year ago, we see tremendous opportunities for our business to grow and for our brand to lead in the highly fragmented jewelry industry. Our showroom rollout and further expansion into fine jewelry both show encouraging results in driving financial performance, customer loyalty, and lifetime value. Turning to gross margin, Q2 gross margin expanded to 53.1%, which is up 460 basis points versus the prior year. Growing demand for the Brilliant Earth brand, our premium and differentiated product offerings, pricing engine optimization, and procurement efficiencies once again drove strong gross margin expansion across our product assortment. As I said last quarter, what we hope will become a well-understood refrain from us is that these results illustrate how our asset-light, data-driven business model is a competitive and financial advantage.
It enables us to nimbly adapt our supply chain and product pricing to changing market conditions to optimize both margin and revenue. This is particularly evident for us in Q2, a period that as we all know, saw significant macroeconomic volatility. Our strong gross margin performance is a testament to the strength of our model and our brand. This quarter it afforded us the flexibility to continue to invest in prudently scaling the business. In the second quarter, SG&A increased to 47.9% of net sales compared to 35.1% of net sales in Q2 2021, an increase of 1,280 basis points.
Approximately 130 basis points of this increase was related to net changes in add backs to adjusted EBITDA, including equity-based compensation and new showroom pre-opening expenses, which are added back in our presentation of adjusted EBITDA. The remaining approximately 1,150 basis point increase over the prior year reflects investments we made to support our growth. Marketing costs as a percentage of sales grew by approximately 400 basis points year-over-year. Our investments in building the Brilliant Earth brand continue to drive growing awareness of the unique and differentiated Brilliant Earth experience and expand market share. In addition, we are continuing to invest in our fine jewelry assortment, which we see as a significant growth opportunity. During the quarter, employee costs were higher by approximately 390 basis points year-over-year.
Consistent with the drivers from last quarter, Q2 2021 again represented a low comp for employee costs as we were coming out of the initial months of the Covid pandemic with employee costs at a comparatively low run rate in Q2 2021. In Q2 2022, we continued to build our team to support our strategic initiatives, new showrooms, and operations as a public company. Other G&A as a percentage of sales increased by approximately 360 basis points, with one of the largest drivers being increased public company operating costs, which as you know, we will not anniversary until late Q3 and Q4 2022. As a growth company, we are also strategically investing in scaling Brilliant Earth for the long term.
The combination of strong revenue and gross margin growth balanced by strategic investments in the business delivered $9.6 million in adjusted EBITDA in the second quarter. Profitability, positive free cash flow, and a capital-efficient operating model continue to differentiate us among direct-to-consumer companies, and we continue to operate the business in an asset-light fashion. We ended the second quarter with $155.5 million in cash. As we look ahead to the balance of the year, we remain confident in our long-term growth goals. As you may recall, our aim over the long term is to see revenue growth in the high 20s-low 30% range, with growth across our product lines and our omni-channel model.
Our long-term gross margin target is in the mid-50% range, driven by our premium products and brand, our price optimization engine, procurement efficiencies, and growth of higher-margin fine jewelry. Our long-term marketing spend target is in the mid- to high-teens% of revenue as we continue to grow our brand awareness and to roll out our showroom experiences to drive conversion and repeat customer behavior. We are targeting a 15%-20%+ long-term adjusted EBITDA margin, driven by several factors. Gross margin expansion, improved effectiveness of our marketing spend, and leverage in our G&A expenses. As I said last quarter, these long-term targets guide our approach as we also navigate the ebbs and flows of a dynamic market. For the balance of the year, we remain confident in our ability to deliver on the full-year 2022 outlook we established last quarter.
We continue to expect net sales in a projected range of $450 million-$470 million. This represents 18%-24% growth versus fiscal year 2021, and a three-year CAGR of 31%-33%. We also expect continuing year-over-year improvements in our gross margin. However, the rate of year-over-year gross margin growth is expected to moderate from the first half of the year as we begin to anniversary improved gross margins from last year. We also anticipate continuing to make prudent investments and allocating spending across areas of the business that generate a strong ROI, consistent with our goal to deliver long-term sustainable, profitable growth. As a result, we continue to expect adjusted EBITDA for the year to be $30 million-$40 million, or an approximately 7%-9% adjusted EBITDA margin.
Historically, we have seen slightly higher year-over-year growth rates in Q4 than in Q3, and we expect a similar pattern this year. An important contributor is the strong outperformance we've seen in fine jewelry, and that historically, fine jewelry sales are the highest in Q4. Additionally, we will have a greater number of showrooms open in Q4 as we continue our successful rollout of new showrooms. In closing, we are pleased with our results this quarter. We remain focused on executing our initiatives to build and scale our business and brand, and to deliver long-term sustainable, profitable growth for our shareholders. With that, we'll be happy to take your questions.
Thank you. As a reminder, to ask a question at this time, please press star one one on your telephone. We ask that you limit yourself to one question and one follow-up. You may re-queue for any additional questions. Please stand by while we compile the Q&A roster. Our first question comes from Oliver Chen with TD Cowen. Your line is now open.
Hi. Thank you. The gross margins were really impressive. Would love your thoughts on pricing optimization opportunities in the back half and what you see there, as well as inflation and cost of goods sold and materials, if that's a factor, as you think about your own pricing strategies as well as cost of goods sold. Thank you.
I can start that off. You know, we were really pleased by our gross margin expansion. As a data-driven company, we're always looking at opportunities to be able to maximize the benefit of our premium brand, as well as the exclusive and unique product offering that we have. Both of these are important to driving our strong margins. Another thing to consider is we're not a discount-oriented brand, and so that also, I think, plays a role in how we're able to take advantage of the premium positioning that we have. In terms of our overall inflationary environment, Jeff, maybe you can speak a little bit more to that as well as our optimization engine.
Sure. Unlike other retailers, we haven't been fortunate that we haven't seen broad-based inflation pressure. For example, gold and platinum prices have recently come down a bit, and that's something that we haven't seen. As you know, we do have our pricing optimization engine as well as an asset-light model that allows us to adapt very nimbly to changing conditions. We've been able to manage that. You see that in the results that we've delivered with our strong gross margin, and we believe that we continue to have opportunities to optimize as well as take actions like optimize on procurement efficiencies, as we have done in the past. You know, I think that's something that we do see a lot of continued strength for us in our gross margins.
Thank you. This is Oliver Chen, by the way, from TD Cowen. On the revenue growth, it's potentially conservative on the guidance. Would love your thoughts on what you're seeing with upside drivers or downside drivers, and how that may relate to marketing efficiency. We're seeing different things across the sector where digital marketing efficiency has been volatile. Thank you.
Yeah. I would say kind of starting from the overall revenue growth, you know, we continue to see strong demand, and the performance that we have has remained consistent. While there's gonna be some fluctuations, we're confident in our ability to deliver on our full year guidance. As it relates to how we think about our marketing efforts, you know, the digital environment, we do recognize it's very dynamic, it's highly competitive, and as such, our costs have increased in certain areas. That said, our marketing spend remains efficient, and we continue to drive profitable growth. We're continuing to also look at opportunities to be able to invest in marketing to support our strategic initiatives. Investing in brand building for us is incredibly important to be able to drive awareness, to continue to take market share.
Word of mouth for us is a big sales contributor, so it's really important for us to invest here, and we've seen those investments paying off. We're also continuing to invest in fine jewelry. This is a category that has massive potential. As we're investing, we are also seeing some strong results there as well. We'll continue to keep a strong eye towards maximizing ROI, but really thoughtful about our approach to maximizing revenue and profitability.
Very helpful. Best regards. Thank you.
Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is now open.
Good afternoon, everyone, and congratulations on your results. Wanted to get some more color on fine jewelry and wedding bands, given the strength that you saw there, how you're projecting that going forward in regards to the AOV. I believe last time, Beth, you mentioned that the consumer was taking a longer time to make their decisions given the environment. What are you seeing now? Has that changed, and has it changed at all by category? Thank you.
Hi, Dana. Thanks for your questions. Starting with the consumer and the overall behavior there. You know, as I mentioned, the performance is relatively consistent, you know, as it relates to bridal. While bridal has moderated slightly, it does continue to experience strong growth. We continue to gain share. We recognize that an engagement ring is a higher price point. It's a more considered purchase, so it's not surprising to us that it's taking a bit longer for them to make these purchases. Overall, I would say that generally we're seeing consistent performance. Now, as it relates to fine jewelry, we're really excited about our opportunity there. Growth is far outpacing the business, and we're really well-positioned for the upcoming holiday season.
See this being a nice growth driver, especially as we're entering Q4 being a premium gift giving occasion, just like we saw with Mother's Day being a real strong performance for us. I think that's gonna be a nice tailwind for us. We're continuing to invest in marketing, in our assortment, in the digital experience, in creative imagery. A lot of, I think, important investments there that are really helping to drive that category.
Got it. The impact on gross margin from the increased fine jewelry, how do you see that go forward?
Jeff, do you wanna take that one?
Sure. I think there's significant gross margin expansion potential in fine jewelry. Fine jewelry is a strong gross margin part of the business, and it's growing quickly. We see that as it becomes a bigger and bigger part of our mix and we gain scale efficiencies in that area of the business. We see there's opportunities to grow our margin there, in addition to some of the other initiatives and levers that we've been able to pull historically.
Thank you.
Thank you. Our next question comes from the line of Matthew Boss with JP Morgan. Your line is now open.
Great. Thanks. So Beth, could you expand on the excitement that you cited regarding the second half of the year? Any specific categories or product assortment launches you see as drivers of momentum in the back half? Maybe specifically, could you speak to the progression of demand trends that you've seen from the initial moderation in April through early August?
Yeah, absolutely. Thanks. Thanks, Matt. In terms of the progression of demand, you know, as I mentioned, there's some fluctuations, but for the most part, it has been consistent for us. Demand continues to be strong, and so we're excited to be able to capitalize on the resonance that we've had with our customer base. As it relates to the second half, you know, we have, I think, a very compelling product offering both really across our product portfolio. I think you know we take a very data-driven and thoughtful approach to expanding our assortment, and that's been very successful. We see success in our personalized offerings. For example, in our Zodiac Collection. We see strength in the offerings that really reinforce our mission positioning, like our Fairmined Gold Collection.
We're continuing to remind the customer that this is a premium product with collections like our Truly Brilliant Collection. I think we have a lot of success that we've been demonstrating, and I'm really excited, especially as we're opening new showrooms and reaching more and more customers that we're seeing such strong results.
Jeff, could you speak to comfort with your current inventory position exiting the quarter? Or just help break down the composition of the build into the back half of the year.
Yes. Thanks, Matt. As you know, we operate the business in a very asset efficient way, and I think maybe just, you know, maybe providing a little bit of context and then how we see that for the latter part of the year. You know, we operate a really technology-enabled and data-driven supply chain. We have tight integrations with our suppliers that we've worked with for many years. What that really allows us to do is to closely manage our working capital and inventory levels as we grow. Like, if you look at it in ways such as our inventory that we have on a per showroom level, it's very efficient relative to the industry as a whole. We also manage our fine jewelry inventory in a very efficient way.
I think the overall approach that we take, you know, is to really have a lot of insight into the trends, insight into our supply chains, manage things tightly, and we expect, you know, that will continue to be the case in the upcoming quarters.
Great. Best of luck.
Thanks, Matt.
Thanks.
Thank you. Our next question comes from the line of Edward Yruma with Piper Sandler. Your line is now open.
Hey, guys. Thanks for taking the question. I guess just on gross margin, obviously nice continued benefits from pricing optimization. As you think about the go-forward benefit, I know you indicated the comparisons get more difficult, but how should we kinda think about where you are in that evolution with the pricing engine and how much more incremental benefit is still possible?
Sure. We think that there continues to be room to run with the pricing engine. You know, I think this really starts, you know, just to set the context from the premium brand, premium differentiated proprietary products that we have that allow us to have that premium gross margin. That's something that we continue to invest in. With the pricing engine, we've talked through our longer term target of mid-50s% in terms of gross margin. We continue to pull levers as we've talked about with pricing engine procurement efficiency. As we get more data, we input that into our algorithms, and we continue to refine. It's a living approach to how we continue to optimize margin.
We believe that there continues to be a lot of room to run with that.
Great. A follow-up, if I may. Good to hear the success on fine jewelry. I guess when you're finding a customer that comes into fine jewelry, are they generally someone that's purchased engagement before and this is a follow-up purchase? Or is fine jewelry successful in kinda introducing people to the brand? Thank you.
Yeah, I would say both actually. We are seeing a lot of success in customers that are already loyal Brilliant Earth customers. Perhaps they've come into a showroom, and they already have a really strong connection. We're also seeing new customers come in, which I think is also really exciting that we're expanding our customer base. Really seeing, I think, strong results also with self-purchasers in addition to gifting. I think our efforts are really successful there.
Thanks so much.
Thank you. Our next question comes from Noah Zatzkin with KeyBanc. Your line is now open.
That's on a great quarter, and thanks for taking my question. Just on the showroom rollout, I think you'll be adding about nine more in the second half, if I'm thinking about that correctly. Can you remind us how you think about the timing and the P&L impact from showrooms as they roll out?
I can start that off. You know, we talked a little bit about how we're planning on doubling the number of showrooms. We're really excited about the metros and how well they've been performing, as well as the upcoming ones that are on our roadmap. There are some timing fluctuations just based on things that are out of our control, like permitting, for example. We haven't been very specific about how the rest are gonna roll out.
Thank you. Just quickly on the Truly Brilliant collection as well as moissanite. Just any color on trends there and how you're thinking about both of those opportunities over time. Thank you.
Yeah. Truly Brilliant is a newer collection for us, and we think that this is really nicely targeting for that discerning customer who's looking for premium characteristics, both in terms of our blockchain-enabled natural diamonds. It uses renewable energy for our lab created. A lot of, I think, really exciting premium sustainability as well as quality characteristics. We're expecting, I think, a really strong reception, but I would say it's early in terms of what we've seen there. Then as it relates to moissanite remains a nice alternative for customers in terms of an engagement ring. Continue to see strength in the overall category, but we usually don't get too granular as it relates to subcategories.
Thank you.
Thank you. Our next question comes from the line of Randal Konik with Jefferies. Your line is now open.
Thanks, Randal. I just wanna go back to the fine jewelry kind of strategy. Can you give us some perspective on how we should be thinking about, y ou know, the SKU count or kind of that you're offering to the consumer, I guess, on the website and in store, and how we should be thinking about how that, you know, kind of evolves over the next 12 - 24 months. Like, you know, how is that gonna kinda be illustrated, how much of it is the consumer gonna see, and so on and so forth. Just wanna get an understanding there. How do you change or how much will this change the inventory kinda needs on the balance sheet if it. You know, probably not in a big way, but just how should we be expecting that to kinda change the inventory model going forward? Thanks, guys.
Great. In terms of how we think about SKU count, we're really looking at productivity across different assortments to make sure that as we're introducing new products, we're continuing to see that productivity level remain strong. That's what we've seen so far. As we've been introducing our assortment and increasing the number of SKUs, we're seeing very strong performance. I would say, like, as we think about 12-24 months out, we're really taking a very dynamic approach there. We're also taking approach that is more curated. Our approach is not to introduce, you know, an incredibly wide selection at all costs. It's really to take a more design-driven, tailored approach, which is more curated. As we see that productivity, we'll continue to be thoughtful about how we drive that increased SKU count.
Jeff, do you wanna talk a little bit about the inventory model?
Sure. Yeah, sure. Thanks, Randy. We're well positioned to manage our inventory efficiently, even as we expand into fine jewelry. I talked earlier about how we really take a data and technology-driven approach and integrate tightly with our suppliers. It's really in our DNA to operate in an asset-light fashion. I think just also the way that we operate is just efficient in that. If you look at a traditional jeweler, they might need to bring in thousands of pieces of a given SKU just to get something started and to have something in every single location. We operate in a different way, where we can test and learn, start with limited allocations of inventory, see what's doing well. Again, use that data to see where we wanna make those investments in inventory.
I think we're well positioned to continue to have an efficient and capital-light model.
I think one thing I would just add is we also have the ability to rapidly introduce new products. I think that's a real competitive advantage for us as we're seeing strength in the assortment to be able to expand on what we're seeing as trends in the marketplace very quickly.
Got it. Very helpful. Then lastly, you know, you've done a great job with the gross margin, and part of that is due to the, you know, the fine jewelry penetration. Any kind of color you can kinda give us on just where we are with fine jewelry penetration today, where we might think it might be two years from now and where you might wanna be five years from now, just to give people some kind of thought process on how that penetration, you know, kinda grows long term, 'cause it's obviously a nicely margin-accretive opportunity for you guys. Just curious there on any color numerically or just qualitatively you can provide us would be great. Thanks, guys.
I think just on a qualitative standpoint, you know, it's still quite small for us. If you look at most jewelers and jewelry representing the majority of their sales, that's really, I think, what we're targeting in the future. You know, while we're not providing specific numbers, we do have, I think, a lot of investment in this area and are trying to accelerate to the extent that we're able to do it in a profitable way.
Understood. Thanks, guys.
Great.
Thank you. Our next question comes from the line of Rick Patel with Raymond James. Your line is now open.
Good afternoon, and congrats on the strong results. Can you help us understand what you're seeing in the industry in terms of independent jewelers closing doors? I think typically when the economy hits a soft patch, the number of mom-and-pop jewelers tends to shrink. I'm hoping you could frame what you're seeing and to what extent you see that as a revenue and market share opportunity in the back half and beyond.
Yeah. I think the recent numbers that I have seen do indicate that there's an acceleration there in terms of independents closing doors. You know, typically there is a bit of a lag. You know, I think that's what we've seen in previous, more challenging times, and I think that you're right on to think of the fact that we're probably gonna see increased consolidation more generally. You know, as it relates to the opportunity, you know, we continue to see this highly fragmented industry as ripe for disruption, and we think we offer tremendous value relative to the independent jeweler. We have strong supplier relationships. Our mission-driven values and the resonance that our brand has, I think is very compelling.
We think we're definitely poised to be leaders here and really take advantage of some of the dynamics that we see in the industry.
Thank you very much.
Thank you. Our next question comes from the line of Oliver Chen with TD Cowen. Your line is now open.
Hey, thanks for taking my question. Your positioning at Brilliant Earth with being premium and branded and mission-focused is quite differentiated. Would love to hear your thoughts, you know, as the industry consolidates a little bit and your positioning relative to other competitors such as Blue Nile, how would you say, Beth and Jeff, are you most different? Thank you.
Well, you know, while we're not gonna comment specifically on one particular competitor, you know, we think that we are very differentiated in the industry. As you mentioned, our premium positioning, we don't have a discount orientation. We really invest in providing a luxury distinguished experience for the customer overall. The mission behind really everything that we do is really important for us as a company, the same way as that it's important for our customers. I think that the products that we offer are also very distinctive. We're constantly introducing new trend-driven collections and those resonate as well with our customer base. You know, we're really very focused on our own strategy and how we can resonate with the Millennial and Gen Z audience, and are seeing great success there.
Thanks, Beth. Lastly, it's Oliver Chen from TD Cowen. The supply chain, what are your thoughts on vertical integration or the future and what may evolve, especially as you continue to make such encouraging progress in fine jewelry? I would love your thoughts.
We don't have any immediate plans there. I think we have a really attractive model as it relates to our inventory light, capital efficient, and more agile, flexible model. That's not to say we won't be opportunistic as we see opportunities to continue to drive an improved customer experience and to lower our costs, but do recognize that there are trade-offs as it relates to inventory there. I think we're comfortable with our current model and feel really good about the supply chain partners that we've had. They're very long term, and I think we see a lot of benefit in terms of those long-term relationships.
Okay. Last question. On the consumer, the consumer has become much more considered and disciplined in some ways. What are your thoughts about what's happening going forward with the health of the consumer, given you know the crosscurrents of low unemployment, yet the obvious pressures of high inflation?
Well, you know, I don't think we necessarily have the crystal ball there. What we can say is that, you know, bridal is typically quite recession resilient overall as a category. The consumer continues to drive strong demand, you know, for our products as it relates to fine jewelry and other categories. Overall, I think even though there have been some macroeconomic headwinds there, we're continuing to perform really well.
Thank you. Best regards.
Thanks, Oliver.
Thank you. This concludes the question-and-answer session. I will now turn the call back over to Beth Gerstein for closing remarks.
Great. I appreciate everyone's participation, and we look forward to talking to you all.
This concludes today's conference call. Thank you for participating. You may now disconnect.