Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 09, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-40836 | |
Entity Registrant Name | Brilliant Earth Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 87-1015499 | |
Entity Address, Address Line One | 300 Grant Avenue | |
Entity Address, Address Line Two | Third Floor | |
Entity Address, City or Town | San Francisco | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94108 | |
City Area Code | 800 | |
Local Phone Number | 691-0952 | |
Title of 12(b) Security | Class A common stock, $0.0001 par value per share | |
Trading Symbol | BRLT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,583,332 | |
Entity Central Index Key | 0001866757 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 161,087 | $ 66,269 |
Restricted cash | 205 | 205 |
Inventories, net | 20,057 | 13,559 |
Prepaid expenses and other current assets | 7,682 | 2,939 |
Total current assets | 189,031 | 82,972 |
Property and equipment, net | 5,983 | 1,986 |
Deferred tax asset | 4,375 | 0 |
Other assets | 552 | 258 |
Total assets | 199,941 | 85,216 |
Current liabilities: | ||
Accounts payable | 11,472 | 10,972 |
Accrued expenses and other current liabilities | 24,758 | 16,961 |
Current portion of deferred revenue | 21,848 | 10,775 |
Current portion of long-term debt | 20,526 | 0 |
Total current liabilities | 78,604 | 38,708 |
Long-term debt, net of debt issuance costs | 42,708 | 62,211 |
Long-term deferred revenue | 204 | 179 |
Deferred rent | 1,818 | 662 |
Warrant liability | 0 | 84 |
Payable pursuant to the Tax Receivable Agreement | 3,919 | 0 |
Other long-term liabilities | 2,701 | 2,440 |
Total liabilities | 129,954 | 104,284 |
Commitments and contingencies (Note 11) | ||
Redeemable convertible preferred units (Class P Units) - 33,162,444 units authorized, 32,435,595 units issued and outstanding at December 31, 2020 | 66,327 | |
Members' deficit - Class F Units - 50,954,445 units authorized, 50,232,863 units issued and outstanding at December 31, 2020; and Class M Units - 4,638,881 units authorized, 2,537,791 units issued and outstanding at December 31, 2020 | ||
Members' deficit - Class F Units - 50,954,445 units authorized, 50,232,863 units issued and outstanding at December 31, 2020; and Class M Units - 4,638,881 units authorized, 2,537,791 units issued and outstanding at December 31, 2020 | (85,395) | |
Stockholders' equity | ||
Preferred stock, $0.0001 par value per share, 10,000,000 shares authorized at September 30, 2021, none issued and outstanding at September 30, 2021 | 0 | |
Additional paid-in capital | 7,012 | |
Retained earnings | 66 | |
Equity attributable to Brilliant Earth Group, Inc. | 7,088 | |
NCI attributable to Brilliant Earth, LLC | 62,899 | |
Total redeemable convertible preferred units and stockholders' equity/members' (deficit) | 69,987 | |
Total redeemable convertible preferred units and stockholders' equity/members' (deficit) | (19,068) | |
Total liabilities, redeemable convertible preferred units, and stockholders' equity/members' (deficit) | 199,941 | $ 85,216 |
Class A Common Stock | ||
Stockholders' equity | ||
Common stock, value, issued | 1 | |
Class B Common Stock | ||
Stockholders' equity | ||
Common stock, value, issued | 4 | |
Class C Common Stock | ||
Stockholders' equity | ||
Common stock, value, issued | 5 | |
Class D Common Stock | ||
Stockholders' equity | ||
Common stock, value, issued | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Temporary equity, shares authorized (in shares) | 33,162,444 | |
Temporary equity, shares issued (in shares) | 32,435,595 | |
Temporary equity, shares outstanding (in shares) | 32,435,595 | |
Units issued (in shares) | 85,081,650 | |
Units outstanding (in shares) | 85,081,650 | 52,770,654 |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | |
Preferred stock, shares authorized (in shares) | 10,000,000 | |
Preferred stock, shares issued (in shares) | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | |
Class F Units | ||
Units authorized (in shares) | 50,954,445 | |
Units issued (in shares) | 50,232,863 | |
Units outstanding (in shares) | 50,232,863 | |
Class M Units | ||
Units authorized (in shares) | 4,638,881 | |
Units issued (in shares) | 2,537,791 | |
Units outstanding (in shares) | 2,537,791 | |
Class A Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 1,200,000,000 | |
Common stock, shares issued (in shares) | 9,583,332 | |
Common stock, shares outstanding (in shares) | 9,583,332 | |
Class B Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 150,000,000 | |
Common stock, shares issued (in shares) | 35,576,400 | |
Common stock, shares outstanding (in shares) | 35,576,400 | |
Class C Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 150,000,000 | |
Common stock, shares issued (in shares) | 49,505,250 | |
Common stock, shares outstanding (in shares) | 49,505,250 | |
Class D Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | |
Common stock, shares authorized (in shares) | 150,000,000 | |
Common stock, shares issued (in shares) | 0 | |
Common stock, shares outstanding (in shares) | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Net sales | $ 95,239 | $ 71,445 | $ 258,283 | $ 163,209 |
Cost of sales | 47,224 | 40,599 | 133,148 | 92,569 |
Gross profit | 48,015 | 30,846 | 125,135 | 70,640 |
Operating expenses: | ||||
Selling, general and administrative | 38,147 | 21,532 | 97,961 | 58,735 |
Income from operations | 9,868 | 9,314 | 27,174 | 11,905 |
Interest expense | (1,912) | (1,214) | (5,786) | (3,607) |
Other expense, net | (3,971) | (59) | (6,518) | (75) |
Income before tax | 3,985 | 8,041 | 14,870 | 8,223 |
Income tax expense | (23) | 0 | (23) | 0 |
Net income | 3,962 | $ 8,041 | 14,847 | $ 8,223 |
Net income allocable to non-controlling interest | 3,896 | 14,781 | ||
Net income allocable to Brilliant Earth Group, Inc. | $ 66 | $ 66 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Member Units | Additional Paid-In Capital | Retained Earnings | Stockholders' Equity | Non-Controlling Interest | Class A Common Stock | Class A Common StockCommon Stock | Class B Common Stock | Class B Common StockCommon Stock | Class C Common Stock | Class C Common StockCommon Stock |
Class P Units, beginning balance (in shares) at Dec. 31, 2019 | 32,435,595 | |||||||||||
Class P Units, beginning balance at Dec. 31, 2019 | $ 80,829 | |||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ (11,610) | |||||||||||
Class P Units, ending balance (in shares) at Sep. 30, 2020 | 32,435,595 | |||||||||||
Class P Units, ending balance at Sep. 30, 2020 | $ 69,219 | |||||||||||
Units, beginning balance (in shares) at Dec. 31, 2019 | 52,595,807 | 52,595,807 | ||||||||||
Units, beginning balance at Dec. 31, 2019 | $ (91,519) | $ (91,519) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Vested Class M Units (in shares) | 78,697 | 78,697 | ||||||||||
Equity-based compensation | $ 21 | $ 21 | ||||||||||
Net income | 8,223 | 8,223 | ||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ 11,610 | $ 11,610 | ||||||||||
Units, ending balance (in shares) at Sep. 30, 2020 | 52,674,504 | 52,674,504 | ||||||||||
Units, ending balance at Sep. 30, 2020 | $ (71,665) | $ (71,665) | ||||||||||
Class P Units, beginning balance (in shares) at Jun. 30, 2020 | 32,435,595 | |||||||||||
Class P Units, beginning balance at Jun. 30, 2020 | $ 58,940 | |||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ 10,279 | |||||||||||
Class P Units, ending balance (in shares) at Sep. 30, 2020 | 32,435,595 | |||||||||||
Class P Units, ending balance at Sep. 30, 2020 | $ 69,219 | |||||||||||
Units, beginning balance (in shares) at Jun. 30, 2020 | 52,649,011 | 52,649,011 | ||||||||||
Units, beginning balance at Jun. 30, 2020 | $ (69,434) | $ (69,434) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Vested Class M Units (in shares) | 25,493 | 25,493 | ||||||||||
Equity-based compensation | $ 7 | $ 7 | ||||||||||
Net income | 8,041 | 8,041 | ||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ (10,279) | $ (10,279) | ||||||||||
Units, ending balance (in shares) at Sep. 30, 2020 | 52,674,504 | 52,674,504 | ||||||||||
Units, ending balance at Sep. 30, 2020 | $ (71,665) | $ (71,665) | ||||||||||
Class P Units, beginning balance (in shares) at Dec. 31, 2020 | 32,435,595 | |||||||||||
Class P Units, beginning balance at Dec. 31, 2020 | $ 66,327 | |||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Tax distributions to members | (9,755) | |||||||||||
Net income | 5,466 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ 327,189 | |||||||||||
Reorganization Transactions (in shares) | (32,435,595) | |||||||||||
Reorganization Transactions | $ (389,227) | |||||||||||
Class P Units, ending balance (in shares) at Sep. 22, 2021 | 0 | |||||||||||
Class P Units, ending balance at Sep. 22, 2021 | $ 0 | |||||||||||
Units, beginning balance (in shares) at Dec. 31, 2020 | 52,770,654 | 52,770,654 | ||||||||||
Units, beginning balance at Dec. 31, 2020 | $ (85,395) | $ (85,395) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Tax distributions to members | $ (11,643) | |||||||||||
Vested Class M Units (in shares) | 556,446 | |||||||||||
Equity-based compensation | $ 246 | |||||||||||
Net income | 8,526 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ (327,189) | |||||||||||
Reorganization Transactions (in shares) | (53,327,100) | |||||||||||
Reorganization Transactions | $ 415,455 | |||||||||||
Units, ending balance (in shares) at Sep. 22, 2021 | 0 | |||||||||||
Units, ending balance at Sep. 22, 2021 | $ 0 | |||||||||||
Class P Units, beginning balance (in shares) at Dec. 31, 2020 | 32,435,595 | |||||||||||
Class P Units, beginning balance at Dec. 31, 2020 | $ 66,327 | |||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Tax distributions to members | (9,755) | |||||||||||
Net income | 5,466 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ 327,189 | |||||||||||
Reorganization Transactions (in shares) | (32,435,595) | |||||||||||
Reorganization Transactions | $ (389,227) | |||||||||||
Units, beginning balance (in shares) at Dec. 31, 2020 | 52,770,654 | 52,770,654 | ||||||||||
Units, beginning balance at Dec. 31, 2020 | $ (85,395) | $ (85,395) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Tax distributions to members | (11,643) | $ (11,643) | ||||||||||
Vested Class M Units (in shares) | 556,446 | |||||||||||
Equity-based compensation | 246 | $ 246 | ||||||||||
Net income | 14,847 | |||||||||||
Net income prior to Reorganization Transactions and IPO | 8,526 | 8,526 | ||||||||||
Adjustment of redeemable convertible preferred units to redemption value | (327,189) | $ (327,189) | ||||||||||
Reorganization Transactions (in shares) | (53,327,100) | 36,064,421 | 50,232,863 | |||||||||
Reorganization Transactions | 395,651 | $ 415,455 | $ 9 | $ (19,813) | $ 4 | $ 5 | ||||||
IPO Transactions (in shares) | 9,583,332 | (522,386) | (727,613) | |||||||||
IPO Transactions | 87,854 | $ 5,936 | 5,937 | 81,917 | $ 1 | |||||||
Increase in deferred tax asset from step-up tax basis related to redemption of LLC Units and set-up of TRA liability | 456 | 456 | 456 | |||||||||
LLC Units vesting during period (in shares) | 34,365 | |||||||||||
Equity-based compensation | 626 | 620 | 620 | 6 | ||||||||
Net income subsequent to Reorganization Transactions and IPO | $ 855 | $ 66 | 66 | 789 | ||||||||
Units, ending balance (in shares) at Sep. 30, 2021 | 85,081,650 | |||||||||||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2021 | 9,583,332 | 9,583,332 | 35,576,400 | 35,576,400 | 49,505,250 | 49,505,250 | ||||||
Stockholders' equity, ending balance at Sep. 30, 2021 | $ 69,987 | 7,012 | 66 | 7,088 | 62,899 | $ 1 | $ 4 | $ 5 | ||||
Class P Units, beginning balance (in shares) at Jun. 30, 2021 | 32,435,595 | |||||||||||
Class P Units, beginning balance at Jun. 30, 2021 | $ 250,746 | |||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Tax distributions to members | (1,100) | |||||||||||
Net income | 1,214 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ 138,367 | |||||||||||
Reorganization Transactions (in shares) | (32,435,595) | |||||||||||
Reorganization Transactions | $ (389,227) | |||||||||||
Class P Units, ending balance (in shares) at Sep. 22, 2021 | 0 | |||||||||||
Class P Units, ending balance at Sep. 22, 2021 | $ 0 | |||||||||||
Units, beginning balance (in shares) at Jun. 30, 2021 | 53,235,187 | 53,235,187 | ||||||||||
Units, beginning balance at Jun. 30, 2021 | $ (277,342) | $ (277,342) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Tax distributions to members | $ (1,697) | |||||||||||
Vested Class M Units (in shares) | 91,913 | |||||||||||
Equity-based compensation | $ 58 | |||||||||||
Net income | 1,893 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ (138,367) | |||||||||||
Reorganization Transactions (in shares) | (53,327,100) | |||||||||||
Reorganization Transactions | $ 415,455 | |||||||||||
Units, ending balance (in shares) at Sep. 22, 2021 | 0 | |||||||||||
Units, ending balance at Sep. 22, 2021 | $ 0 | |||||||||||
Class P Units, beginning balance (in shares) at Jun. 30, 2021 | 32,435,595 | |||||||||||
Class P Units, beginning balance at Jun. 30, 2021 | $ 250,746 | |||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Tax distributions to members | (1,100) | |||||||||||
Net income | 1,214 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ 138,367 | |||||||||||
Reorganization Transactions (in shares) | (32,435,595) | |||||||||||
Reorganization Transactions | $ (389,227) | |||||||||||
Units, beginning balance (in shares) at Jun. 30, 2021 | 53,235,187 | 53,235,187 | ||||||||||
Units, beginning balance at Jun. 30, 2021 | $ (277,342) | $ (277,342) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Tax distributions to members | (1,697) | $ (1,697) | ||||||||||
Vested Class M Units (in shares) | 91,913 | |||||||||||
Equity-based compensation | 58 | $ 58 | ||||||||||
Net income | 3,962 | |||||||||||
Net income prior to Reorganization Transactions and IPO | 1,893 | 1,893 | ||||||||||
Adjustment of redeemable convertible preferred units to redemption value | (138,367) | $ (138,367) | ||||||||||
Reorganization Transactions (in shares) | (53,327,100) | 36,064,421 | 50,232,863 | |||||||||
Reorganization Transactions | 395,651 | $ 415,455 | 9 | (19,813) | $ 4 | $ 5 | ||||||
IPO Transactions (in shares) | 9,583,332 | (522,386) | (727,613) | |||||||||
IPO Transactions | 87,854 | 5,936 | 5,937 | 81,917 | $ 1 | |||||||
Increase in deferred tax asset from step-up tax basis related to redemption of LLC Units and set-up of TRA liability | 456 | 456 | 456 | |||||||||
LLC Units vesting during period (in shares) | 34,365 | |||||||||||
Equity-based compensation | 626 | 620 | 620 | 6 | ||||||||
Net income subsequent to Reorganization Transactions and IPO | $ 855 | 66 | 66 | 789 | ||||||||
Units, ending balance (in shares) at Sep. 30, 2021 | 85,081,650 | |||||||||||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2021 | 9,583,332 | 9,583,332 | 35,576,400 | 35,576,400 | 49,505,250 | 49,505,250 | ||||||
Stockholders' equity, ending balance at Sep. 30, 2021 | $ 69,987 | 7,012 | 66 | 7,088 | 62,899 | $ 1 | $ 4 | $ 5 | ||||
Class P Units, beginning balance (in shares) at Sep. 22, 2021 | 0 | |||||||||||
Class P Units, beginning balance at Sep. 22, 2021 | $ 0 | |||||||||||
Units, beginning balance (in shares) at Sep. 22, 2021 | 0 | |||||||||||
Units, beginning balance at Sep. 22, 2021 | $ 0 | |||||||||||
Units, ending balance (in shares) at Sep. 30, 2021 | 85,081,650 | |||||||||||
Stockholders' equity, ending balance (in shares) at Sep. 30, 2021 | 9,583,332 | 9,583,332 | 35,576,400 | 35,576,400 | 49,505,250 | 49,505,250 | ||||||
Stockholders' equity, ending balance at Sep. 30, 2021 | $ 69,987 | $ 7,012 | $ 66 | $ 7,088 | $ 62,899 | $ 1 | $ 4 | $ 5 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating activities | ||
Net income | $ 14,847,000 | $ 8,223,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 536,000 | 489,000 |
Equity-based compensation expense | 872,000 | 21,000 |
Change in fair value of warrants | 6,331,000 | 0 |
Amortization of debt issuance costs | 1,284,000 | 822,000 |
Other | 24,000 | 39,000 |
Changes in assets and liabilities: | ||
Inventories | (6,501,000) | (4,167,000) |
Prepaid expenses and other current assets | 903,000 | 343,000 |
Other assets | (294,000) | 21,000 |
Accounts payable, accrued expenses and other current liabilities | 3,565,000 | 17,000 |
Deferred revenue | 11,098,000 | 9,449,000 |
Deferred rent | 1,156,000 | (67,000) |
Net cash provided by operating activities | 33,821,000 | 15,190,000 |
Investing activities | ||
Purchases of property and equipment | (4,385,000) | (529,000) |
Net cash used in investing activities | (4,385,000) | (529,000) |
Financing activities | ||
Issuance of Class A common stock in IPO, net of underwriting discounts and offering costs | 101,879,000 | 0 |
Redemption of LLC Units | (14,025,000) | 0 |
Issuance of Class B and C shares of common stock | 9,000 | 0 |
Tax distributions to members | (21,398,000) | 0 |
Payment of offering costs | (1,083,000) | 0 |
Borrowings from PPP loan | 0 | 2,657,000 |
Net cash provided by financing activities | 65,382,000 | 2,657,000 |
Net increase in cash, cash equivalents and restricted cash | 94,818,000 | 17,318,000 |
Cash, cash equivalents and restricted cash at beginning of period | 66,474,000 | 40,598,000 |
Cash, cash equivalents and restricted cash at end of period | 161,292,000 | 57,916,000 |
Non-cash investing and financing activities | ||
Adjustment of redeemable convertible preferred units to redemption value | 327,189,000 | 11,610,000 |
Net exercise of warrants on common LLC Units | 6,415,000 | 0 |
Deferred offering costs included in accounts payable and accrued liabilities | 4,563,000 | 0 |
Deferred tax assets associated with redemption of LLC Units | 4,375,000 | 0 |
TRA Obligation associated with redemption of LLC Units | 3,919,000 | 0 |
Credit to APIC related to redemption of LLC Units | 456,000 | 0 |
Debt issuance costs capitalized to principal of long-term debt | 261,000 | 129,000 |
Purchases of property and equipment included in accounts payable and accrued liabilities | 169,000 | 41,000 |
Supplemental information | ||
Cash paid for interest | 4,539,000 | 2,769,000 |
Class F Units and Class M Units | ||
Non-cash investing and financing activities | ||
Conversion of units | 415,455,000 | 0 |
Class P Units | ||
Non-cash investing and financing activities | ||
Conversion of units | $ 389,227,000 | $ 0 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | BUSINESS AND ORGANIZATION Brilliant Earth Group, Inc. was formed as a Delaware corporation on June 2, 2021 for the purpose of facilitating an initial public offering ("IPO") and executing other related organizational transactions to acquire and carry on the business of Brilliant Earth, LLC. Brilliant Earth, LLC was originally incorporated in Delaware on August 25, 2005, and subsequently converted to a limited liability company on November 29, 2012. Brilliant Earth Group, Inc., the sole managing member of Brilliant Earth, LLC, consolidates Brilliant Earth, LLC and both are collectively referred to here-in as “the Company.” The Company designs, procures and sells ethically-sourced diamonds, gemstones and jewelry online and through showrooms operated in San Francisco, Los Angeles, Boston, Chicago, San Diego, Washington DC, Denver, Philadelphia, Atlanta, Seattle, Portland, Austin, Dallas, and New York. Co-headquarters are located in San Francisco, California and Denver, Colorado. The Company operates in one operating and reporting segment which is the retail sale of diamonds, gemstones and jewelry. Over 90% of sales are to customers in the United States (“US”); sales to non-US customers immediately settle in US dollars and no cash balances are carried in foreign currencies. In accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") since the members of Brilliant Earth, LLC (the "Continuing Equity Owners”) prior to the IPO and merger continue to hold a controlling interest in Brilliant Earth, LLC after the merger (i.e., there was no change in control of Brilliant Earth, LLC) and since Brilliant Earth Group, Inc. was considered a “shell company” which does not meet the definition of a business, the financial statements of the combined entity represent a continuation of the financial position and results of operations of Brilliant Earth, LLC. Accordingly, the historical cost basis of assets, liabilities, and equity of Brilliant Earth, LLC are carried over to the condensed consolidated financial statements of the merged company as a common control transaction. Also, after consummation of the IPO, Brilliant Earth Group, Inc. became subject to U.S. federal, state, and local income taxes with respect to its allocable share of any taxable income of Brilliant Earth, LLC assessed at the prevailing corporate tax rates. Initial Public Offering and purchase of LLC Interests On September 27, 2021, the Company completed its IPO of 9,583,332 shares of Class A common stock at an offering price of $12.00 per share, (excluding the underwriting discount), including 1,249,999 shares of Class A common stock issued pursuant to the underwriters' over-allotment option. The Company received $101.9 million in proceeds after a deduction for underwriting discounts and offering costs totaling $13.1 million. The net proceeds were used to purchase 8,333,333 newly-issued membership units (the “LLC Units” or “LLC Interests”) from Brilliant Earth, LLC and 1,249,999 LLC Units in the form of a redemption from the Continuing Equity Owners at a price per unit equal to the IPO price of $11.22 per share after deducting the underwriting discount, and represents a 10.1% economic interest as of September 30, 2021. Conversion of Class F, P and M units at time of IPO At the time of the IPO, the existing limited liability company agreement of Brilliant Earth, LLC was amended and restated to, among other things, recapitalize all existing Class F, P and M Units in Brilliant Earth, LLC into 86,297,284 common LLC Units after applying a conversion ratio of 1.8588 with a further adjustment for a distribution threshold related to the M Units (which impacted their allocation of value so the economic effect of the exchange was a like-for-like value); the net conversion ratio was 1.8942, 1.9080 and 1.7735 for the Class F Units, P Units and M Units, respectively. The number of Class F, P and M Units presented in these financial statements for periods prior to the IPO have been retroactively adjusted to reflect the conversion ratios (as discussed in the preceding sentence) similar to the presentation of a stock-split. Summary of the restructuring, offering and other transactions completed in connection with the IPO In connection with the IPO, Brilliant Earth Group, Inc. and Brilliant Earth, LLC completed a series of transactions that comprise of reorganization, offering and other financing transactions. The following summarizes the reorganization transactions which occurred as of the date of IPO (the "Reorganization Transactions"): • Amended and restated the existing limited liability company agreement of Brilliant Earth, LLC (the "LLC Agreement") , effective prior to the IPO, to, among other things, (1) recapitalize all existing ownership interests in Brilliant Earth, LLC into 86,297,284 LLC Units after applying a conversion ratio of 1.8588, (2) appoint Brilliant Earth Group, Inc. as the sole managing member of Brilliant Earth, LLC upon its acquisition of LLC Units in connection with the IPO, and (3) provide certain redemption rights to the Continuing Equity Owners. • Amended and restated Brilliant Earth Group, Inc.’s certificate of incorporation to, among other things, provide for four classes of common stock defined as Class A common stock, Class B common stock, Class C common stock and Class D common stock. • Issued 36,064,421 shares of Class B common stock (prior to the redemption of 522,386 shares pursuant to the exercise of underwriters’ overallotment options discussed below) to the Continuing Equity Owners, excluding the founders, Beth Gerstein, Co-Founder and Chief Executive Officer, Eric Grossberg, Co-Founder and Executive Chairman, and Just Rocks, a Delaware corporation which is jointly owned and controlled by the founders (collectively, the "Founders"), which is equal to the number of LLC Units held by such Continuing Equity Owners excluding the Founders, for nominal consideration. • Issued 50,232,863 shares of Class C common stock (prior to the redemption of 727,613 shares pursuant to the exercise of underwriters’ overallotment options discussed below) to the Founders, which is equal to the number of LLC Units held by such Founders, for nominal consideration. • Entered into a Tax Receivable Agreement (the “TRA”) with Brilliant Earth, LLC and the Continuing Equity Owners that will provide for the payment by Brilliant Earth Group, Inc. to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that Brilliant Earth Group, Inc. actually realizes (or in some circumstances is deemed to realize) related to certain tax basis adjustments and payments made under the TRA. The organization agreements include a provision for the Continuing Equity Owners, subject to certain exceptions from time to time at each of their option, to require Brilliant Earth, LLC to redeem all or a portion of their LLC Units in exchange for, at the Company’s election, newly-issued shares of Class A common stock or Class D common stock, as applicable, on a one-for-one basis, or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Interest so redeemed, in each case, in accordance with the terms of the Brilliant Earth LLC Agreement. The following summarizes the IPO and other transactions: • Issued 9,583,332 shares of Class A common stock, including 1,249,999 shares of Class A common stock from the exercise of the underwriters' overallotment, in exchange for net proceeds of approximately $101.9 million at $12.00 per share, less underwriting discount and offering expenses. • Used net proceeds from the IPO to purchase 8,333,333 newly issued LLC Units for approximately $93.5 million directly from Brilliant Earth, LLC at a price per unit equal to the initial public offering price per share of Class A common stock less underwriting discount. • Used net proceeds from the exercise of the underwriters’ overallotment to purchase an additional 1,249,999 LLC Units from each of the Continuing Equity Owners in the form of a redemption on a pro rata basis for $14.0 million in aggregate at a price per unit equal to the initial public offering price per share of Class A common stock less the underwriting discount; this purchase of LLC Interests resulted in an obligation under the TRA, including the related set-up of deferred tax assets on the TRA and on the temporary basis difference associated with this purchase. • Corresponding cancellation of a total of 1,249,999 shares of Class B common stock and Class C common stock resulting from the purchase of 1,249,999 LLC Units from the Continuing Equity Owners. • Exercise of warrants on convertible preferred units ("Class P Units") with a carrying value of $6.4 million as of September 22, 2021 (after the mark-to-market adjustment as of the date of exercise) into 534,589 newly issued LLC Units on a net settlement basis, elected at the option of the holder. Risks and Uncertainties – COVID-19 In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) a global pandemic based on the spread of the virus worldwide, including to the US, where the Company’s principal operations occur. On March 16, 2020, the Company temporarily closed its showrooms to the public, but continued to fulfill orders during this period of time. COVID-19 also temporarily disrupted the Company’s supply chain operations resulting in some delays to jewelry production and delivery timelines in 2020. While the Company re-opened all of its showrooms to the public in 2020, the Company’s operations are still subject to local or regional public health orders that could include temporary government-mandated closures which may impact the Company’s showrooms or other operations. The Company’s financial performance was adversely impacted by COVID-19 in 2020. The COVID-19 pandemic remains ongoing and the potential duration and magnitude of the pandemic’s future impact on the jewelry industry and on the Company’s operations and supply chain remains unknown and depends On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law in response to the COVID-19 pandemic. The CARES Act includes many measures to provide relief to companies. The Company has not participated in any such measures, other than obtaining a U.S. Small Business Administration Paycheck Protection Program Loan (“PPP Loan”) under the CARES Act, which was fully repaid in December 2020. See Note 7, Long-Term Debt |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements for the periods prior to the Reorganization Transactions and IPO have been presented to combine the previously separate entities. These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as its annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2021, or for any other interim period or for any other future year. The condensed consolidated balance sheet as of December 31, 2020 has been derived from the audited financial statements and should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the final prospectus, dated September 22, 2021, filed with the SEC in accordance with Rule 424(b) of the Securities Act of 1933, as amended, on September 24, 2021 (the "Prospectus") in connection with our IPO. Principles of Consolidation and non-controlling interest The condensed consolidated financial statements include the accounts of the Company and its subsidiary, Brilliant Earth, LLC, which it controls due to ownership of the voting interest or pursuant to variable interest entity (“VIE”) accounting guidance. All intercompany balances and transactions have been eliminated in consolidation. The non-controlling interest on the condensed consolidated statement of operations represents the portion of earnings or loss attributable to the economic interest in Brilliant Earth, LLC held by the Continuing Equity Owners. The non-controlling interest on the condensed consolidated balance sheet represents the portion of net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders. As of September 30, 2021, the non-controlling interest was 89.9%. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Some of the more significant estimates include the allowance for sales returns, inventory valuation, useful lives and depreciation of long-lived assets, fair value of equity-based compensation, and prior to the Reorganization Transactions, the warrants and the redemption of value of the redeemable Class P Units. Actual results could differ materially from those estimates. On an ongoing basis, the Company reviews its estimates to ensure that they appropriately reflect changes in its business or new information available. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. U.S. GAAP prescribes three levels of inputs that may be used to measure fair value: Level 1 Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Level 2 Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from, or corroborated by, observable market data by correlation or other means. Level 3 Valuation techniques with significant unobservable market inputs. The Company is required to disclose its estimate of the fair value of material financial instruments, including those recorded as assets or liabilities in its financial statements, in accordance with U.S. GAAP. Through the date of the IPO, the Class P Units and warrants on Class P Units were the only financial instruments (assets or liabilities) measured at fair value on a recurring basis. As discussed in Note 1, Business and organization , the securities converted into LLC Interests in connection with the IPO and are now classified as equity. The fair value of the Class P Units and the warrants on Class P Units as of September 22, 2021 just before conversion into common LLC Units were $389.2 million and $6.4 million, respectively; these securities are no longer subject to this fair value disclosure. The carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities and were classified as Level 1. The carrying value of long-term debt, net of debt issuance costs, also approximates its fair value, which has been estimated by management based on the consideration of applicable interest rates (including certain instruments at variable or floating rates) and were classified as Level 2. Redeemable Convertible Class P Units and Class P Units underlying warrants were classified as Level 3 until the IPO at which time the securities were converted into LLC Interests. Comprehensive Income Comprehensive income is the change in equity of a business enterprise during a period from transactions and all other events and circumstances from non-owner sources. Other comprehensive income may include unrealized gain (loss) on available for sale securities, foreign currency items, and minimum pension liability adjustments. The Company did not have components of other comprehensive income. As a result, comprehensive income is the same as net income. Cash and Cash Equivalents, and Restricted Cash All highly liquid investments with an original maturity of three months or less and deposits in transit from banks for payments related to third-party credit and debit card transactions are considered to be cash equivalents. Credit and debit card transactions are short-term, highly liquid in nature. The following table provides a reconciliation of cash and cash equivalents, and restricted cash from the condensed consolidated balance sheets to the statements of cash flows for the periods ended September 30, 2021, December 31, 2020, and September 30, 2020 (in thousands): September 30, December 31, September 30, 2021 2020 2020 Cash and cash equivalents $ 161,087 $ 66,269 $ 57,712 Restricted cash 205 205 204 Total $ 161,292 $ 66,474 $ 57,916 Revenue Recognition Overview Net sales primarily consist of revenue from diamond, gemstone and jewelry retail sales and payment is required in full prior to order fulfillment. Delivery is determined to be the time of pickup for orders picked up in showrooms, and for shipped orders, typically within one to two business days after shipment. Credit is not extended to customers except through third-party credit cards or financing offerings. A return policy of 30 days from when the item is picked up or ready for shipment is typically provided; one complimentary resizing for standard ring styles is offered within 60 days of when an order is available for shipment or pickup; a lifetime manufacturing warranty is provided on all jewelry, with the exception of estate and vintage jewelry and center diamonds/gemstones; and a lifetime diamond upgrade program is included on all independently graded natural diamonds. The complimentary resizing, lifetime manufacturing warranty claims and lifetime diamond upgrades have not historically been material. A three-year extended service plan, which provides full inspection, cleaning and certain repairs due to normal wear, is offered for an additional charge. The following table discloses total net sales by geography for the three and nine months ended September 30, 2021 and 2020 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2021 2020 2021 2020 United States $ 87,540 $ 65,444 $ 239,534 $ 150,648 International 7,699 6,001 18,749 12,561 Total net sales $ 95,239 $ 71,445 $ 258,283 $ 163,209 Revenue Recognition Revenue is recognized under Financial Accounting Standards Board (“FASB”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 requires that revenue from customers be recognized as control of the promised goods is transferred to customers, which generally occurs upon delivery if the order is shipped, or at the time the customer picks up the completed product at a showroom. Revenue arrangements generally have one performance obligation and are reported net of estimated sales returns and allowances, which are determined based on historical product return rates and current economic conditions. The Company also offers a three-year extended service plan, which gives rise to an additional performance obligation, when purchased by the customer, which is recognized over the course of the service plan. Additionally, sales taxes are collected and remitted to taxing authorities, and the Company has elected to exclude sales taxes from revenues recognized under ASC 606. Contract Balances Transactions where payment has been received from customers, but control has not transferred, are recorded as customer deposits in deferred revenue and revenue recognition is deferred until delivery has occurred. Deferred revenue also includes payments on the Company’s three-year extended service plan that customers have elected to purchase. As of September 30, 2021 and December 31, 2020, total deferred revenue was $22.1 million and $11.0 million, respectively. During the three months ended September 30, 2021 and 2020, the Company recognized $18.8 million and $14.6 million, respectively, of revenue that was deferred as of the last day of the respective prior quarter. During the nine months ended September 30, 2021 and 2020, the Company recognized $10.3 million and $7.2 million, respectively, of revenue that was deferred as of the last day of the respective prior period. Sales Returns and Allowances A returns asset account and a refund liabilities account are maintained to record the effects of estimated product returns and sales returns allowance. Returns asset and refund liabilities are updated at the end of each financial reporting period and the effect of such changes are accounted for in the period in which such changes occur. The Company estimates anticipated product returns in the form of a refund liability based on historical return percentages and current period sales levels, and accrues a related returns asset for goods expected to be returned in salable condition less any expected costs to recover such goods, including return shipping costs that the Company may incur. As of September 30, 2021 and December 31, 2020, refund liabilities balances were $1.3 million and $2.3 million, respectively, and are included as a provision for sales returns and allowances within accrued expenses and other current liabilities in the condensed consolidated balance sheets. As of September 30, 2021 and December 31, 2020, returns asset balances were $0.7 million and $1.2 million, respectively, and are included within prepaid expenses and other current assets in the condensed consolidated balance sheets. Fulfillment Costs The Company generally does not bill customers separately for shipping and handling charges. Any fulfillment costs incurred by the Company when shipping to customers is reflected in cost of sales in the condensed consolidated statements of operations. Consignment Inventory Sales Sales of consignment inventory are presented on a gross sales basis as control of the merchandise is maintained through the point of sale. The Company also provides independent advice, guidance and after-sales service to customers. Consigned products are selected at the discretion of the Company, and the determination of the selling price as well as responsibility of the physical security of the products is maintained by the Company. The products sold from consignment inventory are similar in nature to other products that the Company sells to customers and are sold on the same terms. Marketing, Advertising and Promotional Costs Marketing, advertising and promotional costs are expensed as incurred and totaled approximately $18.5 million and $11.3 million, for the three months ended September 30, 2021 and 2020, respectively, and $49.2 million and $31.6 million, for the nine months ended September 30, 2021 and 2020, respectively. Deferred Offering Costs The Company capitalizes certain legal, accounting and other third-party fees that are directly related to an anticipated equity financing until such transaction is consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds received. Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses in the condensed consolidated statements of operations in the period of determination. Equity-Based Compensation Equity-based compensation is accounted for as an expense in accordance with the fair value recognition and measurement provisions of U.S. GAAP which requires compensation cost for the grant-date fair value of equity-based awards to be recognized over the requisite service period. The Company accounts for forfeitures when they occur, and any compensation expense previously recognized on unvested equity-based awards will be reversed when forfeited. The fair value of awards of restricted LLC Units is based on the fair value of the member unit underlying the awards as of the date of grant. The fair value of the underlying member units (referred to as Class M Units prior to conversion to common LLC Units in the IPO on a value-for-value basis) for grants prior to the Company’s IPO in September 2021 was determined by considering a number of objective, subjective and highly complex factors including independent third-party valuations of the Company’s member units, operating and financial performance, the lack of liquidity of member units and general and industry specific economic outlook among other factors. The fair value of restricted stock units ("RSUs") is based on the fair value of the Class A common stock at the time of grant. The fair value of option-based awards is estimated using the Black-Scholes valuation model. The Black-Scholes model requires the use of highly subjective and complex assumptions, including the option’s expected term and the price volatility of the underlying stock. For inputs into the Black-Scholes model, the expected stock price volatility for the common stock is estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the Company’s industry which are of similar size, complexity and stage of development. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury implied yield at the date of grant. The Company has elected to use the “simplified method” to determine the expected term, which is the midpoint between the vesting date and the end of the contractual term, because it has insufficient history upon which to base an assumption about the term; the Company believes the simplified method approximates a term if it were to be based on expected life. The expected dividend yield is nil as the Company has not paid and does not anticipate paying dividends on its common stock. Income Taxes Interim Periods In calculating the provision for interim income taxes, in accordance with ASC 740, Income Taxes an estimated annual effective tax rate is applied to year-to-date ordinary income. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year. This differs from the method utilized at the end of an annual period. Annual Reporting For annual periods, income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. Uncertainty in income taxes is accounted for using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. The Company recognizes penalties and interest related to uncertain tax positions within the provision (benefit) for income taxes line in the condensed consolidated statements of operations. As of September 30, 2021, no uncertain tax positions have been recorded. The Company will continue to monitor this position each interim period. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02 – Leases , which was amended in January 2018 and requires an entity that leases assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Leases will be classified as either financing or operating, similar to current accounting requirements, with the applicable classification determining the pattern of expense recognition in the statement of earnings. The Company will adopt the ASU in the first quarter of 2022 by applying its provisions prospectively and recognizing any cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2022. The Company also expects to elect the package of practical expedients permitted under the transition guidance, which provides that an entity need not reassess: (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, and (iii) initial direct costs for any existing leases. Management continues to evaluate the impact of this ASU on the condensed consolidated financial statements, but expects that adoption will result in a significant increase in the Company's assets and liabilities. The implementation project team has developed additional processes and policies to support the requirements of this ASU and has collected key data for each leased asset. Other recent accounting pronouncements not yet adopted that could have a material effect on future results of operations or financial position are presented in the audited financial statements and the notes thereto. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share is computed by dividing net income applicable to Brilliant Earth Group, Inc. by the weighted average shares of Class A common stock outstanding (and Class D common stock if outstanding) during the period. Diluted earnings per share is computed by adjusting the net income available to Brilliant Earth Group, Inc. and the weighted average shares outstanding to give effect to potentially dilutive securities. Shares of Class B and Class C common stock are not entitled to receive any distributions or dividends and are therefore excluded from this presentation since they are not participating securities. All earnings prior to September 23, 2021, the date of the IPO, were entirely allocable to the non-controlling interest and, as a result, earnings per share information is not applicable for reporting periods prior to this date. Consequently, only earnings per share for net income for periods subsequent to September 22, 2021 are presented. Basic and diluted earnings per share of common stock for the period from September 23, 2021 to September 30, 2021 have been computed as follows (in thousands, except share and per share amounts): For the period September 23, 2021 to September 30, 2021 Numerator: Net income attributable to Brilliant Earth Group, Inc., BASIC $ 66 Add: Net income impact from assumed redemption of all LLC Units to common stock 789 Less: Income tax expense on net income attributable to NCI at 25.7% (203) Net income attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED $ 652 Denominator: Weighted average shares of common stock outstanding, BASIC 9,583,332 Dilutive effects of: LLC Units that are exchangeable for common stock 85,051,581 Unvested LLC Units, RSUs and stock options 1,986,514 Weighted average shares of common stock outstanding, DILUTED 96,621,427 BASIC earnings per share $ 0.01 DILUTED earnings per share $ 0.01 Net income attributable to the non-controlling interest added back to net income in the fully dilutive computation has been adjusted for income taxes which would have been expensed had the income been recognized by Brilliant Earth Group, Inc., a taxable entity. The weighted average common shares outstanding in the diluted computation per share assumes all outstanding LLC Units are converted and the Company will elect to issue shares of common stock upon redemption rather than cash-settle. |
Inventories, Net
Inventories, Net | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | INVENTORIES, NET Inventories, net consist of the following (in thousands): September 30, December 31, 2021 2020 Loose diamonds $ 7,915 $ 4,938 Fine jewelry and other 12,387 8,863 Allowance for inventory obsolescence (245) (242) Total inventories, net $ 20,057 $ 13,559 The allowance for inventory obsolescence consists of the following (in thousands): September 30, September 30, 2021 2020 Balance at beginning of period $ (242) $ (169) Change in allowance for inventory obsolescence (3) (39) Balance at end of period $ (245) $ (208) Provisions for inventory obsolescence included in cost of sales in the condensed consolidated statements of operations were $27,000 and $25,000, for the three months ended September 30, 2021 and 2020, respectively, and $3,000, and $39,000 for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021 and December 31, 2020, the Company had $15.3 million and $11.7 million, respectively, in consigned inventory held on behalf of suppliers which is not recorded in the condensed consolidated balance sheets. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands): September 30, December 31, 2021 2020 Accrued vendor expenses $ 6,697 $ 5,409 Inventory received not billed 5,110 3,893 Accrued offering cost (a) 4,563 — Accrued payroll expenses 2,601 1,515 Sales and other tax payable accrual 1,949 2,455 Provision for sales returns and allowances 1,348 2,341 Other 2,490 1,348 Total accrued expenses and other current liabilities $ 24,758 $ 16,961 (a) Primarily includes attorney and consulting fees in support of the Company’s IPO, which, at the time of the IPO, were offset against the gross proceeds of the IPO within “Additional paid-in capital” on the condensed consolidated balance sheets. Included in accrued expenses and other current liabilities is a provision for sales returns and allowances. Returns are estimated based on past experience and current expectations and are recorded as an adjustment to revenue. Activity for the nine months ended September 30, 2021 and 2020 was as follows (in thousands): September 30, September 30, 2021 2020 Balance at beginning of period $ 2,341 $ 1,339 Provision 16,450 10,373 Returns and allowances (17,443) (10,993) Balance at end of period $ 1,348 $ 719 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Leases | LEASES During the nine months ended September 30, 2021, the Company entered into new lease agreements in nine locations in the US and amended certain existing leases to extend their terms. Total operating lease expense recorded in selling, general and administrative expenses in the condensed consolidated statements of operations were $1.1 million and $0.6 million, for the three months ended September 30, 2021 and 2020, respectively; and $2.3 million and $1.6 million for the nine months ended September 30, 2021 and 2020, respectively. The aggregate future minimum lease payments under long-term non-cancelable operating leases as of September 30, 2021 are as follows (in thousands): Amount For the three months ending December 31, 2021 $ 660 Years ending December 31, 2022 3,502 2023 3,670 2024 3,518 2025 3,437 2026 3,090 Thereafter 7,112 Total minimum lease payments $ 24,989 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | LONG-TERM DEBT The following table summarizes the net carrying amount of the Term Loan (as defined below) as of September 30, 2021 and December 31, 2020, net of debt issuance costs (in thousands): September 30, 2021 December 31, 2020 Outstanding principal Debt issuance costs Net carrying amount Outstanding principal Debt issuance costs Net carrying amount Term loan $ 65,000 $ (1,766) $ 63,234 $ 65,000 $ (2,789) $ 62,211 Total debt $ 65,000 $ (1,766) $ 63,234 $ 65,000 $ (2,789) $ 62,211 Current portion $ 20,526 $ — $ 20,526 $ — $ — $ — Long term 44,474 (1,766) 42,708 65,000 (2,789) 62,211 Total debt $ 65,000 $ (1,766) $ 63,234 $ 65,000 $ (2,789) $ 62,211 The Company entered into a Loan and Security Agreement (the “Term Loan Agreement”) on September 30, 2019 with Runway Growth Credit Fund Inc. (the “Lender”) for a $40.0 million term loan, of which $35.0 million was defined as the First Tranche Term Loan and $5.0 million was the Second Tranche Term Loan. The $35.0 million First Tranche Term Loan was drawn on September 30, 2019. Payments were interest only through October 15, 2021 (first scheduled amortization payment) after which equal monthly payments of principal were due through April 15, 2023 (maturity date). Interest was at a variable rate equal to LIBOR (floor of 2.15%) plus 8.25%. The Term Loan (the "Term Loan") under the Term Loan Agreement was secured by substantially all assets of the Company, and the Company is required to comply with certain covenants, including a covenant that requires the Company to reach certain minimum liquidity requirements of cash and cash equivalents as defined in the Term Loan Agreement. Prepayment fees of 3.00% declining to 0.00% were provided based on the anniversary date of payment. Debt issuance costs of $2.6 million were capitalized and are being amortized to interest expense as an adjustment to yield using the effective interest method. Included in the debt issuance costs is the present value of a $1.6 million final payment due on April 15, 2023 (the “Final Payment”) which is being accreted to full value over the term. In connection with the origination of the Term Loan Agreement, a warrant for 333,333 Class P Units was issued. The fair value of the warrant was $83,000 at the time of issuance which was accounted for as a debt origination cost (contra-liability). The warrants had a carrying value of $6.4 million as of September 22, 2021 (after the mark-to-market adjustment as of the date of exercise) and were converted upon exercise into 534,589 newly issued LLC Units on a net settlement basis, elected at the option of the holder. The Lender also has a right to invest as is necessary for it to maintain the same percentage ownership of the Company’s equity interest on a fully diluted basis, in any next round on the same terms, conditions and same pricing as offered to the lead investor in the applicable next round. On December 17, 2020, the Company entered into a First Amendment to the Term Loan Agreement with the Lender (the “First Amendment”) to expand the Second Tranche Term Loan from $5.0 million to $30.0 million for a total commitment of $65.0 million. Up to $30.0 million of the proceeds from the Second Tranche Term Loan could be distributed to the holders of the equity interests within 90 days of closing. Other modifications in the First Amendment include: • Closing fee of $0.3 million related to this new facility; • Reduction in the LIBOR Floor on the entire facility from 2.15% to 1.00% (effective interest rate reduced from 10.40% to 9.25% based on LIBOR); • Extension of the maturity to October 15, 2023; • Extension of the interest-only period by six months (first scheduled amortization payment on April 15, 2022); • Allowance of quarterly tax distributions to members; • Extension of the prepayment term trigger dates by six months; • Modification of the Final Payment, as defined, to include the present value of an additional $1.4 million, which represents the incremental increase in the Final Payment due to the increase in the Term Loan principal, and an additional $0.2 million, which are included in the debt issuance costs and are being accreted to full value as an adjustment to the interest rate; and • Issuance of 25,000 new warrants to the Lender with an exercise price of $10.00 per Unit with a term of ten years. These warrants were accounted for using a similar methodology to the valuation of the original warrants discussed above, and the fair value was determined to be $250. The warrants were converted into LLC Units at the time of the IPO. On August 6, 2021 a second amendment was executed primarily to allow for contributions to the Brilliant Earth Foundation. On August 29, 2021, a third amendment was executed to among other matters, permit the Reorganization Transactions that were consummated by the Company in connection with the Up-C structure of the IPO transaction and reduce the variable interest rate from 8.25% to 7.75%; and the LIBOR Floor from 1.00% to 0.50%. The amendments were treated as debt modifications for accounting purposes. The effective interest rate was 11.90% and 13.22% for the nine months ended September 30, 2021 and 2020, respectively. The Company was in compliance with all covenants as of September 30, 2021. As of September 30, 2021, the aggregate future principal payments under the Term Loan, including the Final Payment payable to the lender, are as follows (in thousands): Principal Final Total For the three months ending December 31, 2021 $ — $ — $ — Years ending December 31, 2022 30,789 — 30,789 2023 34,211 3,151 37,362 Total aggregate future principal payments $ 65,000 $ 3,151 $ 68,151 Note under Paycheck Protection Program In April 2020, in connection with the significant negative business impact of the COVID-19 pandemic, the Company applied for and received a $2.7 million PPP Loan under the CARES Act that bore interest at 1.00% per annum. The Company elected to repay the PPP Loan, and the PPP Loan was paid in full in December 2020 with interest expense of $18,000. |
Stockholders' and Members' Equi
Stockholders' and Members' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Stockholders' and Members' Equity | STOCKHOLDERS' AND MEMBERS' EQUITY Summary Capitalization The following summarizes the capitalization and voting rights of the Company’s classes of equity as of September 30, 2021: Authorized Issued & Votes per Economic Preferred stock 10,000,000 None Common stock: Class A 1,200,000,000 9,583,332 1 Yes Class B 150,000,000 35,576,400 1 No Class C 150,000,000 49,505,250 10 No Class D 150,000,000 None 10 Yes Common stock reserved for issuances: Conversion of LLC Units 85,081,650 Vesting of LLC Units 2,011,643 RSUs 188,268 Stock options 1,618,064 Common LLC Units 85,081,650 No Yes The Board of Directors is authorized to direct the Company to issue shares of preferred stock in one or more series and the discretion to determine the number and designation of such series and the powers, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Through September 30, 2021 , no series of preferred stock have been issued. Shares of Class B and Class C common stock are not entitled to receive any distributions or dividends other than in connection with a liquidation and have no rights to convert into Class A common stock or Class D common stock, separate from an exchange or redemption of the LLC Interests corresponding to such shares of Class B common stock or Class C common stock, as applicable, as discussed below under Brilliant Earth, LLC . When a common unit is redeemed for cash or Class A or D common stock by a Continuing Equity Owner who holds shares of Class B common stock or Class C common stock, such Continuing Equity Owner will be required to surrender a share of C lass B common stock or Class C common stock, as applicable, which will be cancelled for no consideration. The Company must, at all times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock issued to Brilliant Earth Group, Inc. and the number of LLC Interests owned by Brilliant Earth Group, Inc., and (ii) maintain a one-to-one ratio between the number of shares of Class B and Class C common stock owned by the Continuing Equity Owners and the number of LLC Interests owned by them. The different classes of common stock are held as follows: • 9,583,332 shares of Class A common stock are held by shareholders who invested in the IPO; • 35,576,400 shares of Class B common stock are held by the Continuing Equity Owners excluding the Founders (36,064,421 initial shares less 522,386 shares redeemed with use of proceeds from the exercise of the underwriters’ overallotment option, plus 34,365 shares associated with the vesting of LLC Units) ; and • 49,505,250 shares of Class C common stock are held by the Founders (50,232,863 initial shares less 727,613 shares redeemed with use of proceeds from the exercise of the underwriters’ overallotment option). Class C and D common stock may only be held by the Founders and their respective permitted transferees. No shares of Class D common stock are currently outstanding, but may be issued in connection with an exchange by the Founders of their LLC Interests (along with an equal number of shares of Class C common stock and such shares shall be immediately cancelled). Brilliant Earth, LLC As of September 30, 2021 , Brilliant Earth Group, Inc. holds a 10.1% economic interest in Brilliant Earth, LLC through its ownership of 9,583,332 LLC Units, but consolidates Brilliant Earth, LLC as sole managing member. The remaining 85,081,650 LLC Units representing an 89.9% interest are held by the Continuing Equity Owners and presented in the condensed consolidated financial statements as a non-controlling interest. The organization agreements include a provision for the Continuing Equity Owners, subject to certain exceptions from time to time at each of their option, to require Brilliant Earth, LLC to redeem all or a portion of their LLC Units in exchange for, at the Company’s election, newly-issued shares of Class A common stock or Class D common stock, as applicable, on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Interest so redeemed, in each case, in accordance with the terms of the Brilliant Earth LLC Agreement. The redemption feature qualifies for an exception from derivative accounting and, accordingly, its value is not bifurcated from the underlying LLC Unit. Issuance of Additional LLC Units Under the LLC Agreement, the Company is required to cause Brilliant Earth, LLC to issue additional LLC Interests to the Company when the Company issues additional shares of Class A common stock. Other than as it relates to the issuance of Class A common stock in connection with an equity incentive program, the Company must contribute to Brilliant Earth, LLC net proceeds and property, if any, received by the Company with respect to the issuance of such additional shares of Class A common stock. The Company must cause Brilliant Earth, LLC to issue a number of LLC Interests equal to the number of shares of Class A common stock issued such that, at all times, the number of LLC Interests held by the Company equals the number of outstanding shares of Class A common stock. Between September 23, 2021 and September 30, 2021, the Company caused Brilliant Earth, LLC to issue to the Company a total of 9,583,332 LLC Units in connection with the issuance of Class A common stock in the IP O. The Company also caused Brilliant Earth Group, Inc. to issue 34,365 shares of Class B common stock to the Continuing Equity Owners associated with 34,365 LLC units which vested during the period. No RSUs vested and no stock options were exercised during the period. Distributions to Members Related to Their Income Tax Liabilities As a limited liability company treated as a partnership for income tax purposes, Brilliant Earth, LLC does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. Under the LLC Agreement, Brilliant Earth, LLC is required to distribute cash, to the extent that Brilliant Earth, LLC has cash available, on a pro rata basis to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to each member’s share of Brilliant Earth, LLC taxable earnings. Brilliant Earth, LLC makes such tax distributions to its members quarterly, based on an estimated tax rate and proje cted year-to-date taxable income, with a final accounting once actual taxable income or loss has been determined. Such distributions totaled approximately $2.8 million and $21.4 million, respectively, for the three and nine months ended September 30, 2021. No distributions were made in the three and nine months ended September 30, 2020 as these distributions to, on or behalf of, members associated with their estimated income tax obligations for the year ended December 31, 2020 were paid in the second quarter of 2021. Brilliant Earth, LLC Capitalization through September 23, 2021, the Date of the IPO Prior to the completion of the reorganization and IPO transactions, Brilliant Earth, LLC had LLC Interests outstanding in the form of Class F, Class P and Class M Units. These units were converted into common LLC Units at the time of the IPO. The Class P Units were classified as redeemable securities presented in temporary equity and conversion to LLC Units was in the form of redemption at a value of $389.2 million as of September 22, 2021 after a mark-to-market adjustment of $138.4 million and $327.2 million for the three and nine months ended September 22, 2021. The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from June 30, 2020 to September 30, 2020 and June 30, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Class F Units and Class M Units Balance, June 30, 2020 32,435,595 $ 58,940 50,232,863 $ (69,702) 2,416,148 $ 268 52,649,011 $ (69,434) Vested Class M Units — — — — 25,493 — 25,493 — Equity-based compensation — — — — — 7 — 7 Net income — — — 8,041 — — — 8,041 Adjustment of redeemable convertible preferred units to redemption value — 10,279 — (10,279) — — — (10,279) Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, June 30, 2021 32,435,595 $ 250,746 50,232,863 $ (277,830) 3,002,324 $ 488 53,235,187 $ (277,342) Tax distributions to members — (1,100) — (1,697) — — — (1,697) Vested Class M Units — — — — 91,913 — 91,913 — Equity-based compensation — — — — — 58 — 58 Net income — 1,214 — 1,893 — — — 1,893 Adjustment of redeemable convertible preferred units to redemption value — 138,367 — (138,367) — — — (138,367) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from January 1, 2020 to September 30, 2020 and January 1, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Total Amounts Balance, January 1, 2020 32,435,595 $ 80,829 50,232,863 $ (91,773) 2,362,944 $ 254 52,595,807 $ (91,519) Vested Class M Units — — — — 78,697 — 78,697 — Equity-based compensation — — — — — 21 — 21 Net income — — — 8,223 — — — 8,223 Adjustment of redeemable convertible preferred units to redemption value — (11,610) — 11,610 — — — 11,610 Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, January 1, 2021 32,435,595 $ 66,327 50,232,863 $ (85,695) 2,537,791 $ 300 52,770,654 $ (85,395) Tax distributions to members — (9,755) — (11,643) — — — (11,643) Vested Class M Units — — — — 556,446 — 556,446 — Equity-based compensation — — — — — 246 — 246 Net income prior to Reorganization Transactions and IPO — 5,466 — 8,526 — — — 8,526 Adjustment of redeemable convertible preferred units to redemption value — 327,189 — (327,189) — — — (327,189) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — |
Stockholders' and Members' Equity | STOCKHOLDERS' AND MEMBERS' EQUITY Summary Capitalization The following summarizes the capitalization and voting rights of the Company’s classes of equity as of September 30, 2021: Authorized Issued & Votes per Economic Preferred stock 10,000,000 None Common stock: Class A 1,200,000,000 9,583,332 1 Yes Class B 150,000,000 35,576,400 1 No Class C 150,000,000 49,505,250 10 No Class D 150,000,000 None 10 Yes Common stock reserved for issuances: Conversion of LLC Units 85,081,650 Vesting of LLC Units 2,011,643 RSUs 188,268 Stock options 1,618,064 Common LLC Units 85,081,650 No Yes The Board of Directors is authorized to direct the Company to issue shares of preferred stock in one or more series and the discretion to determine the number and designation of such series and the powers, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Through September 30, 2021 , no series of preferred stock have been issued. Shares of Class B and Class C common stock are not entitled to receive any distributions or dividends other than in connection with a liquidation and have no rights to convert into Class A common stock or Class D common stock, separate from an exchange or redemption of the LLC Interests corresponding to such shares of Class B common stock or Class C common stock, as applicable, as discussed below under Brilliant Earth, LLC . When a common unit is redeemed for cash or Class A or D common stock by a Continuing Equity Owner who holds shares of Class B common stock or Class C common stock, such Continuing Equity Owner will be required to surrender a share of C lass B common stock or Class C common stock, as applicable, which will be cancelled for no consideration. The Company must, at all times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock issued to Brilliant Earth Group, Inc. and the number of LLC Interests owned by Brilliant Earth Group, Inc., and (ii) maintain a one-to-one ratio between the number of shares of Class B and Class C common stock owned by the Continuing Equity Owners and the number of LLC Interests owned by them. The different classes of common stock are held as follows: • 9,583,332 shares of Class A common stock are held by shareholders who invested in the IPO; • 35,576,400 shares of Class B common stock are held by the Continuing Equity Owners excluding the Founders (36,064,421 initial shares less 522,386 shares redeemed with use of proceeds from the exercise of the underwriters’ overallotment option, plus 34,365 shares associated with the vesting of LLC Units) ; and • 49,505,250 shares of Class C common stock are held by the Founders (50,232,863 initial shares less 727,613 shares redeemed with use of proceeds from the exercise of the underwriters’ overallotment option). Class C and D common stock may only be held by the Founders and their respective permitted transferees. No shares of Class D common stock are currently outstanding, but may be issued in connection with an exchange by the Founders of their LLC Interests (along with an equal number of shares of Class C common stock and such shares shall be immediately cancelled). Brilliant Earth, LLC As of September 30, 2021 , Brilliant Earth Group, Inc. holds a 10.1% economic interest in Brilliant Earth, LLC through its ownership of 9,583,332 LLC Units, but consolidates Brilliant Earth, LLC as sole managing member. The remaining 85,081,650 LLC Units representing an 89.9% interest are held by the Continuing Equity Owners and presented in the condensed consolidated financial statements as a non-controlling interest. The organization agreements include a provision for the Continuing Equity Owners, subject to certain exceptions from time to time at each of their option, to require Brilliant Earth, LLC to redeem all or a portion of their LLC Units in exchange for, at the Company’s election, newly-issued shares of Class A common stock or Class D common stock, as applicable, on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC Interest so redeemed, in each case, in accordance with the terms of the Brilliant Earth LLC Agreement. The redemption feature qualifies for an exception from derivative accounting and, accordingly, its value is not bifurcated from the underlying LLC Unit. Issuance of Additional LLC Units Under the LLC Agreement, the Company is required to cause Brilliant Earth, LLC to issue additional LLC Interests to the Company when the Company issues additional shares of Class A common stock. Other than as it relates to the issuance of Class A common stock in connection with an equity incentive program, the Company must contribute to Brilliant Earth, LLC net proceeds and property, if any, received by the Company with respect to the issuance of such additional shares of Class A common stock. The Company must cause Brilliant Earth, LLC to issue a number of LLC Interests equal to the number of shares of Class A common stock issued such that, at all times, the number of LLC Interests held by the Company equals the number of outstanding shares of Class A common stock. Between September 23, 2021 and September 30, 2021, the Company caused Brilliant Earth, LLC to issue to the Company a total of 9,583,332 LLC Units in connection with the issuance of Class A common stock in the IP O. The Company also caused Brilliant Earth Group, Inc. to issue 34,365 shares of Class B common stock to the Continuing Equity Owners associated with 34,365 LLC units which vested during the period. No RSUs vested and no stock options were exercised during the period. Distributions to Members Related to Their Income Tax Liabilities As a limited liability company treated as a partnership for income tax purposes, Brilliant Earth, LLC does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. Under the LLC Agreement, Brilliant Earth, LLC is required to distribute cash, to the extent that Brilliant Earth, LLC has cash available, on a pro rata basis to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to each member’s share of Brilliant Earth, LLC taxable earnings. Brilliant Earth, LLC makes such tax distributions to its members quarterly, based on an estimated tax rate and proje cted year-to-date taxable income, with a final accounting once actual taxable income or loss has been determined. Such distributions totaled approximately $2.8 million and $21.4 million, respectively, for the three and nine months ended September 30, 2021. No distributions were made in the three and nine months ended September 30, 2020 as these distributions to, on or behalf of, members associated with their estimated income tax obligations for the year ended December 31, 2020 were paid in the second quarter of 2021. Brilliant Earth, LLC Capitalization through September 23, 2021, the Date of the IPO Prior to the completion of the reorganization and IPO transactions, Brilliant Earth, LLC had LLC Interests outstanding in the form of Class F, Class P and Class M Units. These units were converted into common LLC Units at the time of the IPO. The Class P Units were classified as redeemable securities presented in temporary equity and conversion to LLC Units was in the form of redemption at a value of $389.2 million as of September 22, 2021 after a mark-to-market adjustment of $138.4 million and $327.2 million for the three and nine months ended September 22, 2021. The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from June 30, 2020 to September 30, 2020 and June 30, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Class F Units and Class M Units Balance, June 30, 2020 32,435,595 $ 58,940 50,232,863 $ (69,702) 2,416,148 $ 268 52,649,011 $ (69,434) Vested Class M Units — — — — 25,493 — 25,493 — Equity-based compensation — — — — — 7 — 7 Net income — — — 8,041 — — — 8,041 Adjustment of redeemable convertible preferred units to redemption value — 10,279 — (10,279) — — — (10,279) Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, June 30, 2021 32,435,595 $ 250,746 50,232,863 $ (277,830) 3,002,324 $ 488 53,235,187 $ (277,342) Tax distributions to members — (1,100) — (1,697) — — — (1,697) Vested Class M Units — — — — 91,913 — 91,913 — Equity-based compensation — — — — — 58 — 58 Net income — 1,214 — 1,893 — — — 1,893 Adjustment of redeemable convertible preferred units to redemption value — 138,367 — (138,367) — — — (138,367) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from January 1, 2020 to September 30, 2020 and January 1, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Total Amounts Balance, January 1, 2020 32,435,595 $ 80,829 50,232,863 $ (91,773) 2,362,944 $ 254 52,595,807 $ (91,519) Vested Class M Units — — — — 78,697 — 78,697 — Equity-based compensation — — — — — 21 — 21 Net income — — — 8,223 — — — 8,223 Adjustment of redeemable convertible preferred units to redemption value — (11,610) — 11,610 — — — 11,610 Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, January 1, 2021 32,435,595 $ 66,327 50,232,863 $ (85,695) 2,537,791 $ 300 52,770,654 $ (85,395) Tax distributions to members — (9,755) — (11,643) — — — (11,643) Vested Class M Units — — — — 556,446 — 556,446 — Equity-based compensation — — — — — 246 — 246 Net income prior to Reorganization Transactions and IPO — 5,466 — 8,526 — — — 8,526 Adjustment of redeemable convertible preferred units to redemption value — 327,189 — (327,189) — — — (327,189) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Equity-Based Compensation | EQUITY-BASED COMPENSATION Overview At the time of the IPO on September 23, 2021, the 2021 Incentive Award Plan and the 2021 Employee Stock Purchase Plan (the “2021 Plans”) were adopted to attract, retain, and motivate selected employees, consultants, and directors through the granting of equity-based compensation awards and cash-based performance bonus awards. The compensation committee or its approved designees, as defined, administer the 2021 Plans. Subject to the terms and conditions of the 2021 Plans, the administrator has the authority to select the persons to whom awards are to be made, to determine the number of shares to be subject to awards and the terms and conditions of awards, and to make all other determinations and to take all other actions necessary or advisable for the administration of the 2021 Plans. Under the 2021 Incentive Award Plan, 10,923,912 shares of common stock were reserved for issuance pursuant to a variety of equity-based compensation awards, including stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock unit awards, and other equity-based awards. In addition, 1,638,586 shares of Class A common stock were reserved for issuance under our Employee Stock Purchase Plan. The number of shares initially reserved for issuance or transfer pursuant to awards under the 2021 Incentive Award Plan will be increased by an annual increase on the first day of each fiscal year beginning in 2022 and ending in 2031, equal to the lesser of (A) 5% of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of stock as determined by the board of directors; provided, however, that no more than 81,929,342 shares of stock may be issued upon the exercise of incentive stock options. As of September 30, 2021, 9,117,580 shares of common stock are available for future grant under the 2021 Incentive Award Plan. All of the shares of Class A common stock reserved for issuance remain available. Vesting is subject to certain change in control provisions as provided in the award agreements. Prior to the IPO, Class M Units were granted to certain employees at the Company’s discretion in consideration of services provided by employees. The agreements generally provide for 25% vesting on the first anniversary from the date of grant (or a shorter period at the Company's board of directors' discretion), with the remainder vesting monthly over the subsequent three years. Compensation cost related to these Class M Units was measured as of the grant date based on the fair value of the award and is being expensed ratably over the service period. Class M Units were issued and outstanding as of the date of grant. As discussed in Note 1, Business and organization , under Conversion of Class F, P and M units at time of IPO, at the time of the IPO, the LLC Agreement was amended and restated to recapitalize all 2,006,212 unvested Class M Units into 2,046,008 unv ested LLC Units after applying a conversion ratio of 1.8588 with a further adjustment for a distribution threshold (which impacted their allocation of value) so the economic effect of the exchange was a like-for-like value. The unamortized compensation and remaining vesting period for these awards prior to the IPO has been carried forward after the IPO without adjustment. The number of unvested Class M Units presented in these financial statements for periods prior to the IPO have been retroactively adjusted to reflect the conversion ratio similar to the presentation of a stock-split. Grants of Restricted Stock Units At the time of the IPO on September 23, 2021, 188,268 RSU s were granted to certain employees. The awards have a time-based vesting requirement (based on continuous employment). Upon vesting, the RSUs convert into Class A common stock; unvested RSUs are not considered outstanding shares of Class A common stock. The agreements generally provide for 25% vesting at the first anniversary of the date of the grant (or a shorter period at the Company's board of director's discretion), with the remainder vesting quarterly over the following three years. As of September 30, 2021, all of the RSUs are outstanding and remain unvested. The fair value of the RSU s of $12.00 p er unit was based on the fair value of a Class A share of common stock at the time of the IPO. Total compensation expense for RSUs was approximately $36,000 for the period from September 23, 2021 to September 30, 2021, and is included in selling, general and administrative expenses in the condensed consolidated statements of operation s. The unamortized compensation cost related to RSUs of $2.2 million as of September 30, 2021 is expected to be recognized over a weighted-average period of approximately 3.4 years. Grants of Stock Options The day prior to the IPO on September 22, 2021, options to purchase 1,618,064 shares of Class A common stock with a strike price of $12.00 (per share underlying the option) were granted to certain executives, employees and members of the Board with the number of shares underlying the options determined based on the number of Class M Units reduced in the conversion of LLC Units. The awards have a time-based vesting requirement (based on continuous employment). Upon vesting, the stock options are exercisable into Class A common stock. Vesting is generally over four years from the date of grant of the related Class M Units and options may be exercised up to 10.0 years from the date of issuance. As of September 30, 2021, all of the stock options are outstanding and 131,523 options with an aggregated intrinsic value of $0.2 million are vested; the awards have weighted average remaining contractual terms of 10.0 years with an aggregate intrinsic value of $2.3 million. Since options represent equity awards, such awards are fair valued as of the grant date for the purposes of measurement and recognition under U.S. GAAP. To measure the fair value of an option, the Black Scholes valuation model was utilized. The value of the common stock underlying the award is based on the fair value of a share of Class A common stock. The valuation model requires the input of other highly subjective assumptions. Inputs to model for awards granted on September 22, 2021 are as follows: Expected volatility 35.0 % Expected dividend yield Nil Expected term (in years) 5 to 6.25 Years Risk free interest rate 0.9 % Total compensation expense for stock options was approximately $0.6 million for the period from September 22, 2021 to September 30, 2021, and is included in selling, general and administrative expenses in the condensed consolidated statements of operations. As of September 30, 2021, total compensation cost related to unvested option awards not yet recognized was $6.3 million and the weighted-average period over which the compensation is expected to be recognized is 3.4 years. Outstanding Restricted LLC Units (formerly M Units) As discussed above, restricted LLC Units were granted to certain executives, employees and members of the Board prior to the IPO. The awards have a time-based vesting requirement (based on continuous employment). Upon grant, the awards are issued and outstanding common LLC Units but subject to forfeiture in the event of a termination of service; unvested awards are outstanding LLC units. Vesting is generally over four years from the date of grant. The following table summarizes the activity related to the unvested LLC Units for the nine months ended of each period: Number of LLC Units Weighted average Balance, January 1, 2020, unvested 636,408 $ 0.16 Granted 1,009,932 $ 0.30 Forfeited (63,919) $ 0.26 Vested (78,697) $ 0.27 Balance, September 30, 2020, unvested 1,503,724 $ 0.28 Number of LLC Units Weighted average Balance, January 1, 2021, unvested 1,485,946 $ 0.28 Granted 1,323,119 $ 0.68 Forfeited (206,611) $ 0.43 Vested (590,811) $ 0.47 Balance, September 30, 2021, unvested 2,011,643 $ 0.51 The fair value of restricted LLC Units was based on the fair value of an unrestricted LLC Unit at the date of grant. Total compensation expense for unvested LLC Units recorded in selling, general and administrative expenses in the condensed consolidated statements of operations were approximately $0.1 million and $7,000, for the three months ended September 30, 2021 and 2020, respectively; and $0.3 million and $21,000, for the nine months ended September 30, 2021 and 2020, respectively. The unamortized LLC Unit compensation cost of $0.9 million as of September 30, 2021 is expected to be recognized over a weighted-average period of approximately 3.2 years. |
Income Taxes and Tax Receivable
Income Taxes and Tax Receivable Agreement | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes and Tax Receivable Agreement | INCOME TAXES AND TAX RECEIVABLE AGREEMENT Overview of Income Taxes Brilliant Earth Group, Inc. is taxed as a subchapter C corporation and is subject to federal and state income taxes. Brilliant Earth Group, Inc.'s sole material asset is its ownership interest in Brilliant Earth, LLC, which is a limited liability company that is taxed as a partnership for U.S. federal and certain state and local income tax purposes. Brilliant Earth, LLC’s net taxable income or loss and related tax credits, if any, are passed through to its members on a pro-rata basis and included in the member’s tax returns. The income tax burden on the earnings taxed to the non-controlling interest holders is not reported by the Company in its condensed consolidated financial statements under U.S. GAAP. The Company files U.S. federal and certain state income tax returns. The income tax returns of the Company are subject to examination by U.S. federal and state taxing authorities for various time periods, depending on those jurisdictions’ rules, generally after the income tax returns are filed. Tax Provision and Deferred Tax Asset for September 2021 In calculating the provision for interim income taxes in accordance with ASC Topic 740, Income Taxes , an estimated annual effective tax rate is applied to year-to-date ordinary income. At the end of each interim period, Brilliant Earth Group, Inc. estimates the effective tax rate expected to be applicable for the full fiscal year. This differs from the method utilized at the end of an annual period. Estimated annual effective tax rate for the year ended December 31, 2021 is 25.7%. The difference between the estimated annual effective income tax rate and the U.S. federal statutory rate is primarily attributable to state income taxes and income allocable to NCI which is not taxable. The Company’s income tax provision was $23,000 for the period from September 23, 2021 to September 30, 2021. As the IPO occurred during the quarter ended September 30, 2021, and the Company had no business transactions or activities prior to the IPO, no amounts related to the provision for income taxes were incurred for the period from January 1, 2021 to September 22, 2021. On September 23, 2021, the Company recorded a deferred tax asset related to the outside basis difference between U.S. GAAP and reporting for income tax purposes of the Company’s investment in Brilliant Earth, LLC of $4.4 million . The basis difference resulted from the step-up in basis allowed under Section 743(b) and 197 of the Internal Revenue Code related to the purchase of 1,249,999 LLC Units from the Continuing Equity Owners discussed in Note 1, Business and organization, which is expected to be amortized over the useful lives of the underlying assets. In assessing the realizability of deferred tax assets, management determined that it was more likely than not that the deferred tax assets will be realized. No deferred taxes were provided on the inside basis difference resulting from the direct purchase of 8,333,333 newly-issued membership units from Brilliant Earth, LLC since such difference is subject to the indefinite reversal criteria of ASC 740, Income taxes. Tax receivable agreement As each of the Continuing Equity Owners elect to convert their LLC Interests into Class A common stock or Class D common stock, as applicable, Brilliant Earth Group, Inc. will succeed to their aggregate historical tax basis which will create a net tax benefit to the Company. These tax benefits are expected to be amortized over 15.0 years pursuant to Sections 743(b) and 197 of the Code. The Company will only recognize a deferred tax asset for financial reporting purposes when it is “more-likely-than-not” that the tax benefit will be realized. In addition, as part of IPO, the Company entered into a TRA with the Continuing Equity Owners to pay 85% of the tax savings from the tax basis adjustment to them as such savings are realized. Amounts payable under the TRA are contingent upon, among other things, generation of sufficient future taxable income during the term of the TRA. The purchase of 1,249,999 LLC Units from the Continuing Equity Owners triggered a tax basis increase subject to the provisions of the TRA. On September 23, 2021, the date of the purchase, the Company recognized (i) a deferred tax asset in the amount of $4.4 million , (ii) a corresponding estimated liability of $3.9 million representing 85% of the projected tax benefits to the TRA Owners, and (iii) $0.5 million of additional paid-in capital. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Legal Proceedings In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes or claims. In addition, the Company is regularly audited by various tax authorities. Although the Company cannot predict with assurance the outcome of any litigation or audit, it does not believe there are currently any such actions that, if resolved unfavorably, would have a material impact on the Company’s financial condition, results of operations or cash flows. On August 26, 2021, Plaintiff Anna Lerman filed a complaint against the Company in California Superior Court for Ventura County. The complaint alleges, on behalf of a putative class, that the Company recorded telephone calls between the Company’s customers and its customer service representatives without the customers’ consent, in violation of the California Invasion of Privacy Act Sections 631 and 632.7. The plaintiff seeks statutory damages, injunctive relief, attorneys’ fees and costs, and other unspecified damages. The Company has obtained an extension of time to file a response and the time to file such response has not yet passed. The Company believes these claims have no merit, and intends to vigorously defend against this lawsuit. Accordingly, an accrual for any potential liability has not been recorded. T here can be no assurance regarding its ultimate outcome. Non-Income Related Taxes The Company collects and remits sales and use taxes in a variety of jurisdictions across the US. The amounts payable to relevant sales and use tax authorities are accrued in the period incurred and presented on the balance sheet as a component of accrued expenses and other current liabilities. Purchase Obligations From time to time in the normal course of business, the Company will enter into agreements with suppliers or service providers. As of September 30, 2021, unconditional future minimum payments under agreements to purchase services primarily related to software maintenance and marketing and advertising spending in a total aggregated amount of $2.5 million, payable as follows: $1.0 million, $1.3 million, $0.1 million, and $0.1 million during the three months ending December 31, 2021 and the years ending December 31, 2022, 2023, and 2024, respectively. Capital Commitments The Company may enter into commitments to expand various locations, which generally include design, store construction and improvements. As of September 30, 2021, these commitments totaled $0.6 million related to the opening of new locations. Letter of Credit As of September 30, 2021, the Company has an unused letter of credit in the amount of $0.2 million, which was issued in lieu of a security deposit at one of its showroom locations. The certificate of deposit used to secure this letter of credit is recorded as restricted cash on the Company’s condensed consolidated balance sheets. 401K Plan The Company maintains a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code, which provides for voluntary contributions from the Company and its employees. Contributions from the Company were $0.1 million and $0.1 million, for the three months ended September 30, 2021 and 2020, respectively; and $0.4 million and $0.3 million, for the nine months ended September 30, 2021 and 2020, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTSOn November 2, 2021, the Board of Directors authorized the grant of approximately 1.3 million RSUs with a fair value of $13.32 per unit with a four year vesting period. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as its annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. |
Principles of Consolidation and non-controlling interest | The condensed consolidated financial statements include the accounts of the Company and its subsidiary, Brilliant Earth, LLC, which it controls due to ownership of the voting interest or pursuant to variable interest entity (“VIE”) accounting guidance. All intercompany balances and transactions have been eliminated in consolidation. The non-controlling interest on the condensed consolidated statement of operations represents the portion of earnings or loss attributable to the economic interest in Brilliant Earth, LLC held by the Continuing Equity Owners. The non-controlling interest on the condensed consolidated balance sheet represents the portion of net assets of the Company attributable to the Continuing Equity Owners, based on the portion of the LLC Interests owned by such unit holders. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Some of the more significant estimates include the allowance for sales returns, inventory valuation, useful lives and depreciation of long-lived assets, fair value of equity-based compensation, and prior to the Reorganization Transactions, the warrants and the redemption of value of the redeemable Class P Units. Actual results could differ materially from those estimates. On an ongoing basis, the Company reviews its estimates to ensure that they appropriately reflect changes in its business or new information available. |
Fair Value Measurements | Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. U.S. GAAP prescribes three levels of inputs that may be used to measure fair value: Level 1 Valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Level 2 Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from, or corroborated by, observable market data by correlation or other means. Level 3 Valuation techniques with significant unobservable market inputs. The Company is required to disclose its estimate of the fair value of material financial instruments, including those recorded as assets or liabilities in its financial statements, in accordance with U.S. GAAP. Through the date of the IPO, the Class P Units and warrants on Class P Units were the only financial instruments (assets or liabilities) measured at fair value on a recurring basis. As discussed in Note 1, Business and organization , the securities converted into LLC Interests in connection with the IPO and are now classified as equity. The fair value of the Class P Units and the warrants on Class P Units as of September 22, 2021 just before conversion into common LLC Units were $389.2 million and $6.4 million, respectively; these securities are no longer subject to this fair value disclosure. The carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities and were classified as Level 1. The carrying value of long-term debt, net of debt issuance costs, also approximates its fair value, which has been estimated by management based on the consideration of applicable interest rates (including certain instruments at variable or floating rates) and were classified as Level 2. Redeemable Convertible Class P Units and Class P Units underlying warrants were classified as Level 3 until the IPO at which time the securities were converted into LLC Interests. |
Comprehensive Income | Comprehensive income is the change in equity of a business enterprise during a period from transactions and all other events and circumstances from non-owner sources. Other comprehensive income may include unrealized gain (loss) on available for sale securities, foreign currency items, and minimum pension liability adjustments. The Company did not have components of other comprehensive income. As a result, comprehensive income is the same as net income. |
Cash and Cash Equivalents, and Restricted Cash | All highly liquid investments with an original maturity of three months or less and deposits in transit from banks for payments related to third-party credit and debit card transactions are considered to be cash equivalents. Credit and debit card transactions are short-term, highly liquid in nature. |
Revenue Recognition | Net sales primarily consist of revenue from diamond, gemstone and jewelry retail sales and payment is required in full prior to order fulfillment. Delivery is determined to be the time of pickup for orders picked up in showrooms, and for shipped orders, typically within one to two business days after shipment. Credit is not extended to customers except through third-party credit cards or financing offerings. A return policy of 30 days from when the item is picked up or ready for shipment is typically provided; one complimentary resizing for standard ring styles is offered within 60 days of when an order is available for shipment or pickup; a lifetime manufacturing warranty is provided on all jewelry, with the exception of estate and vintage jewelry and center diamonds/gemstones; and a lifetime diamond upgrade program is included on all independently graded natural diamonds. The complimentary resizing, lifetime manufacturing warranty claims and lifetime diamond upgrades have not historically been material. A three-year extended service plan, which provides full inspection, cleaning and certain repairs due to normal wear, is offered for an additional charge. Revenue is recognized under Financial Accounting Standards Board (“FASB”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 requires that revenue from customers be recognized as control of the promised goods is transferred to customers, which generally occurs upon delivery if the order is shipped, or at the time the customer picks up the completed product at a showroom. Revenue arrangements generally have one performance obligation and are reported net of estimated sales returns and allowances, which are determined based on historical product return rates and current economic conditions. The Company also offers a three-year extended service plan, which gives rise to an additional performance obligation, when purchased by the customer, which is recognized over the course of the service plan. Additionally, sales taxes are collected and remitted to taxing authorities, and the Company has elected to exclude sales taxes from revenues recognized under ASC 606. Contract Balances Transactions where payment has been received from customers, but control has not transferred, are recorded as customer deposits in deferred revenue and revenue recognition is deferred until delivery has occurred. Deferred revenue also includes payments on the Company’s three-year extended service plan that customers have elected to purchase. As of September 30, 2021 and December 31, 2020, total deferred revenue was $22.1 million and $11.0 million, respectively. During the three months ended September 30, 2021 and 2020, the Company recognized $18.8 million and $14.6 million, respectively, of revenue that was deferred as of the last day of the respective prior quarter. During the nine months ended September 30, 2021 and 2020, the Company recognized $10.3 million and $7.2 million, respectively, of revenue that was deferred as of the last day of the respective prior period. Sales Returns and Allowances A returns asset account and a refund liabilities account are maintained to record the effects of estimated product returns and sales returns allowance. Returns asset and refund liabilities are updated at the end of each financial reporting period and the effect of such changes are accounted for in the period in which such changes occur. The Company estimates anticipated product returns in the form of a refund liability based on historical return percentages and current period sales levels, and accrues a related returns asset for goods expected to be returned in salable condition less any expected costs to recover such goods, including return shipping costs that the Company may incur. As of September 30, 2021 and December 31, 2020, refund liabilities balances were $1.3 million and $2.3 million, respectively, and are included as a provision for sales returns and allowances within accrued expenses and other current liabilities in the condensed consolidated balance sheets. As of September 30, 2021 and December 31, 2020, returns asset balances were $0.7 million and $1.2 million, respectively, and are included within prepaid expenses and other current assets in the condensed consolidated balance sheets. Fulfillment Costs The Company generally does not bill customers separately for shipping and handling charges. Any fulfillment costs incurred by the Company when shipping to customers is reflected in cost of sales in the condensed consolidated statements of operations. Consignment Inventory Sales Sales of consignment inventory are presented on a gross sales basis as control of the merchandise is maintained through the point of sale. The Company also provides independent advice, guidance and after-sales service to customers. Consigned products are selected at the discretion of the Company, and the determination of the selling price as well as responsibility of the physical security of the products is maintained by the Company. The products sold from consignment inventory are similar in nature to other products that the Company sells to customers and are sold on the same terms. |
Marketing, Advertising and Promotional Costs | Marketing, advertising and promotional costs are expensed as incurred and totaled approximately $18.5 million and $11.3 million, for the three months ended September 30, 2021 and 2020, respectively, and $49.2 million and $31.6 million, for the nine months ended September 30, 2021 and 2020, respectively. |
Deferred Offering Costs | The Company capitalizes certain legal, accounting and other third-party fees that are directly related to an anticipated equity financing until such transaction is consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds received. Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses in the condensed consolidated statements of operations in the period of determination. |
Equity-Based Compensation | Equity-based compensation is accounted for as an expense in accordance with the fair value recognition and measurement provisions of U.S. GAAP which requires compensation cost for the grant-date fair value of equity-based awards to be recognized over the requisite service period. The Company accounts for forfeitures when they occur, and any compensation expense previously recognized on unvested equity-based awards will be reversed when forfeited. The fair value of awards of restricted LLC Units is based on the fair value of the member unit underlying the awards as of the date of grant. The fair value of the underlying member units (referred to as Class M Units prior to conversion to common LLC Units in the IPO on a value-for-value basis) for grants prior to the Company’s IPO in September 2021 was determined by considering a number of objective, subjective and highly complex factors including independent third-party valuations of the Company’s member units, operating and financial performance, the lack of liquidity of member units and general and industry specific economic outlook among other factors. The fair value of restricted stock units ("RSUs") is based on the fair value of the Class A common stock at the time of grant. The fair value of option-based awards is estimated using the Black-Scholes valuation model. The Black-Scholes model requires the use of highly subjective and complex assumptions, including the option’s expected term and the price volatility of the underlying stock. For inputs into the Black-Scholes model, the expected stock price volatility for the common stock is estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the Company’s industry which are of similar size, complexity and stage of development. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury implied yield at the date of grant. The Company has elected to use the “simplified method” to determine the expected term, which is the midpoint between the vesting date and the end of the contractual term, because it has insufficient history upon which to base an assumption about the term; the Company believes the simplified method approximates a term if it were to be based on expected life. The expected dividend yield is nil as the Company has not paid and does not anticipate paying dividends on its common stock. |
Income Taxes | Interim Periods In calculating the provision for interim income taxes, in accordance with ASC 740, Income Taxes an estimated annual effective tax rate is applied to year-to-date ordinary income. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year. This differs from the method utilized at the end of an annual period. Annual Reporting For annual periods, income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. Uncertainty in income taxes is accounted for using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and |
Recent Accounting Pronouncements | In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02 – Leases , which was amended in January 2018 and requires an entity that leases assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Leases will be classified as either financing or operating, similar to current accounting requirements, with the applicable classification determining the pattern of expense recognition in the statement of earnings. The Company will adopt the ASU in the first quarter of 2022 by applying its provisions prospectively and recognizing any cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2022. The Company also expects to elect the package of practical expedients permitted under the transition guidance, which provides that an entity need not reassess: (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, and (iii) initial direct costs for any existing leases. Management continues to evaluate the impact of this ASU on the condensed consolidated financial statements, but expects that adoption will result in a significant increase in the Company's assets and liabilities. The implementation project team has developed additional processes and policies to support the requirements of this ASU and has collected key data for each leased asset. Other recent accounting pronouncements not yet adopted that could have a material effect on future results of operations or financial position are presented in the audited financial statements and the notes thereto. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents, and restricted cash from the condensed consolidated balance sheets to the statements of cash flows for the periods ended September 30, 2021, December 31, 2020, and September 30, 2020 (in thousands): September 30, December 31, September 30, 2021 2020 2020 Cash and cash equivalents $ 161,087 $ 66,269 $ 57,712 Restricted cash 205 205 204 Total $ 161,292 $ 66,474 $ 57,916 |
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents, and restricted cash from the condensed consolidated balance sheets to the statements of cash flows for the periods ended September 30, 2021, December 31, 2020, and September 30, 2020 (in thousands): September 30, December 31, September 30, 2021 2020 2020 Cash and cash equivalents $ 161,087 $ 66,269 $ 57,712 Restricted cash 205 205 204 Total $ 161,292 $ 66,474 $ 57,916 |
Disaggregation of Revenue | The following table discloses total net sales by geography for the three and nine months ended September 30, 2021 and 2020 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2021 2020 2021 2020 United States $ 87,540 $ 65,444 $ 239,534 $ 150,648 International 7,699 6,001 18,749 12,561 Total net sales $ 95,239 $ 71,445 $ 258,283 $ 163,209 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share of common stock for the period from September 23, 2021 to September 30, 2021 have been computed as follows (in thousands, except share and per share amounts): For the period September 23, 2021 to September 30, 2021 Numerator: Net income attributable to Brilliant Earth Group, Inc., BASIC $ 66 Add: Net income impact from assumed redemption of all LLC Units to common stock 789 Less: Income tax expense on net income attributable to NCI at 25.7% (203) Net income attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED $ 652 Denominator: Weighted average shares of common stock outstanding, BASIC 9,583,332 Dilutive effects of: LLC Units that are exchangeable for common stock 85,051,581 Unvested LLC Units, RSUs and stock options 1,986,514 Weighted average shares of common stock outstanding, DILUTED 96,621,427 BASIC earnings per share $ 0.01 DILUTED earnings per share $ 0.01 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net consist of the following (in thousands): September 30, December 31, 2021 2020 Loose diamonds $ 7,915 $ 4,938 Fine jewelry and other 12,387 8,863 Allowance for inventory obsolescence (245) (242) Total inventories, net $ 20,057 $ 13,559 The allowance for inventory obsolescence consists of the following (in thousands): September 30, September 30, 2021 2020 Balance at beginning of period $ (242) $ (169) Change in allowance for inventory obsolescence (3) (39) Balance at end of period $ (245) $ (208) |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses and other current liabilities consist of the following (in thousands): September 30, December 31, 2021 2020 Accrued vendor expenses $ 6,697 $ 5,409 Inventory received not billed 5,110 3,893 Accrued offering cost (a) 4,563 — Accrued payroll expenses 2,601 1,515 Sales and other tax payable accrual 1,949 2,455 Provision for sales returns and allowances 1,348 2,341 Other 2,490 1,348 Total accrued expenses and other current liabilities $ 24,758 $ 16,961 (a) Primarily includes attorney and consulting fees in support of the Company’s IPO, which, at the time of the IPO, were offset against the gross proceeds of the IPO within “Additional paid-in capital” on the condensed consolidated balance sheets. |
Schedule of Accrued Expenses And Other Current Liabilities Provision For Sales Returns | Included in accrued expenses and other current liabilities is a provision for sales returns and allowances. Returns are estimated based on past experience and current expectations and are recorded as an adjustment to revenue. Activity for the nine months ended September 30, 2021 and 2020 was as follows (in thousands): September 30, September 30, 2021 2020 Balance at beginning of period $ 2,341 $ 1,339 Provision 16,450 10,373 Returns and allowances (17,443) (10,993) Balance at end of period $ 1,348 $ 719 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments for Operating Leases | The aggregate future minimum lease payments under long-term non-cancelable operating leases as of September 30, 2021 are as follows (in thousands): Amount For the three months ending December 31, 2021 $ 660 Years ending December 31, 2022 3,502 2023 3,670 2024 3,518 2025 3,437 2026 3,090 Thereafter 7,112 Total minimum lease payments $ 24,989 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The following table summarizes the net carrying amount of the Term Loan (as defined below) as of September 30, 2021 and December 31, 2020, net of debt issuance costs (in thousands): September 30, 2021 December 31, 2020 Outstanding principal Debt issuance costs Net carrying amount Outstanding principal Debt issuance costs Net carrying amount Term loan $ 65,000 $ (1,766) $ 63,234 $ 65,000 $ (2,789) $ 62,211 Total debt $ 65,000 $ (1,766) $ 63,234 $ 65,000 $ (2,789) $ 62,211 Current portion $ 20,526 $ — $ 20,526 $ — $ — $ — Long term 44,474 (1,766) 42,708 65,000 (2,789) 62,211 Total debt $ 65,000 $ (1,766) $ 63,234 $ 65,000 $ (2,789) $ 62,211 |
Schedule of Maturities of Long-term Debt | As of September 30, 2021, the aggregate future principal payments under the Term Loan, including the Final Payment payable to the lender, are as follows (in thousands): Principal Final Total For the three months ending December 31, 2021 $ — $ — $ — Years ending December 31, 2022 30,789 — 30,789 2023 34,211 3,151 37,362 Total aggregate future principal payments $ 65,000 $ 3,151 $ 68,151 |
Stockholders' and Members' Eq_2
Stockholders' and Members' Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Schedule of Stock by Class | The following summarizes the capitalization and voting rights of the Company’s classes of equity as of September 30, 2021: Authorized Issued & Votes per Economic Preferred stock 10,000,000 None Common stock: Class A 1,200,000,000 9,583,332 1 Yes Class B 150,000,000 35,576,400 1 No Class C 150,000,000 49,505,250 10 No Class D 150,000,000 None 10 Yes Common stock reserved for issuances: Conversion of LLC Units 85,081,650 Vesting of LLC Units 2,011,643 RSUs 188,268 Stock options 1,618,064 Common LLC Units 85,081,650 No Yes |
Temporary Equity | The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from June 30, 2020 to September 30, 2020 and June 30, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Class F Units and Class M Units Balance, June 30, 2020 32,435,595 $ 58,940 50,232,863 $ (69,702) 2,416,148 $ 268 52,649,011 $ (69,434) Vested Class M Units — — — — 25,493 — 25,493 — Equity-based compensation — — — — — 7 — 7 Net income — — — 8,041 — — — 8,041 Adjustment of redeemable convertible preferred units to redemption value — 10,279 — (10,279) — — — (10,279) Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, June 30, 2021 32,435,595 $ 250,746 50,232,863 $ (277,830) 3,002,324 $ 488 53,235,187 $ (277,342) Tax distributions to members — (1,100) — (1,697) — — — (1,697) Vested Class M Units — — — — 91,913 — 91,913 — Equity-based compensation — — — — — 58 — 58 Net income — 1,214 — 1,893 — — — 1,893 Adjustment of redeemable convertible preferred units to redemption value — 138,367 — (138,367) — — — (138,367) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from January 1, 2020 to September 30, 2020 and January 1, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Total Amounts Balance, January 1, 2020 32,435,595 $ 80,829 50,232,863 $ (91,773) 2,362,944 $ 254 52,595,807 $ (91,519) Vested Class M Units — — — — 78,697 — 78,697 — Equity-based compensation — — — — — 21 — 21 Net income — — — 8,223 — — — 8,223 Adjustment of redeemable convertible preferred units to redemption value — (11,610) — 11,610 — — — 11,610 Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, January 1, 2021 32,435,595 $ 66,327 50,232,863 $ (85,695) 2,537,791 $ 300 52,770,654 $ (85,395) Tax distributions to members — (9,755) — (11,643) — — — (11,643) Vested Class M Units — — — — 556,446 — 556,446 — Equity-based compensation — — — — — 246 — 246 Net income prior to Reorganization Transactions and IPO — 5,466 — 8,526 — — — 8,526 Adjustment of redeemable convertible preferred units to redemption value — 327,189 — (327,189) — — — (327,189) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — |
Schedule of Stockholders Equity | The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from June 30, 2020 to September 30, 2020 and June 30, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Class F Units and Class M Units Balance, June 30, 2020 32,435,595 $ 58,940 50,232,863 $ (69,702) 2,416,148 $ 268 52,649,011 $ (69,434) Vested Class M Units — — — — 25,493 — 25,493 — Equity-based compensation — — — — — 7 — 7 Net income — — — 8,041 — — — 8,041 Adjustment of redeemable convertible preferred units to redemption value — 10,279 — (10,279) — — — (10,279) Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, June 30, 2021 32,435,595 $ 250,746 50,232,863 $ (277,830) 3,002,324 $ 488 53,235,187 $ (277,342) Tax distributions to members — (1,100) — (1,697) — — — (1,697) Vested Class M Units — — — — 91,913 — 91,913 — Equity-based compensation — — — — — 58 — 58 Net income — 1,214 — 1,893 — — — 1,893 Adjustment of redeemable convertible preferred units to redemption value — 138,367 — (138,367) — — — (138,367) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — The following presents the statement of changes in Class F, Class P, and Class M Units for the periods from January 1, 2020 to September 30, 2020 and January 1, 2021 to September 22, 2021: Brilliant Earth, LLC (prior to Reorganization Transactions) Class P Units Class F Units Class M Units Units Amounts Units Amounts Units Amounts Total Units Total Amounts Balance, January 1, 2020 32,435,595 $ 80,829 50,232,863 $ (91,773) 2,362,944 $ 254 52,595,807 $ (91,519) Vested Class M Units — — — — 78,697 — 78,697 — Equity-based compensation — — — — — 21 — 21 Net income — — — 8,223 — — — 8,223 Adjustment of redeemable convertible preferred units to redemption value — (11,610) — 11,610 — — — 11,610 Balance, September 30, 2020 32,435,595 $ 69,219 50,232,863 $ (71,940) 2,441,641 $ 275 52,674,504 $ (71,665) Balance, January 1, 2021 32,435,595 $ 66,327 50,232,863 $ (85,695) 2,537,791 $ 300 52,770,654 $ (85,395) Tax distributions to members — (9,755) — (11,643) — — — (11,643) Vested Class M Units — — — — 556,446 — 556,446 — Equity-based compensation — — — — — 246 — 246 Net income prior to Reorganization Transactions and IPO — 5,466 — 8,526 — — — 8,526 Adjustment of redeemable convertible preferred units to redemption value — 327,189 — (327,189) — — — (327,189) Reorganization Transactions (32,435,595) (389,227) (50,232,863) 416,001 (3,094,237) (546) (53,327,100) 415,455 Balance, September 22, 2021 after Reorganization Transactions — $ — — $ — — $ — — $ — |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Inputs to model for awards granted on September 22, 2021 are as follows: Expected volatility 35.0 % Expected dividend yield Nil Expected term (in years) 5 to 6.25 Years Risk free interest rate 0.9 % |
Schedule of Activity Related to the Unvested LLC Units | The following table summarizes the activity related to the unvested LLC Units for the nine months ended of each period: Number of LLC Units Weighted average Balance, January 1, 2020, unvested 636,408 $ 0.16 Granted 1,009,932 $ 0.30 Forfeited (63,919) $ 0.26 Vested (78,697) $ 0.27 Balance, September 30, 2020, unvested 1,503,724 $ 0.28 Number of LLC Units Weighted average Balance, January 1, 2021, unvested 1,485,946 $ 0.28 Granted 1,323,119 $ 0.68 Forfeited (206,611) $ 0.43 Vested (590,811) $ 0.47 Balance, September 30, 2021, unvested 2,011,643 $ 0.51 |
Business and Organization (Deta
Business and Organization (Details) $ / shares in Units, $ in Thousands | Sep. 30, 2021 | Sep. 27, 2021USD ($)$ / sharesshares | Sep. 22, 2021USD ($)shares | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | Sep. 23, 2021shares |
Concentration Risk [Line Items] | ||||||
Number of operating segments | segment | 1 | |||||
Number of reportable segments | segment | 1 | |||||
Payments of stock issuance costs | $ | $ 1,083 | $ 0 | ||||
Conversion ratio | 1.8588 | |||||
Tax benefit distributions to noncontrolling interest holders, percent | 85.00% | 85.00% | ||||
Class P Warrants | ||||||
Concentration Risk [Line Items] | ||||||
Warrant carrying value | $ | $ 6,400 | |||||
Conversion of convertible securities (in shares) | 534,589 | |||||
Class B Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Stock issued during period, shares, new issues (in shares) | 36,064,421 | |||||
Class C Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Stock issued during period, shares, new issues (in shares) | 50,232,863 | |||||
Class B And Class C Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Common stock, shares, cancelled (in shares) | 1,249,999 | |||||
Class F, P and M Units Converted Into Common LLC Units | ||||||
Concentration Risk [Line Items] | ||||||
Conversion of stock, shares issued (in shares) | 86,297,284 | |||||
Conversion ratio | 1.8588 | |||||
Class F Units Converted Into Common LLC Units | ||||||
Concentration Risk [Line Items] | ||||||
Conversion ratio | 1.8942 | |||||
Class P Units Converted Into Common LLC Units | ||||||
Concentration Risk [Line Items] | ||||||
Conversion ratio | 1.908 | |||||
Class M Units Converted Into Common LLC Units | ||||||
Concentration Risk [Line Items] | ||||||
Conversion ratio | 1.7735 | |||||
LLC Units Converted Into Class A And Class D Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Conversion ratio | 1 | 1 | 1 | |||
Brilliant Earth, LLC | ||||||
Concentration Risk [Line Items] | ||||||
Economic interest percent | 10.10% | |||||
Brilliant Earth, LLC | ||||||
Concentration Risk [Line Items] | ||||||
Noncontrolling interest, number of shares purchased (in shares) | 8,333,333 | |||||
Purchase of units from noncontrolling interest | $ | $ 93,500 | |||||
Brilliant Earth, LLC | Member Units | ||||||
Concentration Risk [Line Items] | ||||||
Noncontrolling interest, number of shares purchased (in shares) | 8,333,333 | |||||
Continuing Equity Owners | ||||||
Concentration Risk [Line Items] | ||||||
Noncontrolling interest, number of shares purchased (in shares) | 1,249,999 | |||||
Purchase of units from noncontrolling interest | $ | $ 14,000 | |||||
Continuing Equity Owners | Class B Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Stock redeemed (in shares) | 522,386 | |||||
Continuing Equity Owners | Class C Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Stock redeemed (in shares) | 727,613 | |||||
Continuing Equity Owners | Member Units | ||||||
Concentration Risk [Line Items] | ||||||
Noncontrolling interest, number of shares purchased (in shares) | 1,249,999 | |||||
IPO | ||||||
Concentration Risk [Line Items] | ||||||
Payments of stock issuance costs | $ | $ 13,100 | |||||
Sale of stock, price per share net of underwriting discount (in dollars per share) | $ / shares | $ 11.22 | |||||
IPO | Class A Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Number of shares issued in transaction (in shares) | 9,583,332 | |||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 12 | |||||
Consideration received on transaction | $ | $ 101,900 | |||||
Over-Allotment Option | Class A Common Stock | ||||||
Concentration Risk [Line Items] | ||||||
Number of shares issued in transaction (in shares) | 1,249,999 | |||||
Revenue from Contract with Customer Benchmark | Geographic Concentration Risk | United States | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 90.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 23, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | |
Noncontrolling Interest [Line Items] | ||||||||
Fair value of units | $ 389,200 | |||||||
Return period | 30 days | |||||||
Resizing period | 60 days | |||||||
Extended service plan period | 3 years | |||||||
Deferred revenue | $ 22,100 | $ 22,100 | $ 11,000 | |||||
Revenue recognized | 18,800 | $ 14,600 | 10,300 | $ 7,200 | ||||
Refund liability | 1,348 | 719 | 1,348 | 719 | 2,341 | $ 1,339 | ||
Refund assets | 700 | 700 | $ 1,200 | |||||
Marketing, advertising and promotional costs | $ 18,500 | $ 11,300 | $ 49,200 | $ 31,600 | ||||
Class P Warrants | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Warrant liability, fair value | $ 6,400 | $ 83 | ||||||
Brilliant Earth, LLC | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Noncontrolling interest, ownership percentage | 89.90% | 89.90% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 161,087 | $ 66,269 | $ 57,712 | |
Restricted cash | 205 | 205 | 204 | |
Total | $ 161,292 | $ 66,474 | $ 57,916 | $ 40,598 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Total net sales | $ 95,239 | $ 71,445 | $ 258,283 | $ 163,209 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | 87,540 | 65,444 | 239,534 | 150,648 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net sales | $ 7,699 | $ 6,001 | $ 18,749 | $ 12,561 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2021 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net income attributable to Brilliant Earth Group, Inc., BASIC | $ 66 | $ 66 | $ 66 |
Add: Net income impact from assumed redemption of all LLC Units to common stock | $ 789 | $ 3,896 | $ 14,781 |
Effective tax rate, federal and state | 25.70% | ||
Less: Income tax expense on net income attributable to NCI at 25.7% | $ (203) | ||
Net income attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED | $ 652 | ||
Weighted average shares of common stock outstanding, BASIC (in shares) | 9,583,332 | ||
Weighted average Class A common stock assumed outstanding, diluted (in shares) | 96,621,427 | ||
BASIC earnings per share (in dollars per share) | $ 0.01 | ||
DILUTED earnings per share (in dollars per share) | $ 0.01 | ||
LLC Units that are exchangeable for common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Dilutive effects (in shares) | 85,051,581 | ||
Unvested LLC Units, RSUs and stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Dilutive effects (in shares) | 1,986,514 | ||
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded (in shares) | 1,618,064 |
Inventories, Net - Schedule of
Inventories, Net - Schedule of Inventories, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory [Line Items] | ||||
Allowance for inventory obsolescence | $ (245) | $ (242) | $ (208) | $ (169) |
Total inventories, net | 20,057 | 13,559 | ||
Loose diamonds | ||||
Inventory [Line Items] | ||||
Inventory, gross | 7,915 | 4,938 | ||
Fine jewelry and other | ||||
Inventory [Line Items] | ||||
Inventory, gross | $ 12,387 | $ 8,863 |
Inventories, Net - Allowance fo
Inventories, Net - Allowance for Inventory Obsolescence (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Inventory Valuation Reserves [Roll Forward] | ||||
Balance at beginning of period | $ (242) | $ (169) | ||
Change in allowance for inventory obsolescence | $ (27) | $ (25) | (3) | (39) |
Balance at end of period | $ (245) | $ (208) | $ (245) | $ (208) |
Inventories, Net - Narratives (
Inventories, Net - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |||||
Change in allowance for inventory obsolescence | $ 27 | $ 25 | $ 3 | $ 39 | |
Consigned inventory | $ 15,300 | $ 15,300 | $ 11,700 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Accrued Expenses And Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||||
Accrued vendor expenses | $ 6,697 | $ 5,409 | ||
Inventory received not billed | 5,110 | 3,893 | ||
Accrued offering costs | 4,563 | 0 | ||
Accrued payroll expenses | 2,601 | 1,515 | ||
Sales and other tax payable accrual | 1,949 | 2,455 | ||
Provision for sales returns and allowances | 1,348 | 2,341 | $ 719 | $ 1,339 |
Other | 2,490 | 1,348 | ||
Total accrued expenses and other current liabilities | $ 24,758 | $ 16,961 |
Accrued Expenses and Other Cu_4
Accrued Expenses and Other Current Liabilities - Accrued Expenses and Other Current Liabilities is a Provision For Sales Returns (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Contract with Customer, Refund Liability [Roll Forward] | ||
Balance at beginning of period | $ 2,341 | $ 1,339 |
Provision | 16,450 | 10,373 |
Returns and allowances | (17,443) | (10,993) |
Balance at end of period | $ 1,348 | $ 2,341 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)location | Sep. 30, 2020USD ($) | |
Leases [Abstract] | ||||
Number of locations | location | 9 | |||
Total operating lease expense | $ | $ 1.1 | $ 0.6 | $ 2.3 | $ 1.6 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments Under Long-term Non-cancelable Operating Leases (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Leases [Abstract] | |
Remainder of fiscal year | $ 660 |
2022 | 3,502 |
2023 | 3,670 |
2024 | 3,518 |
2025 | 3,437 |
2026 | 3,090 |
Thereafter | 7,112 |
Total minimum lease payments | $ 24,989 |
Long-Term Debt -Term Loan (Deta
Long-Term Debt -Term Loan (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2019 |
Debt Instrument [Line Items] | |||
Outstanding principal | $ 65,000 | $ 65,000 | |
Debt issuance costs | (1,766) | (2,789) | |
Net carrying amount | 63,234 | 62,211 | |
Current portion | 20,526 | 0 | |
Long term outstanding principal | 44,474 | 65,000 | |
Long term net carrying amount | 42,708 | 62,211 | |
Secured Debt | Term Loan Agreement | |||
Debt Instrument [Line Items] | |||
Outstanding principal | 65,000 | 65,000 | |
Debt issuance costs | (1,766) | (2,789) | $ (2,600) |
Net carrying amount | $ 63,234 | $ 62,211 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | Sep. 22, 2021 | Aug. 29, 2021 | Aug. 28, 2021 | Dec. 17, 2020 | Sep. 30, 2019 | Dec. 31, 2020 | Apr. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 23, 2021 | Dec. 16, 2020 |
Debt Instrument [Line Items] | |||||||||||
Debt issuance costs | $ 2,789,000 | $ 1,766,000 | |||||||||
Final payment | 3,151,000 | ||||||||||
Borrowings from PPP loan | 0 | $ 2,657,000 | |||||||||
Class P Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of securities called by warrants (in shares) | 333,333 | ||||||||||
Warrant liability, fair value | $ 83,000 | $ 6,400,000 | |||||||||
Warrant carrying value | $ 6,400,000 | ||||||||||
Conversion of convertible securities (in shares) | 534,589 | ||||||||||
First Amendment Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Warrant liability, fair value | $ 250 | ||||||||||
Warrants issued (in shares) | 25,000 | ||||||||||
Exercise price of warrants (in dollars per share) | $ 10 | ||||||||||
Warrant term | 10 years | ||||||||||
Term Loan Agreement | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, face amount | $ 65,000,000 | 40,000,000 | |||||||||
Debt issuance costs | 2,600,000 | 2,789,000 | $ 1,766,000 | ||||||||
Final payment | $ 1,600,000 | ||||||||||
Interest rate, effective percentage | 9.25% | 10.40% | |||||||||
Interest only period extension | 6 months | ||||||||||
Prepayment term extension | 6 months | ||||||||||
Final payment modification, principal | $ 1,400,000 | ||||||||||
Final payment modification, debt issuance costs | $ 200,000 | ||||||||||
Interest rate during period | 11.90% | 13.22% | |||||||||
Term Loan Agreement | Secured Debt | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Prepayment fee, percent | 3.00% | ||||||||||
Term Loan Agreement | Secured Debt | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Prepayment fee, percent | 0.00% | ||||||||||
Term Loan Agreement | Secured Debt | London Interbank Offered Rate (LIBOR) | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Floor interest rate | 2.15% | ||||||||||
Basis spread on variable rate | 7.75% | 8.25% | 8.25% | ||||||||
Variable rate floor | 0.50% | 1.00% | 1.00% | 2.15% | |||||||
First Tranche Term Loan | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, face amount | $ 35,000,000 | ||||||||||
Second Tranche Term Loan | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, face amount | $ 30,000,000 | $ 5,000,000 | $ 5,000,000 | ||||||||
Debt issuance costs | $ 300,000 | ||||||||||
Maximum distribution period | 90 days | ||||||||||
PPP Loan | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Borrowings from PPP loan | $ 2,700,000 | ||||||||||
Interest rate, stated percentage | 1.00% | ||||||||||
Interest expense, debt | $ 18,000 |
Long-Term Debt - Debt Maturity
Long-Term Debt - Debt Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Remainder of fiscal year | $ 0 | |
2022 | 30,789 | |
2023 | 34,211 | |
Outstanding principal | 65,000 | $ 65,000 |
Final payment | 3,151 | |
Remainder of fiscal year | 0 | |
2022 | 30,789 | |
2023 | 37,362 | |
Total aggregate future principal payments | $ 68,151 |
Stockholders' and Members' Eq_3
Stockholders' and Members' Equity - Schedule of Capitalization (Details) | Sep. 30, 2021voteshares | Sep. 27, 2021shares | Sep. 22, 2021shares | Jun. 30, 2021shares | Dec. 31, 2020shares | Sep. 30, 2020shares | Jun. 30, 2020shares | Dec. 31, 2019shares |
Class of Stock [Line Items] | ||||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | |||||||
Preferred stock, shares issued (in shares) | 0 | |||||||
Preferred stock, shares outstanding (in shares) | 0 | |||||||
Common LLC Units issued (in shares) | 85,081,650 | |||||||
Common LLC Units outstanding (in shares) | 85,081,650 | 0 | 53,235,187 | 52,770,654 | 52,674,504 | 52,649,011 | 52,595,807 | |
Conversion of LLC Units | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 85,081,650 | |||||||
Vesting of LLC Units | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 2,011,643 | |||||||
RSUs | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 188,268 | |||||||
Stock options | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 1,618,064 | |||||||
Class A Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, shares authorized (in shares) | 1,200,000,000 | |||||||
Common stock, shares issued (in shares) | 9,583,332 | |||||||
Common stock, shares outstanding (in shares) | 9,583,332 | |||||||
Votes per share | vote | 1 | |||||||
Class B Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, shares authorized (in shares) | 150,000,000 | |||||||
Common stock, shares issued (in shares) | 35,576,400 | |||||||
Common stock, shares outstanding (in shares) | 35,576,400 | |||||||
Votes per share | vote | 1 | |||||||
Class C Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, shares authorized (in shares) | 150,000,000 | |||||||
Common stock, shares issued (in shares) | 49,505,250 | 50,232,863 | ||||||
Common stock, shares outstanding (in shares) | 49,505,250 | |||||||
Votes per share | vote | 10 | |||||||
Class D Common Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, shares authorized (in shares) | 150,000,000 | |||||||
Common stock, shares issued (in shares) | 0 | |||||||
Common stock, shares outstanding (in shares) | 0 | |||||||
Votes per share | vote | 10 |
Stockholders' and Members' Eq_4
Stockholders' and Members' Equity - Narrative (Details) | Sep. 30, 2021shares | Sep. 30, 2021shares | Sep. 27, 2021shares | Sep. 22, 2021USD ($) | Sep. 30, 2021USD ($)shares | Sep. 22, 2021USD ($)shares | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)shares | Sep. 22, 2021USD ($)shares | Sep. 30, 2020USD ($) | Sep. 23, 2021 |
Class of Stock [Line Items] | |||||||||||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | 0 | |||||||
Reorganization Transactions (in shares) | (53,327,100) | (53,327,100) | |||||||||
Conversion ratio | 1.8588 | ||||||||||
Stock options exercised (in shares) | 0 | ||||||||||
Tax distributions to members | $ | $ 2,800,000 | $ 0 | $ 21,398,000 | $ 0 | |||||||
Temporary equity, redemption | $ | $ 389,200,000 | 389,227,000 | $ 389,227,000 | 389,227,000 | $ 389,227,000 | ||||||
Adjustment of redeemable convertible preferred units to redemption value | $ | $ 138,367,000 | $ 138,367,000 | $ 10,279,000 | $ 327,189,000 | $ 327,189,000 | $ (11,610,000) | |||||
RSUs | |||||||||||
Class of Stock [Line Items] | |||||||||||
Vested (in shares) | 0 | ||||||||||
Class B Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 34,365 | ||||||||||
Brilliant Earth, LLC | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock issued during period, shares, new issues (in shares) | 9,583,332 | ||||||||||
LLC Units Converted Into Class A And Class D Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion ratio | 1 | 1 | 1 | 1 | 1 | ||||||
Brilliant Earth, LLC | |||||||||||
Class of Stock [Line Items] | |||||||||||
Economic interest percent | 10.10% | ||||||||||
Noncontrolling interest, ownership percentage | 89.90% | 89.90% | 89.90% | 89.90% | |||||||
Class A Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Ratio of common Stock held to number of LLC interests held | 1 | 1 | 1 | 1 | |||||||
Common stock, shares issued (in shares) | 9,583,332 | 9,583,332 | 9,583,332 | 9,583,332 | |||||||
Common stock, shares outstanding (in shares) | 9,583,332 | 9,583,332 | 9,583,332 | 9,583,332 | |||||||
Class A Common Stock | IPO Investors | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares issued (in shares) | 9,583,332 | 9,583,332 | 9,583,332 | 9,583,332 | |||||||
Common Class B And Class C | |||||||||||
Class of Stock [Line Items] | |||||||||||
Ratio of common Stock held to number of LLC interests held | 1 | 1 | 1 | 1 | |||||||
Common stock, shares issued (in shares) | 85,081,650 | 85,081,650 | 85,081,650 | 85,081,650 | |||||||
Class B Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares issued (in shares) | 35,576,400 | 35,576,400 | 35,576,400 | 35,576,400 | |||||||
Common stock, shares outstanding (in shares) | 35,576,400 | 35,576,400 | 35,576,400 | 35,576,400 | |||||||
Stock issued during period, shares, new issues (in shares) | 36,064,421 | ||||||||||
Class B Common Stock | Continuing Equity Owners | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares issued (in shares) | 35,576,400 | 35,576,400 | 36,064,421 | 35,576,400 | 35,576,400 | ||||||
Stock redeemed (in shares) | 522,386 | ||||||||||
Class C Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares issued (in shares) | 49,505,250 | 49,505,250 | 50,232,863 | 49,505,250 | 49,505,250 | ||||||
Common stock, shares outstanding (in shares) | 49,505,250 | 49,505,250 | 49,505,250 | 49,505,250 | |||||||
Stock issued during period, shares, new issues (in shares) | 50,232,863 | ||||||||||
Class C Common Stock | Continuing Equity Owners | |||||||||||
Class of Stock [Line Items] | |||||||||||
Stock redeemed (in shares) | 727,613 | ||||||||||
Class C Common Stock | Founders | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares issued (in shares) | 49,505,250 | 49,505,250 | 49,505,250 | 49,505,250 | |||||||
Class D Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, shares issued (in shares) | 0 | 0 | 0 | 0 | |||||||
Common stock, shares outstanding (in shares) | 0 | 0 | 0 | 0 |
Stockholders' and Members' Eq_5
Stockholders' and Members' Equity - Change in Units Prior to Reorganization (Details) - USD ($) $ in Thousands | Sep. 22, 2021 | Sep. 30, 2021 | Sep. 22, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 22, 2021 | Sep. 30, 2020 |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Class P Units, beginning balance (in shares) | 32,435,595 | 32,435,595 | 32,435,595 | 32,435,595 | 32,435,595 | 32,435,595 | |
Class P Units, beginning balance | $ 250,746 | $ 250,746 | $ 58,940 | $ 66,327 | $ 66,327 | $ 80,829 | |
Tax distributions to members | (1,100) | (1,100) | (9,755) | (9,755) | |||
Net income | 1,214 | 1,214 | 5,466 | 5,466 | |||
Adjustment of redeemable convertible preferred units to redemption value | $ 138,367 | $ 138,367 | $ 10,279 | $ 327,189 | $ 327,189 | $ (11,610) | |
Reorganization Transactions (in shares) | (32,435,595) | (32,435,595) | (32,435,595) | (32,435,595) | |||
Reorganization Transactions | $ (389,200) | $ (389,227) | $ (389,227) | $ (389,227) | $ (389,227) | ||
Class P Units, ending balance (in shares) | 0 | 0 | 32,435,595 | 0 | 32,435,595 | ||
Class P Units, ending balance | $ 0 | $ 0 | $ 69,219 | $ 0 | $ 69,219 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Units, beginning balance (in shares) | 53,235,187 | 53,235,187 | 52,649,011 | 52,770,654 | 52,770,654 | 52,595,807 | |
Units, beginning balance | $ (277,342) | $ (277,342) | $ (69,434) | $ (85,395) | $ (85,395) | $ (91,519) | |
Tax distributions to members | (1,697) | $ (1,697) | (11,643) | $ (11,643) | |||
Vested Class M Units (in shares) | 91,913 | 25,493 | 556,446 | 78,697 | |||
Equity-based compensation | 58 | $ 58 | $ 7 | 246 | $ 246 | $ 21 | |
Net income | 3,962 | 1,893 | 8,041 | 14,847 | 8,526 | 8,223 | |
Adjustment of redeemable convertible preferred units to redemption value | (138,367) | $ (138,367) | $ (10,279) | (327,189) | $ (327,189) | $ 11,610 | |
Reorganization Transactions (in shares) | (53,327,100) | (53,327,100) | |||||
Reorganization Transactions | $ 395,651 | $ 415,455 | $ 395,651 | $ 415,455 | |||
Units, ending balance (in shares) | 0 | 85,081,650 | 0 | 52,674,504 | 85,081,650 | 0 | 52,674,504 |
Units, ending balance | $ 0 | $ 0 | $ (71,665) | $ 0 | $ (71,665) | ||
Member Units | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Units, beginning balance (in shares) | 53,235,187 | 53,235,187 | 52,649,011 | 52,770,654 | 52,770,654 | 52,595,807 | |
Units, beginning balance | $ (277,342) | $ (277,342) | $ (69,434) | $ (85,395) | $ (85,395) | $ (91,519) | |
Tax distributions to members | $ (1,697) | $ (11,643) | |||||
Vested Class M Units (in shares) | 91,913 | 25,493 | 556,446 | 78,697 | |||
Equity-based compensation | $ 58 | $ 7 | $ 246 | $ 21 | |||
Net income | 8,041 | 8,223 | |||||
Adjustment of redeemable convertible preferred units to redemption value | $ (138,367) | $ (10,279) | $ (327,189) | $ 11,610 | |||
Reorganization Transactions (in shares) | (53,327,100) | (53,327,100) | |||||
Reorganization Transactions | $ 415,455 | $ 415,455 | |||||
Units, ending balance (in shares) | 52,674,504 | 52,674,504 | |||||
Units, ending balance | $ (71,665) | $ (71,665) | |||||
Class F Units | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Units, beginning balance (in shares) | 50,232,863 | 50,232,863 | |||||
Class F Units | Member Units | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Units, beginning balance (in shares) | 50,232,863 | 50,232,863 | 50,232,863 | 50,232,863 | 50,232,863 | 50,232,863 | |
Units, beginning balance | $ (277,830) | $ (277,830) | $ (69,702) | $ (85,695) | $ (85,695) | $ (91,773) | |
Tax distributions to members | (1,697) | (11,643) | |||||
Net income | 1,893 | 8,041 | 8,526 | 8,223 | |||
Adjustment of redeemable convertible preferred units to redemption value | $ (138,367) | $ (10,279) | $ (327,189) | $ 11,610 | |||
Reorganization Transactions (in shares) | (50,232,863) | (50,232,863) | |||||
Reorganization Transactions | $ 416,001 | $ 416,001 | |||||
Units, ending balance (in shares) | 0 | 0 | 50,232,863 | 0 | 50,232,863 | ||
Units, ending balance | $ 0 | $ 0 | $ (71,940) | $ 0 | $ (71,940) | ||
Class M Units | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Units, ending balance (in shares) | 2,537,791 | 2,537,791 | |||||
Class M Units | Member Units | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Units, beginning balance (in shares) | 3,002,324 | 3,002,324 | 2,416,148 | 2,537,791 | 2,537,791 | 2,362,944 | |
Units, beginning balance | $ 488 | $ 488 | $ 268 | $ 300 | $ 300 | $ 254 | |
Vested Class M Units (in shares) | 91,913 | 25,493 | 556,446 | 78,697 | |||
Equity-based compensation | $ 58 | $ 7 | $ 246 | $ 21 | |||
Reorganization Transactions (in shares) | (3,094,237) | (3,094,237) | |||||
Reorganization Transactions | $ (546) | $ (546) | |||||
Units, ending balance (in shares) | 0 | 0 | 2,441,641 | 0 | 2,441,641 | ||
Units, ending balance | $ 0 | $ 0 | $ 275 | $ 0 | $ 275 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) $ / shares in Units, $ in Thousands | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 23, 2021shares | Sep. 22, 2021$ / sharesshares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2020$ / sharesshares | Dec. 31, 2019$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Conversion ratio | 1.8588 | |||||||||
Options, grants in period (in shares) | 1,618,064 | |||||||||
Strike price (in dollars per share) | $ / shares | $ 12 | |||||||||
Options exercisable (in shares) | 131,523 | 131,523 | 131,523 | 131,523 | ||||||
Options, exercisable, intrinsic value | $ | $ 200 | $ 200 | $ 200 | $ 200 | ||||||
Weighted average remaining contractual term | 10 years | |||||||||
Options, outstanding, intrinsic value | $ | 2,300 | $ 2,300 | 2,300 | 2,300 | ||||||
Option, cost not yet recognized | $ | $ 6,300 | $ 6,300 | $ 6,300 | $ 6,300 | ||||||
Class M Units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Unvested units (in shares) | 2,006,212 | |||||||||
Class M Units | Share-based Payment Arrangement, Tranche One | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights, percentage | 25.00% | |||||||||
Class M Units | Share-based Payment Arrangement, Tranche Two | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting period | 3 years | |||||||||
LLC Units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting period | 4 years | |||||||||
Unvested units (in shares) | 2,011,643 | 2,011,643 | 2,046,008 | 2,011,643 | 1,503,724 | 2,011,643 | 1,503,724 | 1,485,946 | 636,408 | |
Grants in period (in shares) | 1,323,119 | 1,009,932 | ||||||||
Fair value per unit (in dollars per share) | $ / shares | $ 0.51 | $ 0.51 | $ 0.51 | $ 0.28 | $ 0.51 | $ 0.28 | $ 0.28 | $ 0.16 | ||
Share-based compensation expense | $ | $ 100 | $ 7 | $ 300 | $ 21 | ||||||
Unamortized compensation cost | $ | $ 900 | $ 900 | $ 900 | $ 900 | ||||||
Cost not yet recognized, period for recognition | 3 years 2 months 12 days | |||||||||
RSUs | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Common stock reserved for issuances (in shares) | 188,268 | 188,268 | 188,268 | 188,268 | ||||||
Grants in period (in shares) | 188,268 | |||||||||
Fair value per unit (in dollars per share) | $ / shares | $ 12 | $ 12 | $ 12 | $ 12 | ||||||
Share-based compensation expense | $ | $ 36 | |||||||||
Unamortized compensation cost | $ | $ 2,200 | $ 2,200 | $ 2,200 | $ 2,200 | ||||||
Cost not yet recognized, period for recognition | 3 years 4 months 24 days | |||||||||
RSUs | Share-based Payment Arrangement, Tranche One | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting rights, percentage | 25.00% | |||||||||
RSUs | Share-based Payment Arrangement, Tranche Two | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Award vesting period | 3 years | |||||||||
Stock options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Common stock reserved for issuances (in shares) | 1,618,064 | 1,618,064 | 1,618,064 | 1,618,064 | ||||||
Award vesting period | 4 years | |||||||||
Share-based compensation expense | $ | $ 600 | |||||||||
Cost not yet recognized, period for recognition | 3 years 4 months 24 days | |||||||||
Expiration period | 10 years | |||||||||
2021 Incentive Award Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Common stock reserved for issuances (in shares) | 10,923,912 | |||||||||
Increase in number of shares available for grant, percentage of shares outstanding | 5.00% | |||||||||
Maximum shares issued upon exercise (in shares) | 81,929,342 | |||||||||
Number of shares available for grant (in shares) | 9,117,580 | 9,117,580 | 9,117,580 | 9,117,580 | ||||||
2021 Incentive Award Plan | ESPP | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Common stock reserved for issuances (in shares) | 1,638,586 |
Equity-Based Compensation - Val
Equity-Based Compensation - Valuation Assumptions (Details) - Stock options | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 35.00% |
Expected dividend yield | 0.00% |
Risk free interest rate | 0.90% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 5 years |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 years 3 months |
Equity-Based Compensation - LLC
Equity-Based Compensation - LLC Unit Activity (Details) - LLC Units - $ / shares | Sep. 23, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Number of LLC Units | |||
Unvested, beginning balance (in shares) | 1,485,946 | 636,408 | |
Granted (in shares) | 1,323,119 | 1,009,932 | |
Forfeited (in shares) | (206,611) | (63,919) | |
Vested (in shares) | (590,811) | (78,697) | |
Unvested, ending balance (in shares) | 2,046,008 | 2,011,643 | 1,503,724 |
Weighted average grant date fair value | |||
Unvested beginning balance (in dollars per share) | $ 0.28 | $ 0.16 | |
Granted (in dollars per share) | 0.68 | 0.30 | |
Forfeited (in dollars per share) | 0.43 | 0.26 | |
Vested (in dollars per share) | 0.47 | 0.27 | |
Unvested ending balance (in dollars per share) | $ 0.51 | $ 0.28 |
Income Taxes and Tax Receivab_2
Income Taxes and Tax Receivable Agreement (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2021 | Sep. 27, 2021 | Sep. 23, 2021 |
Income Tax Contingency [Line Items] | ||||||||
Effective tax rate, federal and state | 25.70% | |||||||
Income tax expense | $ 23 | $ 23 | $ 0 | $ 23 | $ 0 | |||
Deferred tax assets related to tax receivable agreement | $ 4,400 | |||||||
Tax benefit distributions to noncontrolling interest holders, percent | 85.00% | 85.00% | ||||||
Tax receivable agreement liability | $ 3,900 | |||||||
Tax receivable agreement, recognition in additional-paid-in-capital | $ 500 | |||||||
Continuing Equity Owners | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Noncontrolling interest, number of shares purchased (in shares) | 1,249,999 | |||||||
Brilliant Earth, LLC | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Noncontrolling interest, number of shares purchased (in shares) | 8,333,333 | |||||||
Forecast | ||||||||
Income Tax Contingency [Line Items] | ||||||||
Effective tax rate | 25.70% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Long-term Purchase Commitment [Line Items] | ||||
Purchase obligation, total | $ 2.5 | $ 2.5 | ||
Purchase obligation, remainder of fiscal year | 1 | 1 | ||
Purchase obligation, year one | 1.3 | 1.3 | ||
Purchase obligation, year two | 0.1 | 0.1 | ||
Purchase obligation, year three | 0.1 | 0.1 | ||
Letter of credit | 0.2 | 0.2 | ||
Defined contribution plan, cost | $ 0.1 | $ 0.1 | 0.4 | $ 0.3 |
Capital Addition Purchase Commitments | ||||
Long-term Purchase Commitment [Line Items] | ||||
Capital commitment | $ 0.6 |
Subsequent Events (Details)
Subsequent Events (Details) - RSUs - $ / shares | Nov. 02, 2021 | Sep. 23, 2021 | Sep. 30, 2021 |
Subsequent Event [Line Items] | |||
Grants in period (in shares) | 188,268 | ||
Fair value per unit (in dollars per share) | $ 12 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Grants in period (in shares) | 1,300,000 | ||
Fair value per unit (in dollars per share) | $ 13.32 | ||
Award vesting period | 4 years |