Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 14, 2023 | Jun. 30, 2022 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 51.2 | ||
Documents Incorporated by Reference | Specifically identified portions of the registrant’s definitive proxy statement for the 2023 annual meeting of stockholders, which will be filed no later than 120 days after the end of the registrant’s fiscal year ended December 31, 2022, are incorporated by reference into Part III of this Annual Report on Form 10-K. | ||
Entity Central Index Key | 0001866757 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class A Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 11,566,635 | ||
Class B Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 35,492,492 | ||
Class C Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 49,119,976 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Auditor [Abstract] | |
Auditor Firm Name | BDO USA, LLP |
Auditor Location | Denver, Colorado |
Auditor Firm ID | 243 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 154,649 | $ 172,865 |
Restricted cash | 205 | 205 |
Inventories, net | 39,331 | 24,743 |
Prepaid expenses and other current assets | 11,764 | 8,178 |
Total current assets | 205,949 | 205,991 |
Property and equipment, net | 16,554 | 6,732 |
Deferred tax assets | 8,948 | 4,407 |
Operating lease right of use assets | 27,812 | 0 |
Other assets | 3,311 | 601 |
Total assets | 262,574 | 217,731 |
Current liabilities: | ||
Accounts payable | 11,032 | 14,480 |
Accrued expenses and other current liabilities | 37,833 | 28,756 |
Current portion of deferred revenue | 18,505 | 18,818 |
Current portion of operating lease liabilities | 3,873 | 0 |
Current portion of long-term debt | 3,250 | 30,789 |
Total current liabilities | 74,493 | 92,843 |
Long-term debt, net of debt issuance costs | 59,462 | 32,789 |
Operating Lease, Liability, Noncurrent | 28,537 | 0 |
Deferred rent | 0 | 2,507 |
Payable pursuant to the Tax Receivable Agreement | 6,893 | 3,775 |
Other long-term liabilities | 48 | 2,979 |
Total liabilities | 169,433 | 134,893 |
Commitments and contingencies (Note 12) | ||
Equity | ||
Preferred stock, $0.0001 par value per share, 10,000,000 shares authorized, none issued and outstanding at December 31, 2022 and 2021, respectively | 0 | 0 |
Additional paid-in capital | 7,256 | 6,865 |
Retained earnings | 3,663 | 1,528 |
Equity attributable to Brilliant Earth Group, Inc. | 10,929 | 8,403 |
NCI attributable to Brilliant Earth, LLC | 82,212 | 74,435 |
Total equity | 93,141 | 82,838 |
Total liabilities and equity | 262,574 | 217,731 |
Class A Common Stock | ||
Equity | ||
Common stock, value, issued | $ 1 | $ 1 |
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Class B Common Stock | ||
Equity | ||
Common stock, value, issued | $ 4 | $ 4 |
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Class C Common Stock | ||
Equity | ||
Common stock, value, issued | $ 5 | $ 5 |
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Class D Common Stock | ||
Equity | ||
Common stock, value, issued | $ 0 | $ 0 |
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 |
Common stock, shares issued (in shares) | 11,246,694 | 9,614,523 |
Common stock, shares outstanding (in shares) | 11,246,694 | 9,614,523 |
Class B Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 35,482,534 | 35,658,013 |
Common stock, shares outstanding (in shares) | 35,482,534 | 35,658,013 |
Class C Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 49,119,976 | 49,505,250 |
Common stock, shares outstanding (in shares) | 49,119,976 | 49,505,250 |
Class D Common Stock | ||
Common stock, par or stated value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Net sales | $ 439,882 | $ 380,189 | $ 251,820 |
Cost of sales | 205,591 | 192,768 | 139,518 |
Gross profit | 234,291 | 187,421 | 112,302 |
Operating expenses: | |||
Selling, general and administrative | 210,964 | 147,291 | 85,710 |
Income from operations | 23,327 | 40,130 | 26,592 |
Interest expense | (4,658) | (7,589) | (4,942) |
Other income (expense), net | 805 | (6,601) | (74) |
Loss on extinguishment of debt | (617) | 0 | 0 |
Income before tax | 18,857 | 25,940 | 21,576 |
Income tax benefit | 168 | 316 | 0 |
Net income | 19,025 | 26,256 | $ 21,576 |
Net income allocable to non-controlling interest | 16,890 | 24,728 | |
Net income allocable to Brilliant Earth Group, Inc. | $ 2,135 | $ 1,528 | |
Earnings per share: | |||
Basic (in dollars per share) | $ 0.20 | ||
Diluted (in dollars per share) | $ 0.15 | ||
Weighted average shares of common stock outstanding: | |||
Basic (in shares) | 10,687,732 | ||
Diluted (in shares) | 96,505,325 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED UNITS AND EQUITY / MEMBERS' (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 Stock Common Stock | Class B Common Stock | Class B Common Stock Common Stock | Class C Common Stock | Class C Common Stock Common 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] | ||||||||||||
Special distribution to members | (10,000) | |||||||||||
Net income | 3,997 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ (8,499) | |||||||||||
Class P Units, ending balance (in shares) at Dec. 31, 2020 | 32,435,595 | |||||||||||
Class P Units, ending balance at Dec. 31, 2020 | $ 66,327 | |||||||||||
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] | ||||||||||||
Special distribution to members | $ (20,000) | $ (20,000) | ||||||||||
Vested Class M Units (in shares) | 174,847 | 174,847 | ||||||||||
Equity-based compensation | $ 46 | $ 46 | ||||||||||
Net income | 17,579 | 17,579 | ||||||||||
Adjustment of redeemable convertible preferred units to redemption value | $ 8,499 | $ 8,499 | ||||||||||
Units, ending balance (in shares) at Dec. 31, 2020 | 52,770,654 | 52,770,654 | ||||||||||
Units, ending balance at Dec. 31, 2020 | $ (85,395) | $ (85,395) | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Net income | 5,466 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | 327,189 | |||||||||||
Tax distributions to members prior to the Reorganization Transactions and IPO | $ (9,755) | |||||||||||
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 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
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 | |||||||||||
Tax distributions to members subsequent to the Reorganization Transactions and IPO | $ (11,643) | |||||||||||
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] | ||||||||||||
Net income | 5,466 | |||||||||||
Adjustment of redeemable convertible preferred units to redemption value | 327,189 | |||||||||||
Tax distributions to members prior to the Reorganization Transactions and IPO | $ (9,755) | |||||||||||
Reorganization Transactions (in shares) | (32,435,595) | |||||||||||
Reorganization Transactions | $ (389,227) | |||||||||||
Class P Units, ending balance (in shares) at Dec. 31, 2021 | 0 | |||||||||||
Class P Units, ending balance at Dec. 31, 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] | ||||||||||||
Vested Class M Units (in shares) | 556,446 | |||||||||||
Equity-based compensation | 246 | $ 246 | ||||||||||
Adjustment of redeemable convertible preferred units to redemption value | (327,189) | (327,189) | ||||||||||
Tax distributions to members prior to the Reorganization Transactions and IPO | (11,643) | (11,643) | ||||||||||
Net income prior to the Reorganization Transactions and IPO | 8,526 | $ 8,526 | ||||||||||
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 | 87,556 | $ 4,099 | 4,100 | 83,456 | $ 1 | |||||||
Increase in deferred tax asset from step-up tax basis related to redemption of LLC Units and set-up of TRA liability | 316 | 316 | 316 | |||||||||
Conversion of convertible securities (in shares) | 28,053 | (28,053) | ||||||||||
RSU vesting during period, net of shares withheld for payroll taxes | 3,138 | |||||||||||
Class B shares issued upon vesting of LLC units (in shares) | 144,031 | |||||||||||
Equity-based compensation subsequent to the Reorganization Transactions and IPO | 2,549 | 2,450 | 2,450 | 99 | ||||||||
Tax distributions to members subsequent to the Reorganization Transactions and IPO | (43) | (43) | ||||||||||
Net income subsequent to the Reorganization Transactions and IPO | $ 12,264 | $ 1,528 | 1,528 | 10,736 | ||||||||
Units, ending balance (in shares) at Dec. 31, 2021 | 85,163,263 | 0 | ||||||||||
Units, ending balance at Dec. 31, 2021 | $ 0 | |||||||||||
Stockholders' equity, ending balance (in shares) at Dec. 31, 2021 | 9,614,523 | 9,614,523 | 35,658,013 | 35,658,013 | 49,505,250 | 49,505,250 | ||||||
Stockholders' equity, ending balance at Dec. 31, 2021 | $ 82,838 | 6,865 | 1,528 | 8,403 | 74,435 | $ 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 | |||||||||||
Class P Units, ending balance (in shares) at Dec. 31, 2021 | 0 | |||||||||||
Class P Units, ending balance at Dec. 31, 2021 | $ 0 | |||||||||||
Units, beginning balance (in shares) at Sep. 22, 2021 | 0 | |||||||||||
Units, beginning balance at Sep. 22, 2021 | $ 0 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
IPO Transactions (in shares) | 144,031 | |||||||||||
Units, ending balance (in shares) at Dec. 31, 2021 | 85,163,263 | 0 | ||||||||||
Units, ending balance at Dec. 31, 2021 | $ 0 | |||||||||||
Stockholders' equity, ending balance (in shares) at Dec. 31, 2021 | 9,614,523 | 9,614,523 | 35,658,013 | 35,658,013 | 49,505,250 | 49,505,250 | ||||||
Stockholders' equity, ending balance at Dec. 31, 2021 | $ 82,838 | 6,865 | 1,528 | 8,403 | 74,435 | $ 1 | $ 4 | $ 5 | ||||
Class P Units, ending balance (in shares) at Dec. 31, 2022 | 0 | |||||||||||
Class P Units, ending balance at Dec. 31, 2022 | $ 0 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 19,025 | 2,135 | 2,135 | 16,890 | ||||||||
IPO Transactions (in shares) | 720,299 | |||||||||||
Increase in deferred tax asset from step-up tax basis related to redemption of LLC Units and set-up of TRA liability | 754 | 754 | 754 | |||||||||
Conversion of convertible securities (in shares) | 1,281,052 | (895,778) | (385,274) | |||||||||
RSU vesting during period, net of shares withheld for payroll taxes | 351,119 | |||||||||||
Class B shares issued upon vesting of LLC units (in shares) | 720,299 | |||||||||||
Equity-based compensation subsequent to the Reorganization Transactions and IPO | 8,840 | 8,568 | 8,568 | 272 | ||||||||
Tax distributions to members subsequent to the Reorganization Transactions and IPO | $ (18,316) | (18,316) | ||||||||||
Rebalancing of controlling and non-controlling interest | (8,931) | (8,931) | 8,931 | |||||||||
Units, ending balance (in shares) at Dec. 31, 2022 | 84,602,510 | 0 | ||||||||||
Units, ending balance at Dec. 31, 2022 | $ 0 | |||||||||||
Stockholders' equity, ending balance (in shares) at Dec. 31, 2022 | 11,246,694 | 11,246,694 | 35,482,534 | 35,482,534 | 49,119,976 | 49,119,976 | ||||||
Stockholders' equity, ending balance at Dec. 31, 2022 | $ 93,141 | $ 7,256 | $ 3,663 | $ 10,929 | $ 82,212 | $ 1 | $ 4 | $ 5 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities | |||
Net income | $ 19,025,000 | $ 26,256,000 | $ 21,576,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 1,922,000 | 860,000 | 646,000 |
Equity-based compensation | 8,840,000 | 2,795,000 | 46,000 |
Non-cash operating lease cost | 3,229,000 | 0 | 0 |
Change in fair value of warrants | 0 | 6,331,000 | 0 |
Amortization of debt issuance costs | 592,000 | 1,717,000 | 1,121,000 |
Loss on extinguishment of debt | 617,000 | 0 | 0 |
Deferred tax benefit | (168,000) | (316,000) | 0 |
Other | 180,000 | 39,000 | 118,000 |
Changes in assets and liabilities: | |||
Inventories | (14,751,000) | (11,202,000) | (2,825,000) |
Prepaid expenses and other current assets | (1,848,000) | (5,239,000) | (675,000) |
Other assets | (2,292,000) | (343,000) | (6,000) |
Accounts payable, accrued expenses and other current liabilities | 2,491,000 | 15,281,000 | 4,329,000 |
Deferred revenue | (455,000) | 8,054,000 | 2,365,000 |
Operating lease liabilities | (2,876,000) | 0 | 0 |
Deferred rent | 0 | 1,845,000 | 28,000 |
Net cash provided by operating activities | 14,506,000 | 46,078,000 | 26,723,000 |
Investing activities | |||
Purchases of property and equipment | (9,124,000) | (5,606,000) | (584,000) |
Net cash used in investing activities | (9,124,000) | (5,606,000) | (584,000) |
Financing activities | |||
Proceeds received from Silicon Valley Bank ("SVB") term loan facility | 65,000,000 | 0 | 0 |
Repayment of Runway term loan | (58,158,000) | 0 | 0 |
Tax distributions to members | (18,316,000) | (21,441,000) | 0 |
Principal payments on Runway term loan | (6,842,000) | 0 | 0 |
Final payment and prepayment penalty on Runway term loan | (2,408,000) | 0 | 0 |
Payments of debt issuance costs | (1,249,000) | 0 | (263,000) |
Payments on SVB term loan | (1,625,000) | 0 | 0 |
Redemption of LLC Units | 0 | (14,025,000) | 0 |
Payments of deferred offering costs | 0 | 0 | 0 |
Issuance of Class A common stock in IPO, net of underwriting discounts and offering costs | 0 | 101,581,000 | 0 |
Issuance of Class B and C shares of common stock | 0 | 9,000 | 0 |
Special distributions to members | 0 | 0 | (30,000,000) |
Proceeds received from term loan | 0 | 0 | 30,000,000 |
Borrowings from PPP loan | 0 | 0 | 2,657,000 |
Repayments on PPP loan | 0 | 0 | (2,657,000) |
Net cash (used in) provided by financing activities | (23,598,000) | 66,124,000 | (263,000) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (18,216,000) | 106,596,000 | 25,876,000 |
Cash, cash equivalents and restricted cash at beginning of period | 173,070,000 | 66,474,000 | 40,598,000 |
Cash, cash equivalents and restricted cash at end of period | 154,854,000 | 173,070,000 | 66,474,000 |
Non-cash investing and financing activities | |||
Right-of-use assets and operating lease liabilities | 13,970,000 | 0 | 0 |
Deferred tax assets associated with redemption of LLC Units | 4,374,000 | 4,091,000 | 0 |
TRA Obligation associated with redemption of LLC Units | 3,620,000 | 3,775,000 | 0 |
Purchases of property and equipment included in accounts payable and accrued liabilities | 2,636,000 | 21,000 | 89,000 |
Credit to APIC related to redemption of LLC Units | 754,000 | 316,000 | 0 |
Adjustment of redeemable convertible preferred units to redemption value | 0 | 327,189,000 | 8,499,000 |
Net exercise of warrants on Common LLC Units | 0 | 6,415,000 | 0 |
Debt issuance costs capitalized to principal of long-term debt | 0 | 349,000 | 1,302,000 |
Issuance of warrants | 0 | 0 | 1,000 |
Supplemental information | |||
Cash paid for interest | 3,827,000 | 5,894,000 | 3,722,000 |
Cash paid for taxes | 175,000 | 0 | 0 |
Class F Units and Class M Units | |||
Non-cash investing and financing activities | |||
Conversion of units | 0 | 415,455,000 | 0 |
Class P Units | |||
Non-cash investing and financing activities | |||
Conversion of units | $ 0 | $ 389,227,000 | $ 0 |
Business and Organization
Business and Organization | 12 Months Ended |
Dec. 31, 2022 | |
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 herein as “the Company.” The Company designs, procures and sells ethically-sourced diamonds, gemstones and jewelry online and through 25 showrooms operating within the United States ("U.S.") as of December 31, 2022. 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 U.S.; sales to non-U.S. customers immediately settle in U.S. dollars and no cash balances are carried in foreign currencies. The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer (“CEO”), reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. 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 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 $101.6 million in proceeds after a deduction for underwriting discounts and offering costs totaling $13.4 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 represented a 10.1% economic interest as of the IPO date. 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 Reorganization, 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: • 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 Brilliant Earth LLC Agreement includes 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 $101.6 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements for the periods prior to the Reorganization Transactions and IPO have been presented to combine the previously separate entities. The consolidated financial statements have been prepared in accordance with U.S. GAAP and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect the financial position, results of operations and cash flows of the Company. As an emerging growth company (“EGC”), the Company has elected to use extended transition periods available to EGC companies for complying with new or revised accounting standards. These accounting policies have been consistently applied in the preparation of the consolidated financial statements. Certain reclassifications have been made to prior period amounts to conform to the current presentation. These reclassifications had no impact on net income, cash flows or stockholders’/member’s deficit previously reported. Principles of Consolidation and Non-Controlling Interest The 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 assets and liabilities of Brilliant Earth, LLC represent substantially all of the consolidated assets and liabilities of Brilliant Earth Group, Inc. Brilliant Earth Group, Inc., which was established June 2, 2021, has not had any material operations on a standalone basis since its inception, and all of the operations of the Company are carried out by Brilliant Earth, LLC. The non-controlling interest on the 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 consolidated balance sheets represent 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 December 31, 2022, the non-controlling interest was 88.3%. At the end of each reporting period, equity related to Brilliant Earth, LLC that is attributable to Brilliant Earth Group, Inc. and Continuing Equity Owners is rebalanced to reflect Brilliant Earth Group, Inc.'s and Continuing Equity Owners' ownership in Brilliant Earth, LLC. 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 inventory valuation, allowance for sales returns, estimates of current and deferred income taxes payable pursuant to the tax receivable agreement, 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 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. At December 31, 2022 and 2021, there were no financial instruments (assets or liabilities) measured at fair value on a recurring basis. 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. See Note 9, Stockholders’ Equity and Members Units Including Redeemable Convertible Class P Units , for further discussion. 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) for similar types of borrowing arrangements 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. Concentration of Risk The Company maintains the majority of its cash and cash equivalents in accounts with major financial institutions within the U.S. in the form of demand deposits, money market accounts, and time deposits. Deposits in these institutions may exceed the amounts of insurance provided, or deposits may not be covered by insurance. The Company has not experienced losses on its deposits of cash and cash equivalents. On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver. On March 14, 2023, the FDIC announced the establishment of Silicon Valley Bridge Bank, N.A. (the “Bridge Bank”) which assumed the deposits and obligations of SVB. The Company had deposit accounts at SVB and continues to have deposit accounts with the Bridge Bank. As of the the date these financial statements are issued, the Company has approximately $0.2 million in deposit accounts at the Bridge Bank. The Company does not anticipate any losses with respect to its funds that had been deposited with SVB. See Note 13, Subsequent Events , for further discussion. The Company’s ability to procure diamonds, gemstones and to produce jewelry is dependent on its relationships with various suppliers. No supplier accounted for more than 10% of inventory purchases in a given year during the years ended December 31, 2022, 2021, and 2020. 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 and highly liquid in nature. Restricted cash as of December 31, 2022 and 2021 pertains to funds of $0.2 million securing a letter of credit in lieu of a security deposit related to a lease at one of the Company’s showroom locations. The following table provides a reconciliation of cash and cash equivalents, and restricted cash from the consolidated balance sheets to the statements of cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands): December 31, 2022 2021 2020 Cash and cash equivalents $ 154,649 $ 172,865 $ 66,269 Restricted cash 205 205 205 Total $ 154,854 $ 173,070 $ 66,474 Inventories, Net The Company’s diamond, gemstone and jewelry inventories are primarily held for resale and valued at the lower of cost or net realizable value. Cost is primarily determined using the weighted average cost on a first-in, first-out (“FIFO”) basis for all inventories, except for unique inventory SKUs (principally independently graded diamonds), where cost is determined using specific identification. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Inventory reserves are recorded for obsolete, slow-moving or defective items and shrinkage. Inventory reserves are calculated as the difference between the cost of inventory and its estimated market value based on factors such as current and anticipated demand, customer preferences and fashion trends, management strategy and market conditions. Due to the Company’s inventory principally consisting of diamonds, gemstones and fine jewelry, the age of the inventories has limited impact on the estimated market value. The Company’s diamonds and gemstones do not degrade in quality over time and diamond and gemstone inventory generally consists of the diamond and gemstone shapes and sizes commonly used in the jewelry industry. Product obsolescence is closely monitored and reviewed by management on an ongoing basis. Property and Equipment, Capitalized Software and Website Development and Cloud Computing Implementation Costs Property and equipment are stated at cost less accumulated depreciation. Construction in progress primarily includes costs related to new showroom construction and is stated at original cost. Depreciation is recorded when the relevant assets are placed into service. Repairs and maintenance costs are expensed as incurred. Depreciation expense is calculated on a straight-line basis over the estimated useful lives of the related assets. The cost and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and the related gain or loss is reported in the consolidated statements of operations. Estimated useful lives by major asset category are as follows: Asset Life (in years) Computer equipment 3 Equipment 5 - 7 Furniture and fixtures 7 Software and website 3 Leasehold improvements Shorter of lease term or 7 years The Company capitalizes costs of initial development of internal-use software and its website, and amortizes such costs on a straight-line basis over the estimated useful life of the software, which is generally three years, once it is available for use. Costs related to the ongoing maintenance of internal-use software and the website are expensed as incurred. Cloud computing implementation costs incurred for implementation, setup, and other upfront activities in a hosting arrangement that is a service contract are capitalized during the application development stage until the software is ready for its intended use and are included in other assets in the consolidated balance sheets. Upgrades and enhancements are capitalized if they will result in additional functionality. Amortization of capitalized costs is recorded on a straight-line basis over the term of the associated hosting arrangement, inclusive of certain renewal periods. During the year ended December 31, 2022, the Company recorded amortization expense related to these implementation costs of $0.3 million. Gross capitalized costs were $2.0 million as of December 31, 2022. Impairment Tests for Long-Lived Assets The Company reviews the carrying value of its long-lived assets, including property and equipment and right of use (“ROU”) assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To the extent the estimated future cash inflows attributable to the assets, less estimated future cash outflows, are less than the carrying amount, an impairment loss would be recognized. No impairment losses have been recognized during the three years ended December 31, 2022, and as of December 31, 2022, no events or changes in circumstance have been identified that would indicate the carrying value of long-lived assets is not recoverable. Leases The Company determines if an arrangement contains a lease at inception of a contract, and leases are classified at commencement as either operating or finance leases. For operating leases, the Company recognizes a ROU asset and a lease liability on the balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and the lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company does not have any finance leases. The lease liability is determined as the present value of future lease payments over the lease term. As the rate implicit in the Company’s leases is not readily determinable, the Company uses an incremental borrowing rate that is estimated to approximate the interest rate the Company would have to pay to borrow on a collateralized basis with similar terms and payments in an economic environment similar to where the leased asset is located. The ROU asset is recorded as the initial amount of the lease liability, plus any lease payments made to the lessor before or at the lease commencement date and any initial direct costs incurred, less any tenant improvement allowance incentives received. Tenant incentives are amortized through the right-of-use asset as a reduction of lease expense over the lease term. Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Company utilizes certain practical expedients and policy elections available under Accounting Standards Codification (“ASC”) 842. The Company does not recognize ROU assets or lease liabilities for any lease with a term of twelve months or less and the Company has elected to not separate lease and non-lease components for all existing classes of assets. Operating lease expenses for fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments to the lessor such as maintenance, utilities, insurance, and real estate taxes are expensed as incurred. Prior to fiscal year 2022, assets under lease agreements were accounted for under ASC 840, Leases, and were reviewed for capital or operating classification at their inception. The Company’s leases were classified as operating leases under ASC 840 which were recognized as an expense on a straight-line basis over the lease term. In the event that lease incentives were received to enter into operating leases, such incentives were recognized as a liability and recognized as a reduction of the rental expense on a straight-line basis. Warrants Issued in Connection with Financings Warrants issued in connection with debt and equity financings are generally accounted for as a component of equity unless the warrants include a conditional obligation to issue a variable number of units among other conditions or there is a deemed possibility that the Company may need to settle the warrants in cash, in which case they are accounted for as non-current liabilities in the consolidated balance sheets. Debt Issuance Costs Costs that are direct and incremental to debt issuance are deferred and amortized to interest expense using the effective interest method over the expected life of the debt. All other costs related to debt issuance are expensed as incurred. The Company presents debt issuance costs associated with long-term debt as a reduction of the carrying amount of the debt. Unamortized costs related to the SVB Revolving Credit Facility are included in other assets on the consolidated balance sheets, See Note 8, Long-Term Debt , for further discussion. If the terms of a financing obligation are amended and accounted for as a debt modification by the Company, fees incurred directly with the lending institution are capitalized and amortized over the remaining contractual term using the effective interest method. Fees incurred with other parties are expensed as incurred. If the Company determines that there has been a substantial modification of a financing obligation, previously capitalized debt issuance costs are expensed and included in loss on extinguishment of debt in the consolidated statements of operations. 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. An in-house three-year extended service plan, which provides full inspection, cleaning and certain repairs due to normal wear, is offered for an additional charge. An extended protection plan is also offered through a third party that has different terms ranging from 2 years to lifetime that vary based on the item purchased. The following table discloses total net sales by geography for the years ended December 31, 2022, 2021 and 2020 (in thousands): For the Years Ended December 31, 2022 2021 2020 United States $ 413,678 $ 353,072 $ 233,169 International 26,204 27,117 18,651 Total net sales $ 439,882 $ 380,189 $ 251,820 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 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 offers an in-house 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 plan. The Company also offers an extended protection plan in the capacity of an agent on behalf of a third-party that has different terms ranging from two years to lifetime that vary based on the item purchased. The commission that the Company receives from the third-party is recognized at the time of sale less an estimate of cancellations based on historical experience. There are no additional performance obligations in relation to the third-party plan. Sales taxes are collected and remitted to taxing authorities, and the Company has elected to exclude sales taxes from revenues recognized under ASC 606. A significant financing component does not exist because customer payment is completed prior to order fulfillment. 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 December 31, 2022 and December 31, 2021, total deferred revenue was $18.6 million and $19.0 million, respectively, of which less than $0.1 million and $0.2 million, respectively, were included within other long-term liabilities in the consolidated balance sheets. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $18.4 million, $9.6 million, and $8.1 million, respectively, of revenue that was deferred as of the last day of the respective prior year. 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 December 31, 2022 and December 31, 2021, refund liabilities balances were $2.3 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 consolidated balance sheets. See Note 6, Accrued Expenses and Other Current Liabilities , for further discussion. As of December 31, 2022 and December 31, 2021, returns asset balances were $0.9 million and $1.1 million, respectively, and are included within prepaid expenses and other current assets in the consolidated balance sheets. Fulfillment Costs The Company generally does not bill customers separately for shipping and handling charges. Fulfillment costs incurred by the Company when shipping to customers is reflected in cost of sales in the 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. Cost of Sales The Company purchases diamonds and gemstones from suppliers and utilizes third-party manufacturing suppliers for the production and assembly of substantially all jewelry sold by the Company. Cost of sales includes merchandise costs, inbound freight charges, costs of shipping orders to customers, costs and reserves for disposal of obsolete, slow-moving or defective items and shrinkage. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of marketing, advertising and promotional expenses, payroll and related benefit costs for the Company’s employees, including equity-based compensation expense, merchant processing fees, certain facility-related costs, customer service, technology and depreciation expenses, as well as professional fees and other general corporate expenses. Marketing, advertising and promotional costs are expensed as incurred and totaled approximately $97.3 million, $74.4 million and $47.1 million, for the years ended December 31, 2022, 2021 and 2020, respectively. Foreign Currency Transactions Gains or losses resulting from foreign currency transactions are included within other income (expense), net in the consolidated statements of operations. For the years ended December 31, 2022, 2021 and 2020, losses from foreign currency transactions were $0.5 million, $0.5 million and $0.3 million, respectively. 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 consolidated statements of operations in the period of determination. Equity-Based Compensation Equity-based compensation is accounted for as an expense in accordance with ASC Topic 718, Compensation - Stock Compensation , 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 uses the straight-line method to amortize all stock awards granted over the requisite service period of the award. 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. Member Units Member units were assessed at issuance or when the terms were changed or modified for classification (as liabilities, temporary equity, or permanent equity), and for embedded conversion and redemption features requiring bifurcation. The Class F Units (“Class F Units”) and Class M Units meet the criteria for classification as permanent equity. As discussed in Note 9, Stockholders’ Equity and Members Units Including Redeemable Convertible Class P Units , the Class P Units were classified as temporary equity and adjusted each reporting period to their redemption value. Under the LLC Agreement, the holder of any Class P Units had the right at any time, at such holder’s option, to convert any such Class P Units into Class F Units on a one-to-one basis. Included in the conversion formula was a down round feature which provided the P Unitholder with protection if at any time after the original issuance of the Class P Units, the Company shall issue any Class F or Class M Units, for a consideration per unit less than the applicable conversion price in effect immediately prior to the issuance of such Class F or Class M Units, such Conversion Price shall be decreased based on a formula as described. The embedded conversion feature including down round protection qualifies for an exception under the derivative rules for bifurcation and all proceeds from issuance were allocated to the P Units. Distributions to Members The LLC Agreement provides for the distribution of cash in defined amounts sufficient to fund member income tax liabilities. Income Taxes Brilliant Earth Group, Inc. accounts for its income taxes 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 consolidated statements of operations. As of December 31, 2022 and 2021, no uncertain tax positions have been recorded. The Company will continue to monitor this position each interim period. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases , and also issued subsequent amendments to the initial guidance, ASC 2018-10, ASC 2018-11, ASU 2019-10, ASU 2020-02 and ASU 2020-05 (collectively, “ASC 842”). The standard requires the recognition of a liability for lease obligations and a corresponding ROU asset on the balance sheet, and additional disclosure regarding leasing arrangements. The Company adopted this guidance by applying the modified retrospective approach effective January 1, 2022. The Company elected to apply transition practical expedients, which allowed the Company to use its previous evaluations regarding if an arrangement contains a lease, if a lease is an operating or financing lease and what costs are capitalized as initial |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
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 year ended December 31, 2022 and the period from September 23, 2021 to December 31, 2021 have been computed as follows (in thousands, except share and per share amounts): For the year ended December 31, 2022 For the period September 23, 2021 to December 31, 2021 Numerator: Net income attributable to Brilliant Earth Group, Inc., BASIC $ 2,135 $ 1,528 Add: Net income impact from assumed redemption of all LLC Units to common stock 16,890 10,736 Less: Income tax expense on net income attributable to NCI (4,369) (2,755) Net income attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED $ 14,656 $ 9,509 Denominator: Weighted average shares of common stock outstanding, BASIC 10,687,732 9,590,443 Dilutive effects of: Vested LLC Units that are exchangeable for common stock 84,569,954 85,105,060 Unvested LLC Units that are exchangeable for common stock 995,892 1,931,234 RSUs and stock options 251,747 114,684 Weighted average shares of common stock outstanding, DILUTED 96,505,325 96,741,421 BASIC earnings per share $ 0.20 $ 0.16 DILUTED earnings per share $ 0.15 $ 0.10 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. For the year ended December 31, 2022 and the period from September 23, 2021 to December 31, 2021 , the dilutive impact of LLC Units convertible into common stock were included in the computation of diluted earnings per share under the if-converted method; the dilutive impact of unvested LLC Units, RSUs and stock options were included using the treasury stock method. For the year ended December 31, 2022, the impact of 1,112,615 of shares underlying stock options and 2,002,014 of RSUs, respectively, have been excluded from the computation of earnings per share because such impact is anti-dilutive. For the period from September 23, 2021 to December 31, 2021 , the impact of 1,306,854 of shares underlying stock options and 224 of RSUs, respectively, have been excluded from the computation of earnings per share because such impact is anti-dilutive. |
Inventories, Net
Inventories, Net | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | INVENTORIES, NET Inventories, net consist of the following (in thousands): December 31, 2022 2021 Loose diamonds $ 11,894 $ 9,013 Fine jewelry and other 27,744 15,990 Allowance for inventory obsolescence (307) (260) Total inventories, net $ 39,331 $ 24,743 The allowance for inventory obsolescence consists of the following (in thousands): December 31, 2022 2021 2020 Balance at beginning of period $ (260) $ (242) $ (169) Change in allowance for inventory obsolescence (47) (18) (73) Balance at end of period $ (307) $ (260) $ (242) Provisions for inventory obsolescence included in cost of sales in the consolidated statements of operations were less than $0.1 million for the years ended December 31, 2022, and 2021, and $0.1 million for the year ended December 31, 2020, respectively. As of December 31, 2022 and December 31, 2021, the Company had $27.6 million and $16.9 million, respectively, in consigned inventory held on behalf of suppliers which is not recorded in the consolidated balance sheets. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | PROPERTY AND EQUIPMENT, NET Property and equipment, net, consist of the following (in thousands): December 31, 2022 2021 Equipment $ 2,111 $ 1,064 Furniture and fixtures 1,834 880 Leasehold improvements 12,995 6,743 Construction in progress 3,626 700 Other 726 469 Gross property and equipment 21,292 9,856 Less: accumulated depreciation (4,738) (3,124) Total property and equipment, net $ 16,554 $ 6,732 Total depreciation expense was approximately $1.9 million, $0.9 million, and $0.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
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): December 31, 2022 2021 Vendor expenses $ 14,769 $ 9,881 Inventory received not billed 7,973 4,648 Payroll expenses 5,301 4,498 Sales and other tax payable 4,137 4,229 Provision for sales returns and allowances 2,332 2,338 Current portion of TRA 502 — Other 2,819 3,162 Total accrued expenses and other current liabilities $ 37,833 $ 28,756 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 years ended December 31, 2022, 2021 and 2020 was as follows (in thousands): December 31, 2022 2021 2020 Balance at beginning of period $ 2,338 $ 2,341 $ 1,339 Provision 21,455 15,329 16,712 Returns and allowances (21,461) (15,332) (15,710) Balance at end of period $ 2,332 $ 2,338 $ 2,341 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | LEASESThe Company leases its executive offices, retail showrooms, office and operational locations under operating leases. The fixed, non-cancelable terms of our real estate leases are generally 5-10 years. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments. Most of the real estate leases require payment of real estate taxes, insurance and certain common area maintenance costs in addition to future minimum lease payments. Total operating lease ROU assets and lease liabilities were as follows (in thousands): Assets Classification As of December 31, 2022 Operating ROU assets at cost Operating lease right of use assets $ 31,041 Accumulated amortization Operating lease right of use assets (3,229) Net book value $ 27,812 Liabilities Classification As of December 31, 2022 Current: Operating leases Current portion of operating lease liabilities $ 3,873 Noncurrent: Operating leases Operating lease liabilities 28,537 Total lease liabilities $ 32,410 Total operating lease costs were as follows (in thousands): Classification For the year ended December 31, 2022 Operating lease costs Selling, general and administrative expense $ 4,372 Variable lease costs Selling, general and administrative expense 913 Total lease costs $ 5,285 The maturity analysis of the operating lease liabilities as of December 31, 2022 was as follows (in thousands): Amount Years ending December 31, 2023 $ 5,235 2024 5,830 2025 5,822 2026 5,515 2027 4,061 Thereafter 11,854 Total minimum lease payments (1) 38,317 Less: imputed interest (5,907) Net present value of operating lease liabilities 32,410 Less: current portion (3,873) Long-term portion $ 28,537 (1) Future minimum lease payments exclude $18.1 million of future payments required under signed lease agreements that have not yet commenced. These operating leases will commence during fiscal year 2023 with lease terms ranging from six ten At December 31, 2021, minimum lease payments for operating leases having an initial term in excess of one year under the previous lease standard (ASC 840) were as follows (in thousands): Amount Years ending December 31, 2022 $ 3,507 2023 3,680 2024 3,530 2025 3,449 2026 3,103 Thereafter 7,897 Total minimum lease payments $ 25,166 The following table summarizes the weighted-average remaining lease term and weighted-average discount rate on long-term leases as of December 31, 2022 (in thousands): Weighted-average remaining lease term - operating leases 7.3 years Weighted-average discount rate - operating leases 4.5 % ROU assets and lease obligations recognized upon adoption of ASC 842 on January 1, 2022: ROU assets $ 19,173 Operating lease obligations $ (21,316) Supplemental cash flow information related to operating leases as of December 31, 2022 is as follows: Cash paid for amounts included in lease liabilities for the year ended December 31, 2022: Operating cash flows from operating leases $ 2,876 ROU assets obtained in exchange for new operating lease liabilities $ 13,970 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The following table summarizes the net carrying amount of the Term Loan (as defined below) as of December 31, 2022 and December 31, 2021, net of debt issuance costs (in thousands): December 31, 2022 December 31, 2021 Outstanding principal Debt issuance costs Net carrying amount Outstanding principal Debt issuance costs Net carrying amount Term loan $ 63,375 $ (663) $ 62,712 $ 65,000 $ (1,422) $ 63,578 Total debt $ 63,375 $ (663) $ 62,712 $ 65,000 $ (1,422) $ 63,578 Current portion $ 3,250 $ — $ 3,250 $ 30,789 $ — $ 30,789 Long-term 60,125 (663) 59,462 34,211 (1,422) 32,789 Total debt $ 63,375 $ (663) $ 62,712 $ 65,000 $ (1,422) $ 63,578 Term Loan Agreement - Runway Growth Credit Finance Corp. On September 30, 2019, the Company entered into a Loan and Security Agreement with Runway Growth Finance Corp. (f/k/a Runway Growth Credit Fund Inc.) (“Runway”) which, as subsequently amended, provided for up to $65.0 million of borrowings (as subsequently amended, the “Runway Term Loan”). The Runway Term Loan bore interest at a variable rate equal to LIBOR (at a floor of 0.50%) plus 7.75%. The Runway Term Loan was secured by substantially all of the assets of the Company and required us to comply with various affirmative and negative debt covenants. In connection with the origination of the Runway Term Loan Agreement, a warrant for 333,333 Class P Units was issued. The fair value of the warrant was $0.1 million 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 Company was required to make interest-only payments on the Runway Term Loan through April 15, 2022, at which time the Runway Term Loan began amortizing, with equal monthly payments of principal, which would fully amortize the principal amount of the Term Loan by October 15, 2023, plus interest being paid by the Company to Runway in consecutive monthly installments until October 15, 2023. The Term Loan carried a prepayment fee of 3.00% declining to 0.00% based on the anniversary date of payment, and a final payment fee equal to 4.50% of the principal amount repaid upon prepayment, plus $0.2 million. On May 24, 2022, concurrently with entry into the SVB Credit Agreement (as defined below), the Company repaid all outstanding amounts under the Runway Term Loan, totaling $58.2 million with proceeds from the SVB Credit Agreement. In connection with the repayment and termination of the Runway Term Loan, the Company was required to pay a 1.00% prepayment fee, plus a final payment fee. The Runway Term Loan was scheduled to mature on October 15, 2023. As a result of the extinguishment of the Runway Term Loan, the Company recognized a loss on debt extinguishment of $0.6 million associated with the prepayment fee and the write-off of unamortized debt issuance costs. Credit Agreement - Silicon Valley Bank On May 24, 2022 (the “Closing Date”), Brilliant Earth, LLC, as borrower, and Silicon Valley Bank, as administrative agent and collateral agent for the lenders, entered into a credit agreement (the “SVB Credit Agreement”) which provides for a secured term loan credit facility of $65.0 million (the “SVB Term Loan Facility”) and a secured revolving credit facility in an amount of up to $40.0 million (the “SVB Revolving Credit Facility”, and together with the Term Loan Facility, the “SVB Credit Facilities”). The SVB Credit Facilities were used to refinance existing indebtedness, pay related fees and expenses, and will be used from and after the Closing Date for working capital and general corporate purposes. The Credit Facilities mature on May 24, 2027 (the “SVB Maturity Date”). As of December 31, 2022, there are no amounts outstanding under the SVB Revolving Credit Facility and there were $63.4 million of total debt outstanding under the SVB Term Loan Facility, of which $60.1 million is classified at long-term debt. The SVB Credit Facilities are secured by substantially all assets of Brilliant Earth, LLC and any of its future material subsidiaries, subject to customary exceptions. Brilliant Earth, LLC’s future material subsidiaries (subject to certain customary exceptions) will guarantee repayment of the SVB Credit Facilities. Borrowings under the SVB Credit Facilities bear interest at either (a) a secured overnight financing rate plus an annual adjustment of 0.125%, plus an applicable margin of 2.25% to 2.75%, depending on the Consolidated Total Leverage Ratio (defined below), or an alternate base rate plus an applicable margin of 1.25% to 1.75%, depending on the Consolidated Total Leverage Ratio, each subject to a 0.00% floor. In addition, Brilliant Earth, LLC has agreed to pay a commitment fee on the first day of each quarter on the unused amount of the SVB Revolving Credit Facility, equal to 0.25% to 0.35% per annum depending on the Consolidated Total Leverage Ratio. The Consolidated Total Leverage Ratio is defined as the ratio, as of the last day of any four fiscal quarter period, of (a) Consolidated Total Indebtedness of the Company and its subsidiaries to (b) the Consolidated EBITDA for such period (each term as further defined in the Credit Agreement). The SVB Term Loan Facility is required to be repaid on the last day of each calendar quarter (commencing on September 30, 2022), in an amount equal to 1.25% per quarter through June 30, 2024, 1.875% per quarter from September 30, 2024 through June 30, 2025, and 2.50% per quarter thereafter, with the balance payable on the SVB Maturity Date. The SVB Term Loan Facility is also subject to certain mandatory prepayment requirements in connection with asset sales, casualty events and debt incurrence, subject to customary exceptions. The SVB Credit Facilities are subject to customary affirmative covenants and negative covenants as well as financial maintenance covenants. The financial covenants are tested at the end of each fiscal quarter, beginning with the quarter ended June 30, 2022, and requires that (a) the Company and its subsidiaries not have a Consolidated Fixed Charge Coverage Ratio (defined as the ratio of (i) Consolidated EBITDA, less cash taxes (including tax distributions), less certain capital expenditures, less cash dividends and other cash restricted payments, to (ii) the sum of cash interest expense and scheduled principal payments on outstanding debt (in each case, as further defined in the SVB Credit Agreement)) of less than 1.25 to 1.00, (b) the Company and its subsidiaries not have a Consolidated Total Leverage Ratio of more than 4.00 to 1.00, and (c) Brilliant Earth, LLC and its subsidiaries not have a Consolidated Borrower Leverage Ratio (defined substantially similar as Consolidated Total Leverage Ratio, but limited to Brilliant Earth, LLC and its subsidiaries) in excess of 3.00 to 1.00 (which level is subject to temporary increases to 4.00 to 1.00 in connection with certain acquisitions). As of December 31, 2022 the Company was in compliance with such covenants. At December 31, 2022, deferred issuance costs included in other assets totaled $0.5 million, net of accumulated amortization of $0.1 million. At December 31, 2022, deferred issuance costs included in long-term debt totaled $0.8 million, net of accumulated amortization of $0.1 million. These costs are being amortized to interest expense over the term of the loan. The Company's debt effective interest rate was 7.18%, 11.68%, and 13.01% for the years ended December 31, 2022, 2021, and 2020, respectively. Interest expense was $4.1 million, $5.9 million and $3.8 million; and the amortization of deferred issuance costs was $0.6 million, $1.7 million and $1.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, the aggregate future principal payments under the SVB Term Loan Facility were as follows (in thousands): Principal Years ending December 31, 2023 $ 3,250 2024 4,062 2025 5,688 2026 6,500 2027 43,875 Total aggregate future principal payments $ 63,375 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 in full early during the year ended December 31, 2020, including interest expense of less than $0.1 million. |
Stockholders' Equity and Member
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units | STOCKHOLDERS’ EQUITY AND MEMBERS UNITS INCLUDING REDEEMABLE CONVERTIBLE CLASS P UNITS Member Units As discussed in Note 1, Business and Organization, Conversion of Class F, P and M Units at Time of IPO, 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 of 1.8942, 1.9080 and 1.7735 for the Class F Units, P Units and M Units, respectively. At September 22, 2021, the following summarizes the Company’s units authorized, issued and outstanding: Units authorized Units issued and outstanding Class F Units 50,954,445 50,232,863 Class P Units 33,162,444 32,435,595 Class M Units 7,791,744 3,904,237 Prior to the reorganization, offering and other transactions completed in connection with the IPO, the business and affairs of the Brilliant Earth, LLC were managed by a board. The Class F Unit holders elected four members and the Class P Unit holders elected three members to the board. The Class F Units and the Class P Units were voting units and the unit holders voted together as a single class on an as-converted basis. The Class M Units were non-voting Units. Under the LLC Agreement prior to the reorganization, offering and other transactions completed in connection with the IPO, distributions were made to the Members in the following order and priority: • First, ratably among the holders of the Class P Units, until each holder of Class P Units has received an aggregate amount per unit equal to the Original Class P Purchase Price; • Second, ratably among the holders of the Class F Units until the holders of the Class F Units have received an aggregate amount per unit equal to the Original Class P Purchase Price; and • Third, ratably among the holders of the Class F Units, the Class P Units (treating each Class P Unit as the number of Class F Units into which it is then convertible) based on the total outstanding Units held by each Member and the Class M Units which participate only upon the occurrence of certain events as described in the LLC Agreement. Distributions using reasonable efforts are allowed to provide cash for payment of income tax obligations which are treated as advance payment of distributions on liquidation and prior to liquidation. Allocation of profits and losses to the classes of member units were determined by Brilliant Earth, LLC based on the provisions in the LLC Agreement. Under the Agreement, cumulative net losses were allocated to the F Units; subsequent net income was allocated to the Class F Units until cumulative net losses have been recovered. Thereafter, net income was allocated pro rata to the Class P Units and Class F Units based on their relative percent of capital. The Class M Units share only in cumulative net profits in excess of thresholds determined on the date of grant. For the year ended December 31, 2020, net income of $11.3 million was allocated to the Class F Units to recover previous cumulative net losses and the balance of $10.3 million was allocated pro rata to the Class F and Class P Units and no net income was allocable to the Class M Units. For the period ended September 22, 2021, net income of $14.0 million was allocated pro rata to the Class F and Class P Units and no net income was allocable to the Class M Units. Notwithstanding anything to the contrary in the LLC Agreement, in December 2020, the requisite members and the board of the Company agreed to make a special/specified distribution to the Members holding Class P Units and Class F Units on a one-time basis in the amounts of $10.0 million and $20.0 million, respectively, using proceeds from a loan refinancing. This distribution was treated as an advance of, and was offset against, future distributions to be made under the LLC Agreement to such Specified Member. Redeemable Convertible Class P Units and Classification as Temporary Equity Carried at Redemption Value The Class P Units had an embedded conversion feature which allowed the holders, at their option, to convert Class P Units into Class F Units on a one-for-one basis. The units also had an embedded redemption feature which was included in an investor rights agreement and was an integral part of the LLC Agreement that allowed the Class P Unit holders to “put” any or all of their units to the Company for settlement in cash currently, or if the Company was unable to satisfy the put in accordance with the investor rights agreement, over time under a senior secured promissory note with interest and principal due over two years. The repurchase price was the greater of the fair market value of the member units or the original purchase price less previous distributions, excluding tax distributions. The conversion and redemption features were evaluated under the guidance in ASC 815-10, and the Company determined that bifurcation was not required. The Class P Units were classified as temporary equity until such time as the conditions are removed or lapse, since the redemption feature is beyond the control of Brilliant Earth, LLC. Since the redemption feature was exercisable, the Class P Units were adjusted each reporting period to their redemption value through a reclassification from the carrying value of the Class F Units to the carrying value of the Class P Units for the change in the period. As discussed below, the carrying value of the redeemable convertible preferred units was increased by $327.2 million for the period ended September 22, 2021, and decreased by $8.5 million for the year ended December 31, 2020. Warrants for Class P units and Fair Value Disclosures As discussed in Note 1, Business and Organization , Summary of the Reorganization, Offering and Other Transactions Completed in Connection with the IPO , warrants were exercised to Class P Units into newly issued LLC Units on a net settlement basis as of September 22, 2021. Warrants for Class P Units consisted of the following as of September 22, 2021: Number of units under warrants Issue date Expiration date Exercise price Fair value per warrant on issue date 497,292 9/30/2019 9/30/2029 $3.52 $0.17 37,297 12/17/2020 12/17/2030 $6.70 $0.01 534,589 Warrants for Class P Units were issued to Runway in connection with borrowings. The fair value on the date of issue was recorded as a debt issuance cost (contra-liability) and a liability because the Class P Units underlying the warrants were classified outside of members’ deficit. The fair value of warrants were remeasured each reporting period using Level 3 inputs with the increase or decrease charged to other income or expense in the consolidated statements of operations. Fair value remeasurements during the period ended September 22, 2021 and for the year ended December 31, 2020 are discussed below. Fair Value Measurement for Class P Unit Redemption Value, Warrants Exercisable into Class P Units, and Valuation as of the Grant Date of Class M Units Measurements of the redemption value of the Class P Units, the fair value of warrants that were exercisable into Class P Units, and the valuation as of the grant date of Class M Units were the responsibility Brilliant Earth, LLC with assistance from independent third-party valuations. Measurements of the redemption value of the Class P Units and the fair value warrants exercisable into Class P Units were determined in accordance with ASC 820, Fair Value Measurements . The objective of fair value measurements is estimation of an exit price from the perspective of a market participant that holds the asset or owes the liability. As such, unobservable inputs reflect market participant assumptions about risk, both in terms of the inherent risks in a valuation technique, as well as the inputs to that valuation technique. Although unobservable inputs used in determining the fair value by market participants may consider Brilliant Earth, LLC's own data, the metrics are not entity-specific because they do not incorporate the asset’s current use or any specific advantages or disadvantages Brilliant Earth, LLC derives from the asset. Measurements of the grant date fair value of Class M Units were determined in accordance with ASC 718, Compensation – Stock Compensation . ASC 718 defines fair value as the amount at which asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than a forced or liquidated sale, and excludes the effect of certain conditions, restrictions and other features that would be considered in a true fair value measurement. For the six months ended June 30, 2021 and year ending December 31, 2020, fair value measurements were based on an estimate of the implied equity value of the Company using a combination of guideline public company analysis, a guideline transaction analysis, and a discounted cash flows analysis, with a 33.3% weighting given to each method. The enterprise value was then adjusted for cash and interest-bearing debt to determine equity value. In determining fair value for the relevant period, the aggregate equity value for the Company was then allocated to each instrument with consideration given to the preferences of each class of units using a hypothetical distribution of value (commonly referred to as the “waterfall”). Then, the allocation to the fair value on the grant date for Class M Units were further adjusted using the Black-Scholes option pricing model. For the period from July 1, 2021 to September 22, 2021, the enterprise value determined using the method described in the preceding paragraph was further adjusted to reflect the potential for an exit event based on the contemplated initial public offering using a guideline company analysis. The derived equity value was then allocated to each instrument as described in the preceding paragraph. Key inputs included valuations of guideline companies and transactions. The guideline company and transaction methods also considered a control premium. The discounted cash flow analysis included estimates of the Company's future financial performance discounted at a rate that considered the cost of capital and venture capital required rates of return studies. All inputs were Level 3 in the fair value hierarchy. Level 3 inputs into the Black-Scholes model to Class M Units included the expected price volatility estimated by taking the average historic price volatility for industry peers consisting of several public companies in our industry that are of similar size, complexity, and stage of development and the risk-free interest rate for the expected term of the grant. All Class M Units were converted into Common LLC Units at the time of the IPO and ceased to exist as of September 22, 2021, and therefore, were no longer remeasured at fair value. The quantitative information about certain significant Level 3 unobservable inputs for the three valuation methods and for Black-Scholes are summarized as follows: Periods ended September 22, December 31, 2021 2020 Guideline company and transaction analysis: Control premium 20.00% 20.00% Discounted cash flow analysis: Discount rate 22.00% 22.00% to 25.00% Option pricing model inputs for warrants and Class M Units: Volatility 40.00% 45.00% Time to Liquidity in years 0.8 to 1.0 1.2 to 1.5 Risk free rate 0.07% 0.10% Discount for lack of marketability 7.50% to 10.00% 12.00% to 15.00% The fair value amounts using Level 3 inputs from January 1, 2020 through September 22, 2021 were as follows (in thousands): Class P Unit redemption value Class P Unit warrant liability Balance, January 1, 2020 $ 80,829 $ 83 Special distributions to members (10,000) — Net income allocable to Class P Units 3,997 — Increase/decrease (8,499) 1 Balance, December 31, 2020 66,327 84 Tax distributions to members (9,755) — Net income allocable to Class P Units prior to the Reorganization Transaction and IPO 5,466 — Increase/decrease 327,189 6,331 Reorganization Transactions (389,227) (6,415) Balance, September 22, 2021 $ — $ — The increase in the fair market value of the Class P Unit warrant liability was $6.3 million and recorded in other expense, net in the consolidated statements of operations for the year ended December 31, 2021. Application of these approaches involves the use of estimates, judgments and assumptions that are highly complex and subjective, such as those regarding expected future company financial performance, discount rates, valuations and selection of comparable companies, and the probability of possible future events. Changes in any or all these estimates and assumptions or the relationships between those assumptions impact the Company’s valuations as of each valuation date and may have a material impact on the valuation of Class P Units. Summary Capitalization The following summarizes the capitalization and voting rights of the Company’s classes of equity as of December 31, 2022 and 2021: December 31, December 31, 2022 2021 Authorized Issued & Votes per Economic Preferred stock 10,000,000 None None Common stock: Class A 1,200,000,000 11,246,694 9,614,523 1 Yes Class B 150,000,000 35,482,534 35,658,013 1 No Class C 150,000,000 49,119,976 49,505,250 10 No Class D 150,000,000 None None 10 Yes Common stock reserved for issuances: Conversion of LLC Units 84,602,510 85,163,263 Unvested LLC Units 615,000 1,901,977 Unvested RSUs 3,158,686 1,377,728 Stock options 857,615 1,449,181 Common LLC Units 84,602,510 85,163,263 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 December 31, 2022 , 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 as of December 31, 2022 , are held as follows: • 11,246,694 shares of Class A common stock were issued in the IPO, and through subsequent conversion of LLC Units and vesting of RSUs; • 35,482,534 shares of Class B common stock are held by the Continuing Equity Owners excluding the Founders ; and • 49,119,976 shares of Class C common stock are held by the Founders. 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 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 December 31, 2022, Brilliant Earth Group, Inc. holds a 11.7% economic interest in Brilliant Earth, LLC through its ownership of 11,246,694 LLC Units, but consolidates Brilliant Earth, LLC as sole managing member. The remaining 84,602,510 L LC units represe nting an 88.3% i nterest are held by the Continuing Equity Owners and presented in the 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, at the Company's election, 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 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 December 31, 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 IPO and 3,138 LLC Units for RSUs that vested, net of shares withheld for payroll taxes, during the period. The Company also caused Brilliant Earth Group, Inc. to issue 144,031 shares of Class B common stock to the Continuing Equity Owners associated with LLC units which vested during the period, of which 28,053 shares of Class B common stock was converted to Class A common stock. No stock options were exercised during the period. For the year ended December 31, 2022, the Company caused Brilliant Earth, LLC to issue to the Company a vested total of 351,119 LLC Units as a result of the issuance of Class A common stock related to the vesting of RSUs. The Company also caused Brilliant Earth Group, Inc. to issue 720,299 shares of Class B common stock to the Continuing Equity Owners associated with LLC units which vested during the year ended December 31, 2022. During the year ended December 31, 2022, there were 895,778 shares of Class B common stock, and 385,274 shares of Class C common stock, respectively, converted to Class A common stock related to the Continuing Equity Owners. There were no stock options exercised during the year ended December 31, 2022. 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 $18.3 million and $21.4 million for the years ended December 31, 2022 and 2021, respectively. No distributions were made in the year ended December 31, 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 $327.2 million for the period from December 31, 2020 to September 22, 2021 . 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 22, 2021 (in thousands except share amounts): Brilliant Earth, LLC (prior to reorganization transaction) Class P LLC Units Class F LLC Units Class M LLC Units Class F Units and Class M Units Units Amount 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) Special distribution to members — (10,000) — (20,000) — — — (20,000) Vested Class M Units — — — — 174,847 — 174,847 — Equity-based compensation — — — — — 46 — 46 Net income (loss) — 3,997 — 17,579 — — — 17,579 Adjustment of redeemable convertible preferred units to redemption value — (8,499) — 8,499 — — — 8,499 Balance, December 31, 2020 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 the 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' Equity and Members Units Including Redeemable Convertible Class P Units | STOCKHOLDERS’ EQUITY AND MEMBERS UNITS INCLUDING REDEEMABLE CONVERTIBLE CLASS P UNITS Member Units As discussed in Note 1, Business and Organization, Conversion of Class F, P and M Units at Time of IPO, 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 of 1.8942, 1.9080 and 1.7735 for the Class F Units, P Units and M Units, respectively. At September 22, 2021, the following summarizes the Company’s units authorized, issued and outstanding: Units authorized Units issued and outstanding Class F Units 50,954,445 50,232,863 Class P Units 33,162,444 32,435,595 Class M Units 7,791,744 3,904,237 Prior to the reorganization, offering and other transactions completed in connection with the IPO, the business and affairs of the Brilliant Earth, LLC were managed by a board. The Class F Unit holders elected four members and the Class P Unit holders elected three members to the board. The Class F Units and the Class P Units were voting units and the unit holders voted together as a single class on an as-converted basis. The Class M Units were non-voting Units. Under the LLC Agreement prior to the reorganization, offering and other transactions completed in connection with the IPO, distributions were made to the Members in the following order and priority: • First, ratably among the holders of the Class P Units, until each holder of Class P Units has received an aggregate amount per unit equal to the Original Class P Purchase Price; • Second, ratably among the holders of the Class F Units until the holders of the Class F Units have received an aggregate amount per unit equal to the Original Class P Purchase Price; and • Third, ratably among the holders of the Class F Units, the Class P Units (treating each Class P Unit as the number of Class F Units into which it is then convertible) based on the total outstanding Units held by each Member and the Class M Units which participate only upon the occurrence of certain events as described in the LLC Agreement. Distributions using reasonable efforts are allowed to provide cash for payment of income tax obligations which are treated as advance payment of distributions on liquidation and prior to liquidation. Allocation of profits and losses to the classes of member units were determined by Brilliant Earth, LLC based on the provisions in the LLC Agreement. Under the Agreement, cumulative net losses were allocated to the F Units; subsequent net income was allocated to the Class F Units until cumulative net losses have been recovered. Thereafter, net income was allocated pro rata to the Class P Units and Class F Units based on their relative percent of capital. The Class M Units share only in cumulative net profits in excess of thresholds determined on the date of grant. For the year ended December 31, 2020, net income of $11.3 million was allocated to the Class F Units to recover previous cumulative net losses and the balance of $10.3 million was allocated pro rata to the Class F and Class P Units and no net income was allocable to the Class M Units. For the period ended September 22, 2021, net income of $14.0 million was allocated pro rata to the Class F and Class P Units and no net income was allocable to the Class M Units. Notwithstanding anything to the contrary in the LLC Agreement, in December 2020, the requisite members and the board of the Company agreed to make a special/specified distribution to the Members holding Class P Units and Class F Units on a one-time basis in the amounts of $10.0 million and $20.0 million, respectively, using proceeds from a loan refinancing. This distribution was treated as an advance of, and was offset against, future distributions to be made under the LLC Agreement to such Specified Member. Redeemable Convertible Class P Units and Classification as Temporary Equity Carried at Redemption Value The Class P Units had an embedded conversion feature which allowed the holders, at their option, to convert Class P Units into Class F Units on a one-for-one basis. The units also had an embedded redemption feature which was included in an investor rights agreement and was an integral part of the LLC Agreement that allowed the Class P Unit holders to “put” any or all of their units to the Company for settlement in cash currently, or if the Company was unable to satisfy the put in accordance with the investor rights agreement, over time under a senior secured promissory note with interest and principal due over two years. The repurchase price was the greater of the fair market value of the member units or the original purchase price less previous distributions, excluding tax distributions. The conversion and redemption features were evaluated under the guidance in ASC 815-10, and the Company determined that bifurcation was not required. The Class P Units were classified as temporary equity until such time as the conditions are removed or lapse, since the redemption feature is beyond the control of Brilliant Earth, LLC. Since the redemption feature was exercisable, the Class P Units were adjusted each reporting period to their redemption value through a reclassification from the carrying value of the Class F Units to the carrying value of the Class P Units for the change in the period. As discussed below, the carrying value of the redeemable convertible preferred units was increased by $327.2 million for the period ended September 22, 2021, and decreased by $8.5 million for the year ended December 31, 2020. Warrants for Class P units and Fair Value Disclosures As discussed in Note 1, Business and Organization , Summary of the Reorganization, Offering and Other Transactions Completed in Connection with the IPO , warrants were exercised to Class P Units into newly issued LLC Units on a net settlement basis as of September 22, 2021. Warrants for Class P Units consisted of the following as of September 22, 2021: Number of units under warrants Issue date Expiration date Exercise price Fair value per warrant on issue date 497,292 9/30/2019 9/30/2029 $3.52 $0.17 37,297 12/17/2020 12/17/2030 $6.70 $0.01 534,589 Warrants for Class P Units were issued to Runway in connection with borrowings. The fair value on the date of issue was recorded as a debt issuance cost (contra-liability) and a liability because the Class P Units underlying the warrants were classified outside of members’ deficit. The fair value of warrants were remeasured each reporting period using Level 3 inputs with the increase or decrease charged to other income or expense in the consolidated statements of operations. Fair value remeasurements during the period ended September 22, 2021 and for the year ended December 31, 2020 are discussed below. Fair Value Measurement for Class P Unit Redemption Value, Warrants Exercisable into Class P Units, and Valuation as of the Grant Date of Class M Units Measurements of the redemption value of the Class P Units, the fair value of warrants that were exercisable into Class P Units, and the valuation as of the grant date of Class M Units were the responsibility Brilliant Earth, LLC with assistance from independent third-party valuations. Measurements of the redemption value of the Class P Units and the fair value warrants exercisable into Class P Units were determined in accordance with ASC 820, Fair Value Measurements . The objective of fair value measurements is estimation of an exit price from the perspective of a market participant that holds the asset or owes the liability. As such, unobservable inputs reflect market participant assumptions about risk, both in terms of the inherent risks in a valuation technique, as well as the inputs to that valuation technique. Although unobservable inputs used in determining the fair value by market participants may consider Brilliant Earth, LLC's own data, the metrics are not entity-specific because they do not incorporate the asset’s current use or any specific advantages or disadvantages Brilliant Earth, LLC derives from the asset. Measurements of the grant date fair value of Class M Units were determined in accordance with ASC 718, Compensation – Stock Compensation . ASC 718 defines fair value as the amount at which asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than a forced or liquidated sale, and excludes the effect of certain conditions, restrictions and other features that would be considered in a true fair value measurement. For the six months ended June 30, 2021 and year ending December 31, 2020, fair value measurements were based on an estimate of the implied equity value of the Company using a combination of guideline public company analysis, a guideline transaction analysis, and a discounted cash flows analysis, with a 33.3% weighting given to each method. The enterprise value was then adjusted for cash and interest-bearing debt to determine equity value. In determining fair value for the relevant period, the aggregate equity value for the Company was then allocated to each instrument with consideration given to the preferences of each class of units using a hypothetical distribution of value (commonly referred to as the “waterfall”). Then, the allocation to the fair value on the grant date for Class M Units were further adjusted using the Black-Scholes option pricing model. For the period from July 1, 2021 to September 22, 2021, the enterprise value determined using the method described in the preceding paragraph was further adjusted to reflect the potential for an exit event based on the contemplated initial public offering using a guideline company analysis. The derived equity value was then allocated to each instrument as described in the preceding paragraph. Key inputs included valuations of guideline companies and transactions. The guideline company and transaction methods also considered a control premium. The discounted cash flow analysis included estimates of the Company's future financial performance discounted at a rate that considered the cost of capital and venture capital required rates of return studies. All inputs were Level 3 in the fair value hierarchy. Level 3 inputs into the Black-Scholes model to Class M Units included the expected price volatility estimated by taking the average historic price volatility for industry peers consisting of several public companies in our industry that are of similar size, complexity, and stage of development and the risk-free interest rate for the expected term of the grant. All Class M Units were converted into Common LLC Units at the time of the IPO and ceased to exist as of September 22, 2021, and therefore, were no longer remeasured at fair value. The quantitative information about certain significant Level 3 unobservable inputs for the three valuation methods and for Black-Scholes are summarized as follows: Periods ended September 22, December 31, 2021 2020 Guideline company and transaction analysis: Control premium 20.00% 20.00% Discounted cash flow analysis: Discount rate 22.00% 22.00% to 25.00% Option pricing model inputs for warrants and Class M Units: Volatility 40.00% 45.00% Time to Liquidity in years 0.8 to 1.0 1.2 to 1.5 Risk free rate 0.07% 0.10% Discount for lack of marketability 7.50% to 10.00% 12.00% to 15.00% The fair value amounts using Level 3 inputs from January 1, 2020 through September 22, 2021 were as follows (in thousands): Class P Unit redemption value Class P Unit warrant liability Balance, January 1, 2020 $ 80,829 $ 83 Special distributions to members (10,000) — Net income allocable to Class P Units 3,997 — Increase/decrease (8,499) 1 Balance, December 31, 2020 66,327 84 Tax distributions to members (9,755) — Net income allocable to Class P Units prior to the Reorganization Transaction and IPO 5,466 — Increase/decrease 327,189 6,331 Reorganization Transactions (389,227) (6,415) Balance, September 22, 2021 $ — $ — The increase in the fair market value of the Class P Unit warrant liability was $6.3 million and recorded in other expense, net in the consolidated statements of operations for the year ended December 31, 2021. Application of these approaches involves the use of estimates, judgments and assumptions that are highly complex and subjective, such as those regarding expected future company financial performance, discount rates, valuations and selection of comparable companies, and the probability of possible future events. Changes in any or all these estimates and assumptions or the relationships between those assumptions impact the Company’s valuations as of each valuation date and may have a material impact on the valuation of Class P Units. Summary Capitalization The following summarizes the capitalization and voting rights of the Company’s classes of equity as of December 31, 2022 and 2021: December 31, December 31, 2022 2021 Authorized Issued & Votes per Economic Preferred stock 10,000,000 None None Common stock: Class A 1,200,000,000 11,246,694 9,614,523 1 Yes Class B 150,000,000 35,482,534 35,658,013 1 No Class C 150,000,000 49,119,976 49,505,250 10 No Class D 150,000,000 None None 10 Yes Common stock reserved for issuances: Conversion of LLC Units 84,602,510 85,163,263 Unvested LLC Units 615,000 1,901,977 Unvested RSUs 3,158,686 1,377,728 Stock options 857,615 1,449,181 Common LLC Units 84,602,510 85,163,263 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 December 31, 2022 , 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 as of December 31, 2022 , are held as follows: • 11,246,694 shares of Class A common stock were issued in the IPO, and through subsequent conversion of LLC Units and vesting of RSUs; • 35,482,534 shares of Class B common stock are held by the Continuing Equity Owners excluding the Founders ; and • 49,119,976 shares of Class C common stock are held by the Founders. 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 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 December 31, 2022, Brilliant Earth Group, Inc. holds a 11.7% economic interest in Brilliant Earth, LLC through its ownership of 11,246,694 LLC Units, but consolidates Brilliant Earth, LLC as sole managing member. The remaining 84,602,510 L LC units represe nting an 88.3% i nterest are held by the Continuing Equity Owners and presented in the 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, at the Company's election, 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 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 December 31, 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 IPO and 3,138 LLC Units for RSUs that vested, net of shares withheld for payroll taxes, during the period. The Company also caused Brilliant Earth Group, Inc. to issue 144,031 shares of Class B common stock to the Continuing Equity Owners associated with LLC units which vested during the period, of which 28,053 shares of Class B common stock was converted to Class A common stock. No stock options were exercised during the period. For the year ended December 31, 2022, the Company caused Brilliant Earth, LLC to issue to the Company a vested total of 351,119 LLC Units as a result of the issuance of Class A common stock related to the vesting of RSUs. The Company also caused Brilliant Earth Group, Inc. to issue 720,299 shares of Class B common stock to the Continuing Equity Owners associated with LLC units which vested during the year ended December 31, 2022. During the year ended December 31, 2022, there were 895,778 shares of Class B common stock, and 385,274 shares of Class C common stock, respectively, converted to Class A common stock related to the Continuing Equity Owners. There were no stock options exercised during the year ended December 31, 2022. 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 $18.3 million and $21.4 million for the years ended December 31, 2022 and 2021, respectively. No distributions were made in the year ended December 31, 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 $327.2 million for the period from December 31, 2020 to September 22, 2021 . 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 22, 2021 (in thousands except share amounts): Brilliant Earth, LLC (prior to reorganization transaction) Class P LLC Units Class F LLC Units Class M LLC Units Class F Units and Class M Units Units Amount 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) Special distribution to members — (10,000) — (20,000) — — — (20,000) Vested Class M Units — — — — 174,847 — 174,847 — Equity-based compensation — — — — — 46 — 46 Net income (loss) — 3,997 — 17,579 — — — 17,579 Adjustment of redeemable convertible preferred units to redemption value — (8,499) — 8,499 — — — 8,499 Balance, December 31, 2020 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 the 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 | 12 Months Ended |
Dec. 31, 2022 | |
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. As of December 31, 2022 we have reserved 11,404,638 shares of common stock 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 under the 2021 Incentive Award Plan. In addition, 1,734,731 shares of Class A common stock are 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 is 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 December 31, 2022, 7,032,467 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 RSUs 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. The following table summarizes the activity related to the Company ’ s RSUs for the year ended December 31, 2022: Number of Restricted Stock Units Weighted average Balance as of December 31, 2021, unvested 1,377,728 $ 13.15 Granted 2,891,551 $ 7.68 Vested (351,119) $ 12.72 Forfeited (759,474) $ 9.74 Balance as of December 31, 2022, unvested 3,158,686 $ 9.01 The total fair value of RSUs vested for the years ended December 31, 2022 and 2021, was $4.5 million , and $0.1 million , respectively. The fair value of the RSU s was based on the fair value of a Class A share of common stock at the time of grant. Total compensation expense for RSUs was approximately $7.2 million for the year ended December 31, 2022 , and $1.0 million for the period from September 23, 2021 to December 31, 2021, respectively, and is included in selling, general and administrative expenses in the consolidated statements of operation s. The Company recognized $0.1 million of t ax benefit associated with the equity-based compensation expense for RSUs for the year ended December 31, 2022, and nil for the year ended December 31, 2021, respectively. The unamortized compensation cost related to RSUs of $24.7 million as of December 31, 2022 is expected to be recognized over a weighted-average period of approximately 3.1 years . Grants of Stock Options 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. No additional options were granted subsequent to September 22, 2021. 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 years from the date of issuance. The following table summarizes the activity related to the outstanding and exercisable stock options: Number of options Weighted average exercise price Weighted average grant date fair value Weighted average remaining contractual term (years) Outstanding as of December 31, 2021 1,612,133 $ 12.00 $ 4.28 9.7 Forfeited (754,518) $ 12.00 $ 4.29 Outstanding as of December 31, 2022 857,615 $ 12.00 $ 4.27 8.7 Exercisable as of December 31, 2022 476,932 $ 12.00 $ 4.26 8.7 Unvested as of December 31, 2022 380,683 $ 12.00 $ 4.29 8.7 Vested and expected to vest as of December 31, 2022 857,615 $ 12.00 $ 4.27 8.7 As of December 31, 2022, the vested stock options did not have an aggregated intrinsic value as the exercise price exceeded the estimated fair market value of the stock options. 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 during the period from September 22, 2021 through December 31, 2022 , are as follows: Expected volatility 35.0 % Expected dividend yield Nil Expected term (in years) 5 to 6.3 Years Risk free interest rate 0.9 % Total compensation expense for stock options was approximately $1.4 million for both the year ended December 31, 2022 and the period from September 22, 2021 to December 31, 2021, respectively, and is included in selling, general and administrative expenses in the consolidated statements of operations. No tax benefit was associated with the equity-based compensation expense for stock options. As of December 31, 2022, total compensation expense related to unvested option awards not yet recognized was $1.6 million and the weighted-average period over which the compensation is expected to be recognized is 2.1 years. Class M Units Prior to being recapitalized into Outstanding Restricted LLC Units as discussed in Note 1, Business and Organization, Summary of the Reorganization, Offering and Other Transactions Completed in connection with the IPO , Class M Units were profit interests granted to certain employees at the Company’s discretion without consideration. The agreements granted to date generally provide for 25.0% vesting on the first anniversary from the date of grant (or shorter period at management’s 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 was expensed ratably over the service period. Class M Units were deemed issued and outstanding as they vested. The fair value of grants of restricted Class M Units was based on the fair value of an unrestricted Class M Unit underlying the award until the recapitalization which occurred on September 22, 2021 as discussed in the table within the subsection " Outstanding Restricted LLC Units (formerly M Units) " below. Vested Class M Units were subject to repurchase at the option of the Company upon termination of the holder’s employment based on the then fair value of the units. No units had been repurchased through September 22, 2021. 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 IP O and have been retroactiv ely adjusted as described in Note 1, Business and Organization , Conversion of Class F, P and M Units at Time of 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: Number of LLC Units Weighted average Balance, January 1, 2020, unvested 457,227 $ 0.16 Granted 1,444,831 $ 0.29 Forfeited (241,265) $ 0.27 Vested (174,847) $ 0.27 Balance, December 31, 2020, unvested 1,485,946 $ 0.28 Granted prior to September 22, 2021 1,515,276 $ 0.67 Forfeited (398,768) $ 0.22 Vested (700,477) $ 0.46 Balance, December 31, 2021, unvested 1,901,977 $ 0.52 Forfeited (566,678) $ 0.42 Vested (720,299) $ 0.51 Balance, December 31, 2022, unvested 615,000 $ 0.61 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 LLC Units is recorded in selling, general and administrative expenses in the consolidated statements of operations were approximate ly $0.3 million, $0.3 million, and less than $0.1 million f or the years ended December 31, 2022, 2021, and 2020, respectively. The unamortized LLC Unit compensation cost of $0.4 million as of December 31, 2022 is expected to be recognized over a weighted-average period of approximately 2.0 years. The quantitative information about certain significant Level 3 unobservable inputs for the three valuation methods and for Black-Scholes are summarized in Note 9, Stockholders’ Equity and Members Units Including Redeemable Convertible Class P Units, for the period ended September 22, 2021 and the year ended December 31, |
Income Taxes and Tax Receivable
Income Taxes and Tax Receivable Agreement | 12 Months Ended |
Dec. 31, 2022 | |
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 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. Income Tax Benefit an d Deferred Tax Asset On September 23, 2021 in connection to the Reorganization Transaction, 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 Brilliant Earth Group, Inc.’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 outside 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. Provision for Income Taxes Brilliant Earth Group, Inc.'s income tax benefits were $0.2 million and $0.3 million for the year ended December 31, 2022 and for the period from September 23, 2021 to December 31, 2021, respectively. Brilliant Earth Group, Inc. had no business transactions or activities prior to the IPO, and accordingly, no amounts related to income taxes were incurred by the Company. Total Company earnings used to compute income taxes is as follows (in thousands): For the year ended December 31, For the period from September 23, to December 31, 2022 2021 Pre-tax earnings of the Company $ 18,857 $ 25,940 Earnings allocable to NCI (not allocable to the Company) (16,890) (24,728) Pre-tax earnings of Brilliant Earth, Inc. 1,967 1,212 Income tax benefit of Brilliant Earth, Inc. 168 316 After tax earnings of Brilliant Earth Group, Inc. $ 2,135 $ 1,528 The components of the benefit from income taxes are as follows (in thousands): December 31, 2022 December 31, 2021 Current tax benefit Federal $ — $ — State — — Total current income tax benefit — — Deferred tax benefit Federal (136) (259) State (32) (57) Total deferred income tax benefit (168) (316) Benefit from income taxes $ (168) $ (316) A reconciliation of the expected federal statutory rate of 21.0% to the effective rate is as follows (in thousands): For the year ended December 31, 2022 For the year ended December 31, 2021 Tax effect Rate Tax effect Rate Brilliant Earth Group, Inc. expected tax expense at statutory rate $ 413 21.0% $ 255 21.0% Less: equity interest in earnings of subsidiary not taxable (permanent difference) (645) (32.8)% (272) (22.4)% Brilliant Earth Group, Inc. level pre-tax loss as adjusted for tax (232) (11.8)% (17) (1.4)% Income (loss) from investee per K-1 (inside basis difference) 602 30.6% (148) (12.2)% Loss from step up in outside basis (538) (27.4)% (151) (12.5)% Income tax benefit at effective rate $ (168) (8.6)% $ (316) (26.1)% The components of deferred tax assets are as follows (in thousands): December 31, December 31, 2022 2021 Deferred tax assets Outside basis difference in investment $ 8,464 $ 4,091 Net operating loss carryforwards 484 316 Net deferred tax asset $ 8,948 $ 4,407 The Company recognizes deferred tax assets to the extent it believes, based on available evidence, that it is more likely than not that they will be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent results of operations. For the year ended December 31, 2022 and the period from September 23, 2021 to December 31, 2021, the Company evaluated the likelihood it would realize its deferred tax assets and determined the probability to be more likely than not, and accordingly, no valuation allowance was recognized. As of December 31, 2022, the Company has total federal net operating loss carryforwards ( “ NOLs ” ) of $1.9 million that have no expiration date. The Company also has various immaterial state NOLs that begin to expire in 2031. Management believes on a more likely than not basis that the Company will be able to realize the tax benefit of its NOLs carryforwards. Utilization of net operating losses, credit carryforwards, and certain deductions may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The tax benefits related to future utilization of federal and state net operating losses, tax credit carryforwards, and other deferred tax assets may be limited or lost if cumulative changes in ownership exceeds 50% within any three-year period. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examinations from various taxing authorities. Uncertain Tax Positions The Company follows the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes . ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded in the consolidated financial statements. As of December 31, 2022, the Company had not incurred or recorded any penalties or interest related to income taxes in the consolidated statements of operations. Additionally, the Company did not record any uncertain tax positions on the consolidated balance sheets as management concluded that no such positions existed as of December 31, 2022. The Company is subject to examination for the year ended December 31, 2022 and the period from September 22, 2021 to December 31, 2021 . The Company is not currently subject to income tax audits in any U.S. or state jurisdictions for any tax year. 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 years p ursuant 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 the 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 amounts to be recorded for both the deferred tax assets and the liability for our obligations under the TRA will be estimated at the time of any purchase or redemption as a reduction to shareholders’ equity, and the effects of changes in any of our estimates after this date will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. As part of the IPO, 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. As of December 31, 2022, related to the TRA, the Company has recorded (i) a deferred tax asset in the amount of $8.5 million , (ii) a corresponding estimated liability with a balance of $7.4 million representing 85% of the projected tax benefits to the TRA Owners; and (iii) $1.1 million of additional paid-in capital. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, to the extent possible, the Company discloses the range of such reasonably possible losses. On February 17, 2023, Plaintiff Tanisha Roberson filed a complaint against the Company in the United States District Court for Northern District of Illinois. The complaint alleges, on behalf of a putative class, that the Company’s “Virtual Try On” feature violates the Illinois Biometric Information Privacy Act. The plaintiff seeks statutory damages, injunctive relief, attorneys’ fees and costs, and other unspecified damages. As of the date of this Annual Report on Form 10-K, the Company’s initial response to the complaint is not yet due. The Company intends to vigorously defend the alleged claims of the plaintiff and the putative class. At this time, any liability related to the alleged claims is not currently probable or reasonably estimable. Non-Income Related Taxes The Company collects and remits sales and use taxes in a variety of jurisdictions across the U.S. 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 December 31, 2022, unconditional future minimum payments under agreements to purchase services primarily related to software maintenance and marketing and advertising spending. As of December 31, 2022, these commitments with a remaining term in excess of 12 months totaled $5.3 million. Capital Commitments The Company may enter into commitments to expand various locations, which generally include design, store construction and improvements. As of December 31, 2022, these commitments totaled $2.8 million, related to the opening of new locations. 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 $0.9 million, $0.5 million and $0.4 million, for the years ended December 31, 2022, 2021 and 2020, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTSOn March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, and the FDIC was appointed as receiver. On March 14, 2023, the FDIC announced the establishment of the Bridge Bank, which assumed the deposits and obligations of SVB. The FDIC further announced that all contracts entered into with SVB before it failed were transferred into the Bridge Bank by the FDIC and the Bridge Bank is obligated to and has the full ability to perform SVB’s contractual obligations. As of the date these financial statements are issued, the Company’s deposit balance at the Bridge Bank was approximately $0.2 million. The Company does not anticipate any losses with respect to its funds that had been deposited with SVB. As described in Note 8, Debt |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The consolidated financial statements for the periods prior to the Reorganization Transactions and IPO have been presented to combine the previously separate entities. The consolidated financial statements have been prepared in accordance with U.S. GAAP and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect the financial position, results of operations and cash flows of the Company. As an emerging growth company (“EGC”), the Company has elected to use extended transition periods available to EGC companies for complying with new or revised accounting standards. These accounting policies have been consistently applied in the preparation of the consolidated financial statements. Certain reclassifications have been made to prior period amounts to conform to the current presentation. These reclassifications had no impact on net income, cash flows or stockholders’/member’s deficit previously reported. |
Principles of Consolidation and Non-Controlling Interest | The 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 assets and liabilities of Brilliant Earth, LLC represent substantially all of the consolidated assets and liabilities of Brilliant Earth Group, Inc. Brilliant Earth Group, Inc., which was established June 2, 2021, has not had any material operations on a standalone basis since its inception, and all of the operations of the Company are carried out by Brilliant Earth, LLC. |
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 inventory valuation, allowance for sales returns, estimates of current and deferred income taxes payable pursuant to the tax receivable agreement, 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 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. At December 31, 2022 and 2021, there were no financial instruments (assets or liabilities) measured at fair value on a recurring basis. 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. See Note 9, Stockholders’ Equity and Members Units Including Redeemable Convertible Class P Units , for further discussion. 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) for similar types of borrowing arrangements 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. |
Concentration of Risk | The Company maintains the majority of its cash and cash equivalents in accounts with major financial institutions within the U.S. in the form of demand deposits, money market accounts, and time deposits. Deposits in these institutions may exceed the amounts of insurance provided, or deposits may not be covered by insurance. The Company has not experienced losses on its deposits of cash and cash equivalents. On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver. On March 14, 2023, the FDIC announced the establishment of Silicon Valley Bridge Bank, N.A. (the “Bridge Bank”) which assumed the deposits and obligations of SVB. The Company had deposit accounts at SVB and continues to have deposit accounts with the Bridge Bank. As of the the date these financial statements are issued, the Company has approximately $0.2 million in deposit accounts at the Bridge Bank. The Company does not anticipate any losses with respect to its funds that had been deposited with SVB. See Note 13, Subsequent Events , for further discussion. The Company’s ability to procure diamonds, gemstones and to produce jewelry is dependent on its relationships with various suppliers. No supplier accounted for more than 10% of inventory purchases in a given year during the years ended December 31, 2022, 2021, and 2020. |
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 and highly liquid in nature.Restricted cash as of December 31, 2022 and 2021 pertains to funds of $0.2 million securing a letter of credit in lieu of a security deposit related to a lease at one of the Company’s showroom locations. |
Inventories, Net | The Company’s diamond, gemstone and jewelry inventories are primarily held for resale and valued at the lower of cost or net realizable value. Cost is primarily determined using the weighted average cost on a first-in, first-out (“FIFO”) basis for all inventories, except for unique inventory SKUs (principally independently graded diamonds), where cost is determined using specific identification. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Inventory reserves are recorded for obsolete, slow-moving or defective items and shrinkage. Inventory reserves are calculated as the difference between the cost of inventory and its estimated market value based on factors such as current and anticipated demand, customer preferences and fashion trends, management strategy and market conditions. Due to the Company’s inventory principally consisting of diamonds, gemstones and fine jewelry, the age of the inventories has limited impact on the estimated market value. The Company’s diamonds and gemstones do not degrade in quality over time and diamond and gemstone inventory generally consists of the diamond and |
Property and Equipment, Capitalized Software and Website Development and Impairment Tests for Long-Lived Assets | Property and equipment are stated at cost less accumulated depreciation. Construction in progress primarily includes costs related to new showroom construction and is stated at original cost. Depreciation is recorded when the relevant assets are placed into service. Repairs and maintenance costs are expensed as incurred. Depreciation expense is calculated on a straight-line basis over the estimated useful lives of the related assets. The cost and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and the related gain or loss is reported in the consolidated statements of operations. Estimated useful lives by major asset category are as follows: Asset Life (in years) Computer equipment 3 Equipment 5 - 7 Furniture and fixtures 7 Software and website 3 Leasehold improvements Shorter of lease term or 7 years The Company capitalizes costs of initial development of internal-use software and its website, and amortizes such costs on a straight-line basis over the estimated useful life of the software, which is generally three years, once it is available for use. Costs related to the ongoing maintenance of internal-use software and the website are expensed as incurred. Cloud computing implementation costs incurred for implementation, setup, and other upfront activities in a hosting arrangement that is a service contract are capitalized during the application development stage until the software is ready for its intended use and are included in other assets in the consolidated balance sheets. Upgrades and enhancements are capitalized if they will result in additional functionality. Amortization of capitalized costs is recorded on a straight-line basis over the term of the associated hosting arrangement, inclusive of certain renewal periods. During the year ended December 31, 2022, the Company recorded amortization expense related to these implementation costs of $0.3 million. Gross capitalized costs were $2.0 million as of December 31, 2022. Impairment Tests for Long-Lived Assets The Company reviews the carrying value of its long-lived assets, including property and equipment and right of use (“ROU”) assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To the extent the estimated future cash inflows attributable to the assets, less estimated future cash outflows, are less than the carrying amount, an impairment loss would be recognized. No impairment losses have been recognized during the three years ended December 31, 2022, and as of December 31, 2022, no events or changes in circumstance have been identified that would indicate the carrying value of long-lived assets is not recoverable. |
Leases | The Company determines if an arrangement contains a lease at inception of a contract, and leases are classified at commencement as either operating or finance leases. For operating leases, the Company recognizes a ROU asset and a lease liability on the balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and the lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company does not have any finance leases. The lease liability is determined as the present value of future lease payments over the lease term. As the rate implicit in the Company’s leases is not readily determinable, the Company uses an incremental borrowing rate that is estimated to approximate the interest rate the Company would have to pay to borrow on a collateralized basis with similar terms and payments in an economic environment similar to where the leased asset is located. The ROU asset is recorded as the initial amount of the lease liability, plus any lease payments made to the lessor before or at the lease commencement date and any initial direct costs incurred, less any tenant improvement allowance incentives received. Tenant incentives are amortized through the right-of-use asset as a reduction of lease expense over the lease term. Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Company utilizes certain practical expedients and policy elections available under Accounting Standards Codification (“ASC”) 842. The Company does not recognize ROU assets or lease liabilities for any lease with a term of twelve months or less and the Company has elected to not separate lease and non-lease components for all existing classes of assets. Operating lease expenses for fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments to the lessor such as maintenance, utilities, insurance, and real estate taxes are expensed as incurred. |
Warrants Issued in Connection with Financings | Warrants issued in connection with debt and equity financings are generally accounted for as a component of equity unless the warrants include a conditional obligation to issue a variable number of units among other conditions or there is a deemed possibility that the Company may need to settle the warrants in cash, in which case they are accounted for as non-current liabilities in the consolidated balance sheets. |
Debt Issuance Costs | . All other costs related to debt issuance are expensed as incurred. The Company presents debt issuance costs associated with long-term debt as a reduction of the carrying amount of the debt. Unamortized costs related to the SVB Revolving Credit Facility are included in other assets on the consolidated balance sheets, See Note 8, Long-Term Debt , for further discussion. |
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. An in-house three-year extended service plan, which provides full inspection, cleaning and certain repairs due to normal wear, is offered for an additional charge. An extended protection plan is also offered through a third party that has different terms ranging from 2 years to lifetime that vary based on the item purchased. 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 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 offers an in-house 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 plan. The Company also offers an extended protection plan in the capacity of an agent on behalf of a third-party that has different terms ranging from two years to lifetime that vary based on the item purchased. The commission that the Company receives from the third-party is recognized at the time of sale less an estimate of cancellations based on historical experience. There are no additional performance obligations in relation to the third-party plan. Sales taxes are collected and remitted to taxing authorities, and the Company has elected to exclude sales taxes from revenues recognized under ASC 606. A significant financing component does not exist because customer payment is completed prior to order fulfillment. 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 December 31, 2022 and December 31, 2021, total deferred revenue was $18.6 million and $19.0 million, respectively, of which less than $0.1 million and $0.2 million, respectively, were included within other long-term liabilities in the consolidated balance sheets. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $18.4 million, $9.6 million, and $8.1 million, respectively, of revenue that was deferred as of the last day of the respective prior year. 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 December 31, 2022 and December 31, 2021, refund liabilities balances were $2.3 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 consolidated balance sheets. See Note 6, Accrued Expenses and Other Current Liabilities , for further discussion. As of December 31, 2022 and December 31, 2021, returns asset balances were $0.9 million and $1.1 million, respectively, and are included within prepaid expenses and other current assets in the consolidated balance sheets. Fulfillment Costs The Company generally does not bill customers separately for shipping and handling charges. Fulfillment costs incurred by the Company when shipping to customers is reflected in cost of sales in the 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. |
Cost of Sales | The Company purchases diamonds and gemstones from suppliers and utilizes third-party manufacturing suppliers for the production and assembly of substantially all jewelry sold by the Company. Cost of sales includes merchandise costs, inbound freight charges, costs of shipping orders to customers, costs and reserves for disposal of obsolete, slow-moving or defective items and shrinkage. |
Selling, General and Administrative Expenses | Selling, general and administrative expenses consist primarily of marketing, advertising and promotional expenses, payroll and related benefit costs for the Company’s employees, including equity-based compensation expense, merchant processing fees, certain facility-related costs, customer service, technology and depreciation expenses, as well as professional fees and other general corporate expenses. |
Marketing, Advertising and Promotional Costs | Marketing, advertising and promotional costs are expensed as incurred and totaled approximately $97.3 million, $74.4 million and $47.1 million, for the years ended December 31, 2022, 2021 and 2020, respectively. |
Foreign Currency Transactions | Gains or losses resulting from foreign currency transactions are included within other income (expense), net in the consolidated statements of operations. |
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 consolidated statements of operations in the period of determination. |
Equity-Based Compensation | Equity-based compensation is accounted for as an expense in accordance with ASC Topic 718, Compensation - Stock Compensation , 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 uses the straight-line method to amortize all stock awards granted over the requisite service period of the award. 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. |
Member Units | Member units were assessed at issuance or when the terms were changed or modified for classification (as liabilities, temporary equity, or permanent equity), and for embedded conversion and redemption features requiring bifurcation. The Class F Units (“Class F Units”) and Class M Units meet the criteria for classification as permanent equity. As discussed in Note 9, Stockholders’ Equity and Members Units Including Redeemable Convertible Class P Units , the Class P Units were classified as temporary equity and adjusted each reporting period to their redemption value. Under the LLC Agreement, the holder of any Class P Units had the right at any time, at such holder’s option, |
Distributions to Members | The LLC Agreement provides for the distribution of cash in defined amounts sufficient to fund member income tax liabilities. |
Income Taxes | Brilliant Earth Group, Inc. accounts for its income taxes 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 consolidated statements of operations. As of December 31, 2022 and 2021, no uncertain tax positions have been recorded. The Company will continue to monitor this position each interim period. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases , and also issued subsequent amendments to the initial guidance, ASC 2018-10, ASC 2018-11, ASU 2019-10, ASU 2020-02 and ASU 2020-05 (collectively, “ASC 842”). The standard requires the recognition of a liability for lease obligations and a corresponding ROU asset on the balance sheet, and additional disclosure regarding leasing arrangements. The Company adopted this guidance by applying the modified retrospective approach effective January 1, 2022. The Company elected to apply transition practical expedients, which allowed the Company to use its previous evaluations regarding if an arrangement contains a lease, if a lease is an operating or financing lease and what costs are capitalized as initial direct costs prior to adoption. The adoption of ASC 842 effective January 1, 2022 resulted in the recognition of operating lease ROU assets of $19.2 million and operating lease liabilities of $21.3 million in the Company’s consolidated balance sheet. In connection with the adoption, pre-existing liabilities for deferred rent and various lease incentives totaling $2.1 million were reclassified to the operating lease ROU assets. The Company’s financial position and operating results for reporting periods prior to January 1, 2022 have not been adjusted and continue to be presented in accordance with the accounting standard in effect at that time. No cumulative effect adjustment was required to be recorded. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which modifies ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 is effective for the Company for interim and annual reporting periods beginning after December 15, 2021. The Company adopted this guidance on January 1, 2022 on a prospective basis and the adoption did not have a material impact on the Company's consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 consolidated balance sheets to the statements of cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands): December 31, 2022 2021 2020 Cash and cash equivalents $ 154,649 $ 172,865 $ 66,269 Restricted cash 205 205 205 Total $ 154,854 $ 173,070 $ 66,474 |
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents, and restricted cash from the consolidated balance sheets to the statements of cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands): December 31, 2022 2021 2020 Cash and cash equivalents $ 154,649 $ 172,865 $ 66,269 Restricted cash 205 205 205 Total $ 154,854 $ 173,070 $ 66,474 |
Schedule of Property and Equipment, Net | Estimated useful lives by major asset category are as follows: Asset Life (in years) Computer equipment 3 Equipment 5 - 7 Furniture and fixtures 7 Software and website 3 Leasehold improvements Shorter of lease term or 7 years Property and equipment, net, consist of the following (in thousands): December 31, 2022 2021 Equipment $ 2,111 $ 1,064 Furniture and fixtures 1,834 880 Leasehold improvements 12,995 6,743 Construction in progress 3,626 700 Other 726 469 Gross property and equipment 21,292 9,856 Less: accumulated depreciation (4,738) (3,124) Total property and equipment, net $ 16,554 $ 6,732 |
Disaggregation of Revenue | The following table discloses total net sales by geography for the years ended December 31, 2022, 2021 and 2020 (in thousands): For the Years Ended December 31, 2022 2021 2020 United States $ 413,678 $ 353,072 $ 233,169 International 26,204 27,117 18,651 Total net sales $ 439,882 $ 380,189 $ 251,820 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share of common stock for the year ended December 31, 2022 and the period from September 23, 2021 to December 31, 2021 have been computed as follows (in thousands, except share and per share amounts): For the year ended December 31, 2022 For the period September 23, 2021 to December 31, 2021 Numerator: Net income attributable to Brilliant Earth Group, Inc., BASIC $ 2,135 $ 1,528 Add: Net income impact from assumed redemption of all LLC Units to common stock 16,890 10,736 Less: Income tax expense on net income attributable to NCI (4,369) (2,755) Net income attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED $ 14,656 $ 9,509 Denominator: Weighted average shares of common stock outstanding, BASIC 10,687,732 9,590,443 Dilutive effects of: Vested LLC Units that are exchangeable for common stock 84,569,954 85,105,060 Unvested LLC Units that are exchangeable for common stock 995,892 1,931,234 RSUs and stock options 251,747 114,684 Weighted average shares of common stock outstanding, DILUTED 96,505,325 96,741,421 BASIC earnings per share $ 0.20 $ 0.16 DILUTED earnings per share $ 0.15 $ 0.10 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net consist of the following (in thousands): December 31, 2022 2021 Loose diamonds $ 11,894 $ 9,013 Fine jewelry and other 27,744 15,990 Allowance for inventory obsolescence (307) (260) Total inventories, net $ 39,331 $ 24,743 The allowance for inventory obsolescence consists of the following (in thousands): December 31, 2022 2021 2020 Balance at beginning of period $ (260) $ (242) $ (169) Change in allowance for inventory obsolescence (47) (18) (73) Balance at end of period $ (307) $ (260) $ (242) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Estimated useful lives by major asset category are as follows: Asset Life (in years) Computer equipment 3 Equipment 5 - 7 Furniture and fixtures 7 Software and website 3 Leasehold improvements Shorter of lease term or 7 years Property and equipment, net, consist of the following (in thousands): December 31, 2022 2021 Equipment $ 2,111 $ 1,064 Furniture and fixtures 1,834 880 Leasehold improvements 12,995 6,743 Construction in progress 3,626 700 Other 726 469 Gross property and equipment 21,292 9,856 Less: accumulated depreciation (4,738) (3,124) Total property and equipment, net $ 16,554 $ 6,732 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses and other current liabilities consist of the following (in thousands): December 31, 2022 2021 Vendor expenses $ 14,769 $ 9,881 Inventory received not billed 7,973 4,648 Payroll expenses 5,301 4,498 Sales and other tax payable 4,137 4,229 Provision for sales returns and allowances 2,332 2,338 Current portion of TRA 502 — Other 2,819 3,162 Total accrued expenses and other current liabilities $ 37,833 $ 28,756 |
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 years ended December 31, 2022, 2021 and 2020 was as follows (in thousands): December 31, 2022 2021 2020 Balance at beginning of period $ 2,338 $ 2,341 $ 1,339 Provision 21,455 15,329 16,712 Returns and allowances (21,461) (15,332) (15,710) Balance at end of period $ 2,332 $ 2,338 $ 2,341 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Total Operating Lease ROU Assets and Lease Liabilities | Total operating lease ROU assets and lease liabilities were as follows (in thousands): Assets Classification As of December 31, 2022 Operating ROU assets at cost Operating lease right of use assets $ 31,041 Accumulated amortization Operating lease right of use assets (3,229) Net book value $ 27,812 Liabilities Classification As of December 31, 2022 Current: Operating leases Current portion of operating lease liabilities $ 3,873 Noncurrent: Operating leases Operating lease liabilities 28,537 Total lease liabilities $ 32,410 Total operating lease costs were as follows (in thousands): Classification For the year ended December 31, 2022 Operating lease costs Selling, general and administrative expense $ 4,372 Variable lease costs Selling, general and administrative expense 913 Total lease costs $ 5,285 |
Schedule of Future Minimum Lease Payments Under Long-term Non-cancelable Operating Leases | The maturity analysis of the operating lease liabilities as of December 31, 2022 was as follows (in thousands): Amount Years ending December 31, 2023 $ 5,235 2024 5,830 2025 5,822 2026 5,515 2027 4,061 Thereafter 11,854 Total minimum lease payments (1) 38,317 Less: imputed interest (5,907) Net present value of operating lease liabilities 32,410 Less: current portion (3,873) Long-term portion $ 28,537 (1) Future minimum lease payments exclude $18.1 million of future payments required under signed lease agreements that have not yet commenced. These operating leases will commence during fiscal year 2023 with lease terms ranging from six ten |
Schedule of Future Minimum Lease Payments for Operating Leases | At December 31, 2021, minimum lease payments for operating leases having an initial term in excess of one year under the previous lease standard (ASC 840) were as follows (in thousands): Amount Years ending December 31, 2022 $ 3,507 2023 3,680 2024 3,530 2025 3,449 2026 3,103 Thereafter 7,897 Total minimum lease payments $ 25,166 |
Additional Lease Information | The following table summarizes the weighted-average remaining lease term and weighted-average discount rate on long-term leases as of December 31, 2022 (in thousands): Weighted-average remaining lease term - operating leases 7.3 years Weighted-average discount rate - operating leases 4.5 % ROU assets and lease obligations recognized upon adoption of ASC 842 on January 1, 2022: ROU assets $ 19,173 Operating lease obligations $ (21,316) Supplemental cash flow information related to operating leases as of December 31, 2022 is as follows: Cash paid for amounts included in lease liabilities for the year ended December 31, 2022: Operating cash flows from operating leases $ 2,876 ROU assets obtained in exchange for new operating lease liabilities $ 13,970 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 December 31, 2022 and December 31, 2021, net of debt issuance costs (in thousands): December 31, 2022 December 31, 2021 Outstanding principal Debt issuance costs Net carrying amount Outstanding principal Debt issuance costs Net carrying amount Term loan $ 63,375 $ (663) $ 62,712 $ 65,000 $ (1,422) $ 63,578 Total debt $ 63,375 $ (663) $ 62,712 $ 65,000 $ (1,422) $ 63,578 Current portion $ 3,250 $ — $ 3,250 $ 30,789 $ — $ 30,789 Long-term 60,125 (663) 59,462 34,211 (1,422) 32,789 Total debt $ 63,375 $ (663) $ 62,712 $ 65,000 $ (1,422) $ 63,578 |
Schedule of Maturities of Long-term Debt | As of December 31, 2022, the aggregate future principal payments under the SVB Term Loan Facility were as follows (in thousands): Principal Years ending December 31, 2023 $ 3,250 2024 4,062 2025 5,688 2026 6,500 2027 43,875 Total aggregate future principal payments $ 63,375 |
Stockholders' Equity and Memb_2
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of Stock by Class | At September 22, 2021, the following summarizes the Company’s units authorized, issued and outstanding: Units authorized Units issued and outstanding Class F Units 50,954,445 50,232,863 Class P Units 33,162,444 32,435,595 Class M Units 7,791,744 3,904,237 The following summarizes the capitalization and voting rights of the Company’s classes of equity as of December 31, 2022 and 2021: December 31, December 31, 2022 2021 Authorized Issued & Votes per Economic Preferred stock 10,000,000 None None Common stock: Class A 1,200,000,000 11,246,694 9,614,523 1 Yes Class B 150,000,000 35,482,534 35,658,013 1 No Class C 150,000,000 49,119,976 49,505,250 10 No Class D 150,000,000 None None 10 Yes Common stock reserved for issuances: Conversion of LLC Units 84,602,510 85,163,263 Unvested LLC Units 615,000 1,901,977 Unvested RSUs 3,158,686 1,377,728 Stock options 857,615 1,449,181 Common LLC Units 84,602,510 85,163,263 No Yes |
Schedule of Stockholders' Equity Note, Warrants or Rights | Warrants for Class P Units consisted of the following as of September 22, 2021: Number of units under warrants Issue date Expiration date Exercise price Fair value per warrant on issue date 497,292 9/30/2019 9/30/2029 $3.52 $0.17 37,297 12/17/2020 12/17/2030 $6.70 $0.01 534,589 |
Schedule of Class of Warrant or Right, Valuation Assumptions | The quantitative information about certain significant Level 3 unobservable inputs for the three valuation methods and for Black-Scholes are summarized as follows: Periods ended September 22, December 31, 2021 2020 Guideline company and transaction analysis: Control premium 20.00% 20.00% Discounted cash flow analysis: Discount rate 22.00% 22.00% to 25.00% Option pricing model inputs for warrants and Class M Units: Volatility 40.00% 45.00% Time to Liquidity in years 0.8 to 1.0 1.2 to 1.5 Risk free rate 0.07% 0.10% Discount for lack of marketability 7.50% to 10.00% 12.00% to 15.00% |
Class of Warrant Or Right Fair Value Amounts | The fair value amounts using Level 3 inputs from January 1, 2020 through September 22, 2021 were as follows (in thousands): Class P Unit redemption value Class P Unit warrant liability Balance, January 1, 2020 $ 80,829 $ 83 Special distributions to members (10,000) — Net income allocable to Class P Units 3,997 — Increase/decrease (8,499) 1 Balance, December 31, 2020 66,327 84 Tax distributions to members (9,755) — Net income allocable to Class P Units prior to the Reorganization Transaction and IPO 5,466 — Increase/decrease 327,189 6,331 Reorganization Transactions (389,227) (6,415) Balance, September 22, 2021 $ — $ — |
Schedule of Stockholders Equity | 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 22, 2021 (in thousands except share amounts): Brilliant Earth, LLC (prior to reorganization transaction) Class P LLC Units Class F LLC Units Class M LLC Units Class F Units and Class M Units Units Amount 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) Special distribution to members — (10,000) — (20,000) — — — (20,000) Vested Class M Units — — — — 174,847 — 174,847 — Equity-based compensation — — — — — 46 — 46 Net income (loss) — 3,997 — 17,579 — — — 17,579 Adjustment of redeemable convertible preferred units to redemption value — (8,499) — 8,499 — — — 8,499 Balance, December 31, 2020 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 the 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) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Nonvested Share Activity | The following table summarizes the activity related to the Company ’ s RSUs for the year ended December 31, 2022: Number of Restricted Stock Units Weighted average Balance as of December 31, 2021, unvested 1,377,728 $ 13.15 Granted 2,891,551 $ 7.68 Vested (351,119) $ 12.72 Forfeited (759,474) $ 9.74 Balance as of December 31, 2022, unvested 3,158,686 $ 9.01 |
Schedule of Stock Options Roll Forward | The following table summarizes the activity related to the outstanding and exercisable stock options: Number of options Weighted average exercise price Weighted average grant date fair value Weighted average remaining contractual term (years) Outstanding as of December 31, 2021 1,612,133 $ 12.00 $ 4.28 9.7 Forfeited (754,518) $ 12.00 $ 4.29 Outstanding as of December 31, 2022 857,615 $ 12.00 $ 4.27 8.7 Exercisable as of December 31, 2022 476,932 $ 12.00 $ 4.26 8.7 Unvested as of December 31, 2022 380,683 $ 12.00 $ 4.29 8.7 Vested and expected to vest as of December 31, 2022 857,615 $ 12.00 $ 4.27 8.7 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Inputs to model for awards granted during the period from September 22, 2021 through December 31, 2022 , are as follows: Expected volatility 35.0 % Expected dividend yield Nil Expected term (in years) 5 to 6.3 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: Number of LLC Units Weighted average Balance, January 1, 2020, unvested 457,227 $ 0.16 Granted 1,444,831 $ 0.29 Forfeited (241,265) $ 0.27 Vested (174,847) $ 0.27 Balance, December 31, 2020, unvested 1,485,946 $ 0.28 Granted prior to September 22, 2021 1,515,276 $ 0.67 Forfeited (398,768) $ 0.22 Vested (700,477) $ 0.46 Balance, December 31, 2021, unvested 1,901,977 $ 0.52 Forfeited (566,678) $ 0.42 Vested (720,299) $ 0.51 Balance, December 31, 2022, unvested 615,000 $ 0.61 |
Income Taxes and Tax Receivab_2
Income Taxes and Tax Receivable Agreement (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Earnings Used To Compute Income Taxes | Total Company earnings used to compute income taxes is as follows (in thousands): For the year ended December 31, For the period from September 23, to December 31, 2022 2021 Pre-tax earnings of the Company $ 18,857 $ 25,940 Earnings allocable to NCI (not allocable to the Company) (16,890) (24,728) Pre-tax earnings of Brilliant Earth, Inc. 1,967 1,212 Income tax benefit of Brilliant Earth, Inc. 168 316 After tax earnings of Brilliant Earth Group, Inc. $ 2,135 $ 1,528 |
Schedule of Components of Income Tax Expense (Benefit) | The components of the benefit from income taxes are as follows (in thousands): December 31, 2022 December 31, 2021 Current tax benefit Federal $ — $ — State — — Total current income tax benefit — — Deferred tax benefit Federal (136) (259) State (32) (57) Total deferred income tax benefit (168) (316) Benefit from income taxes $ (168) $ (316) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the expected federal statutory rate of 21.0% to the effective rate is as follows (in thousands): For the year ended December 31, 2022 For the year ended December 31, 2021 Tax effect Rate Tax effect Rate Brilliant Earth Group, Inc. expected tax expense at statutory rate $ 413 21.0% $ 255 21.0% Less: equity interest in earnings of subsidiary not taxable (permanent difference) (645) (32.8)% (272) (22.4)% Brilliant Earth Group, Inc. level pre-tax loss as adjusted for tax (232) (11.8)% (17) (1.4)% Income (loss) from investee per K-1 (inside basis difference) 602 30.6% (148) (12.2)% Loss from step up in outside basis (538) (27.4)% (151) (12.5)% Income tax benefit at effective rate $ (168) (8.6)% $ (316) (26.1)% |
Schedule of Deferred Tax Assets and Liabilities | he components of deferred tax assets are as follows (in thousands): December 31, December 31, 2022 2021 Deferred tax assets Outside basis difference in investment $ 8,464 $ 4,091 Net operating loss carryforwards 484 316 Net deferred tax asset $ 8,948 $ 4,407 |
Business and Organization (Deta
Business and Organization (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Sep. 27, 2021 USD ($) $ / shares shares | Sep. 22, 2021 USD ($) shares | Dec. 31, 2021 shares | Dec. 31, 2022 USD ($) segment classOfStock showroom shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Sep. 23, 2021 shares | |
Concentration Risk [Line Items] | |||||||
Number of locations | showroom | 25 | ||||||
Number of operating segments | segment | 1 | ||||||
Number of reportable segments | segment | 1 | ||||||
Payments of deferred offering costs | $ | $ 0 | $ 0 | $ 0 | ||||
Number of classes of stock | classOfStock | 4 | ||||||
Tax benefit distributions to noncontrolling interest holders, percent | 85% | 85% | 85% | ||||
Class P Warrants | |||||||
Concentration Risk [Line Items] | |||||||
Warrant carrying value | $ | $ 6,400 | ||||||
Conversion of convertible securities (in shares) | 534,589 | ||||||
Class A Common Stock | |||||||
Concentration Risk [Line Items] | |||||||
Conversion of stock, shares issued (in shares) | 28,053 | 385,274 | |||||
Class B Common Stock | |||||||
Concentration Risk [Line Items] | |||||||
Conversion of stock, shares issued (in shares) | 895,778 | ||||||
Stock issued during period, shares, new issues (in shares) | 36,064,421 | 144,031 | 720,299 | ||||
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 | 1.9080 | ||||||
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 | |||||
Brilliant Earth, LLC | |||||||
Concentration Risk [Line Items] | |||||||
Economic interest percent | 10.10% | 11.70% | |||||
Brilliant Earth, LLC | |||||||
Concentration Risk [Line Items] | |||||||
Noncontrolling interest, number of shares purchased (in shares) | 8,333,333 | ||||||
Rebalancing of controlling and non-controlling 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 | ||||||
Rebalancing of controlling and non-controlling 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 deferred offering costs | $ | $ 13,400 | ||||||
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 | $ | $ 101,600 | ||||||
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% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Mar. 21, 2023 USD ($) | Sep. 22, 2021 USD ($) | Dec. 31, 2019 USD ($) | Sep. 30, 2019 USD ($) | |
Noncontrolling Interest [Line Items] | |||||||
Fair value of units | $ 389,200 | ||||||
Letter of credit | $ 200 | $ 200 | |||||
Restricted cash | 205 | 205 | $ 205 | ||||
Amortization expense | 300 | ||||||
Capitalized cost | 2,000 | ||||||
Impairment losses | $ 0 | 0 | 0 | ||||
Return period | 30 days | ||||||
Resizing period | 60 days | ||||||
Extended service plan period | 3 years | ||||||
Third-party extended service plan period | 2 years | ||||||
Deferred revenue | $ 18,600 | 19,000 | |||||
Deferred revenue, noncurrent | 100 | 200 | |||||
Revenue recognized | 18,400 | 9,600 | 8,100 | ||||
Refund liability | 2,332 | 2,338 | 2,341 | $ 1,339 | |||
Refund assets | 900 | 1,100 | |||||
Marketing, advertising and promotional costs | 97,300 | 74,400 | 47,100 | ||||
Foreign currency transactions | 500 | $ 500 | $ 300 | ||||
Net present value of operating lease liabilities | (32,410) | ||||||
Subsequent Event | Silicon Valley Bridge Bank, N.A. | |||||||
Noncontrolling Interest [Line Items] | |||||||
Deposits | $ 200 | ||||||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-02 | |||||||
Noncontrolling Interest [Line Items] | |||||||
Net present value of operating lease liabilities | (21,316) | ||||||
Operating Lease Rou Assets, Including Deferred Rent And Various Lease Incentives | $ 2,100 | ||||||
Software | |||||||
Noncontrolling Interest [Line Items] | |||||||
Estimated useful life | 3 years | ||||||
Minimum | |||||||
Noncontrolling Interest [Line Items] | |||||||
Third-party extended service plan period | 2 years | ||||||
Class P Units | |||||||
Noncontrolling Interest [Line Items] | |||||||
Warrant liability, fair value | $ 6,400 | $ 100 | |||||
Conversion ratio | 1 | ||||||
Brilliant Earth, LLC | |||||||
Noncontrolling Interest [Line Items] | |||||||
Noncontrolling interest, ownership percentage | 88.30% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 154,649 | $ 172,865 | $ 66,269 | |
Restricted cash | 205 | 205 | 205 | |
Total | $ 154,854 | $ 173,070 | $ 66,474 | $ 40,598 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Estimated Useful Life (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Software Development and Website | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Total net sales | $ 439,882 | $ 380,189 | $ 251,820 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 413,678 | 353,072 | 233,169 |
International | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | $ 26,204 | $ 27,117 | $ 18,651 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Net income attributable to Brilliant Earth Group, Inc., BASIC | $ 2,135 | $ 1,528 | $ 2,135 | $ 1,528 |
Add: Net income impact from assumed redemption of all LLC Units to common stock | 16,890 | 10,736 | ||
Less: Income tax expense on net income attributable to NCI | (4,369) | (2,755) | ||
Net income attributable to Brilliant Earth Group, Inc., after adjustment for assumed conversion, DILUTED | $ 14,656 | $ 9,509 | ||
Weighted average shares of common stock outstanding, BASIC (in shares) | 10,687,732 | 9,590,443 | 10,687,732 | |
Weighted average shares of common stock outstanding, DILUTED (in shares) | 96,505,325 | 96,741,421 | 96,505,325 | |
BASIC earnings per share (in dollars per share) | $ 0.20 | $ 0.16 | $ 0.20 | |
DILUTED earnings per share (in dollars per share) | $ 0.15 | $ 0.10 | $ 0.15 | |
Effective tax rate, federal and state | (8.60%) | (26.10%) | ||
Vested LLC Units that are exchangeable for common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive effects (in shares) | 84,569,954 | 85,105,060 | ||
Unvested LLC Units that are exchangeable for common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive effects (in shares) | 995,892 | 1,931,234 | ||
Antidilutive securities excluded (in shares) | 1,306,854 | 1,112,615 | ||
RSUs and stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive effects (in shares) | 114,684 | 251,747 | ||
Unvested RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded (in shares) | 224 | 2,002,014 |
Inventories, Net - Schedule of
Inventories, Net - Schedule of Inventories, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory [Line Items] | ||||
Allowance for inventory obsolescence | $ (307) | $ (260) | $ (242) | $ (169) |
Total inventories, net | 39,331 | 24,743 | ||
Loose diamonds | ||||
Inventory [Line Items] | ||||
Inventory, gross | 11,894 | 9,013 | ||
Fine jewelry and other | ||||
Inventory [Line Items] | ||||
Inventory, gross | $ 27,744 | $ 15,990 |
Inventories, Net - Allowance fo
Inventories, Net - Allowance for Inventory Obsolescence (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Inventory Valuation Reserves [Roll Forward] | |||
Balance at beginning of period | $ (260) | $ (242) | $ (169) |
Change in allowance for inventory obsolescence | (47) | (18) | (73) |
Balance at end of period | $ (307) | $ (260) | $ (242) |
Inventories, Net - Narratives (
Inventories, Net - Narratives (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Inventory [Line Items] | |||
Change in allowance for inventory obsolescence | $ 47 | $ 18 | $ 73 |
Consigned inventory | 27,600 | 16,900 | |
Maximum | |||
Inventory [Line Items] | |||
Change in allowance for inventory obsolescence | $ 100 | $ 100 | $ 100 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | $ 21,292 | $ 9,856 | |
Less: accumulated depreciation | (4,738) | (3,124) | |
Total property and equipment, net | 16,554 | 6,732 | |
Depreciation | 1,922 | 860 | $ 646 |
Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 2,111 | 1,064 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 1,834 | 880 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 12,995 | 6,743 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | 3,626 | 700 | |
Other | |||
Property, Plant and Equipment [Line Items] | |||
Gross property and equipment | $ 726 | $ 469 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Accrued Expenses And Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||||
Vendor expenses | $ 14,769 | $ 9,881 | ||
Inventory received not billed | 7,973 | 4,648 | ||
Payroll expenses | 5,301 | 4,498 | ||
Sales and other tax payable | 4,137 | 4,229 | ||
Provision for sales returns and allowances | 2,332 | 2,338 | $ 2,341 | $ 1,339 |
Current portion of TRA | 502 | 0 | ||
Other | 2,819 | 3,162 | ||
Total accrued expenses and other current liabilities | $ 37,833 | $ 28,756 |
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 | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Contract with Customer, Refund Liability [Roll Forward] | |||
Balance at beginning of period | $ 2,338 | $ 2,341 | $ 1,339 |
Provision | 21,455 | 15,329 | 16,712 |
Returns and allowances | (21,461) | (15,332) | (15,710) |
Balance at end of period | $ 2,332 | $ 2,338 | $ 2,341 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Lessee, Lease, Description [Line Items] | |
Amount of operating lease not yet commenced | $ 18,100 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of contracts | 5 years |
Operating lease not yet commenced term of contract (in years) | 6 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of contracts | 10 years |
Operating lease not yet commenced term of contract (in years) | 10 years |
Leases - Total Operating Lease
Leases - Total Operating Lease Right-of-Use Assets and Operating Lease Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Assets | ||
Operating ROU assets at cost | $ 31,041 | |
Accumulated amortization | (3,229) | |
Net book value | 27,812 | $ 0 |
Liabilities | ||
Less: current portion | 3,873 | 0 |
Operating Lease, Liability, Noncurrent | 28,537 | $ 0 |
Net present value of operating lease liabilities | 32,410 | |
Income and Expenses | ||
Operating lease costs | 4,372 | |
Variable lease costs | 913 | |
Total lease costs | $ 5,285 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments Under Long-term Non-cancelable Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2023 | $ 5,235 | |
2024 | 5,830 | |
2025 | 5,822 | |
2026 | 5,515 | |
2027 | 4,061 | |
Thereafter | 11,854 | |
Total minimum lease payments(1) | 38,317 | |
Less: imputed interest | (5,907) | |
Net present value of operating lease liabilities | 32,410 | |
Less: current portion | (3,873) | $ 0 |
Operating Lease, Liability, Noncurrent | $ 28,537 | $ 0 |
Leases - Future Minimum Lease_2
Leases - Future Minimum Lease Payments For Operating Leases (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Leases [Abstract] | |
2022 | $ 3,507 |
2023 | 3,680 |
2024 | 3,530 |
2025 | 3,449 |
2026 | 3,103 |
Thereafter | 7,897 |
Total minimum lease payments | $ 25,166 |
Leases - Weighted Average Remai
Leases - Weighted Average Remaining Lease Term and Weighted Average Discount Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Weighted-average remaining lease term - operating leases | 7 years 3 months 18 days | ||
Weighted-average discount rate - operating leases | 4.50% | ||
Lessee, Lease, Description [Line Items] | |||
Operating lease right of use assets | $ 27,812 | $ 0 | |
Net present value of operating lease liabilities | (32,410) | ||
Supplemental cash flow information related to operating leases as of December 31, 2022 is as follows: | |||
Operating cash flows from operating leases | 2,876 | ||
Right-of-use assets and operating lease liabilities | 13,970 | $ 0 | $ 0 |
Accounting Standards Update 2016-02 | Cumulative Effect, Period of Adoption, Adjustment | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease right of use assets | 19,173 | ||
Net present value of operating lease liabilities | $ (21,316) |
Debt - Term Loan (Details)
Debt - Term Loan (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Outstanding principal | $ 63,375 | $ 65,000 |
Debt issuance costs | (663) | (1,422) |
Net carrying amount | 62,712 | 63,578 |
Current portion | 3,250 | 30,789 |
Long term outstanding principal | 34,211 | |
Long term net carrying amount | 59,462 | 32,789 |
Silicon Valley Bank Term Loan Agreement | ||
Debt Instrument [Line Items] | ||
Outstanding principal | 63,400 | |
Long term outstanding principal | 60,125 | |
Secured Debt | Term Loan Agreement | ||
Debt Instrument [Line Items] | ||
Outstanding principal | 63,375 | 65,000 |
Debt issuance costs | (663) | (1,422) |
Net carrying amount | $ 62,712 | $ 63,578 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
May 24, 2022 | Sep. 22, 2021 | Sep. 30, 2019 | Apr. 30, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 17, 2020 | |
Debt Instrument [Line Items] | ||||||||
Final prepayment fee | 4.50% | |||||||
Repayment of Runway term loan | $ 58,158,000 | $ 0 | $ 0 | |||||
Loss on extinguishment of debt | (617,000) | 0 | 0 | |||||
Outstanding principal | 63,375,000 | 65,000,000 | ||||||
Quarterly payment percent, period one | 1.25% | |||||||
Quarterly payment percent, period two | 1.875% | |||||||
Quarterly payment percent, period three | 2.50% | |||||||
Amortization of debt issuance costs | 592,000 | 1,717,000 | $ 1,121,000 | |||||
Deferred issuance costs | 500,000 | |||||||
Deferred issuance costs long-term debt | 800,000 | |||||||
Accumulated amortization | 100,000 | |||||||
Net of accumulated amortization | 100,000 | |||||||
Class P Warrants | ||||||||
Debt Instrument [Line Items] | ||||||||
Number of securities called by warrants (in shares) | 333,333 | |||||||
Warrant liability, fair value | $ 6,400,000 | $ 100,000 | ||||||
Warrant carrying value | $ 6,400,000 | |||||||
Conversion of convertible securities (in shares) | 534,589 | |||||||
Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Temporary increase to the Consolidated Borrower Leverage Ratio | 300% | |||||||
Runway Term Loan Agreement | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 65,000,000 | |||||||
Final prepayment fee | 1% | |||||||
Repayment of Runway term loan | $ 58,200,000 | |||||||
Loss on extinguishment of debt | (600,000) | |||||||
Runway Term Loan Agreement | Secured Debt | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate floor | 0.50% | |||||||
Basis spread on variable rate | 7.75% | |||||||
Silicon Valley Bank Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Amount outstanding | 0 | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 65,000,000 | |||||||
Fixed charge coverage ratio | 125% | |||||||
Consolidated total leverage ratio | 400% | |||||||
Temporary increase to the Consolidated Borrower Leverage Ratio | 400% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.25% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.35% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Annual adjustment percent | 0.125% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.25% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.75% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Alternative Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 0% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Alternative Base Rate | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.25% | |||||||
Silicon Valley Bank Credit Agreement | Secured Debt | Alternative Base Rate | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.75% | |||||||
Silicon Valley Bank Credit Agreement | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 40,000,000 | |||||||
Silicon Valley Bank Term Loan Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding principal | 63,400,000 | |||||||
Term Loan Agreement | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Amount of final prepayment fee | $ 200,000 | |||||||
Outstanding principal | $ 63,375,000 | $ 65,000,000 | ||||||
Interest rate during period | 7.18% | 11.68% | 13.01% | |||||
Interest expense, debt | $ 4,100,000 | $ 5,900,000 | $ 3,800,000 | |||||
Amortization of debt issuance costs | $ 1,700,000 | 1,100,000 | ||||||
Term Loan Agreement | Secured Debt | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Prepayment fee, percent | 0% | |||||||
Term Loan Agreement | Secured Debt | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Prepayment fee, percent | 0.0003% | |||||||
PPP Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowings from PPP loan | $ 2,700,000 | |||||||
Interest rate, stated percentage | 1% | |||||||
Interest and Debt Expense | $ 100,000 |
Debt - Debt Maturity (Details)
Debt - Debt Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
2023 | $ 3,250 | |
2024 | 4,062 | |
2025 | 5,688 | |
2026 | 6,500 | |
2027 | 43,875 | |
Outstanding principal | $ 63,375 | $ 65,000 |
Stockholders' Equity and Memb_3
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units - Schedule of Capitalization (Details) | Dec. 31, 2022 vote shares | Dec. 31, 2021 shares | Sep. 22, 2021 shares | Dec. 31, 2020 shares | Dec. 31, 2019 shares |
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | |||
Preferred stock, shares issued (in shares) | 0 | 0 | |||
Preferred stock, shares outstanding (in shares) | 0 | 0 | |||
Common stock reserved for issuances (in shares) | 11,404,638 | ||||
Common LLC Units issued (in shares) | 84,602,510 | 85,163,263 | |||
Common LLC Units outstanding (in shares) | 84,602,510 | 85,163,263 | 0 | 52,770,654 | 52,595,807 |
Conversion of LLC Units | |||||
Class of Stock [Line Items] | |||||
Common stock reserved for issuances (in shares) | 84,602,510 | 85,163,263 | |||
Unvested LLC Units | |||||
Class of Stock [Line Items] | |||||
Common stock reserved for issuances (in shares) | 615,000 | 1,901,977 | |||
Unvested RSUs | |||||
Class of Stock [Line Items] | |||||
Common stock reserved for issuances (in shares) | 3,158,686 | 1,377,728 | |||
Stock options | |||||
Class of Stock [Line Items] | |||||
Common stock reserved for issuances (in shares) | 857,615 | 1,449,181 | |||
Class A Common Stock | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 | |||
Common stock, shares issued (in shares) | 11,246,694 | 9,614,523 | |||
Common stock, shares outstanding (in shares) | 11,246,694 | 9,614,523 | |||
Votes per share | vote | 1 | ||||
Class B Common Stock | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 | |||
Common stock, shares issued (in shares) | 35,482,534 | 35,658,013 | |||
Common stock, shares outstanding (in shares) | 35,482,534 | 35,658,013 | |||
Votes per share | vote | 1 | ||||
Class C Common Stock | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 | |||
Common stock, shares issued (in shares) | 49,119,976 | 49,505,250 | |||
Common stock, shares outstanding (in shares) | 49,119,976 | 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 | 150,000,000 | |||
Common stock, shares issued (in shares) | 0 | 0 | |||
Common stock, shares outstanding (in shares) | 0 | 0 | |||
Votes per share | vote | 10 |
Stockholders' Equity and Memb_4
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units - Narrative (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 27, 2021 shares | Sep. 22, 2021 USD ($) director | Dec. 31, 2020 USD ($) | Dec. 31, 2021 shares | Jun. 30, 2021 | Sep. 22, 2021 USD ($) director | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) | |
Class of Stock [Line Items] | |||||||||
Special distribution to members | $ | $ 10,000,000 | $ 10,000,000 | |||||||
Special distribution to members | $ | 20,000,000 | ||||||||
Increase (decrease) in redeemable convertible preferred units to redemption value | $ | $ (327,189,000) | $ (327,189,000) | 8,499,000 | ||||||
Increase/decrease | $ | $ 0 | $ 6,331,000 | 0 | ||||||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | ||||||
Stock options exercised (in shares) | 0 | 0 | |||||||
Tax distributions to members | $ | $ 18,316,000 | $ 21,441,000 | 0 | ||||||
Temporary equity, redemption | $ | $ 389,200,000 | $ 389,227,000 | $ 389,227,000 | ||||||
Member Units | |||||||||
Class of Stock [Line Items] | |||||||||
Special distribution to members | $ | $ 20,000,000 | 20,000,000 | |||||||
RSUs | |||||||||
Class of Stock [Line Items] | |||||||||
Stock issued during period, shares, new issues (in shares) | 3,138 | 351,119 | |||||||
Brilliant Earth, LLC | |||||||||
Class of Stock [Line Items] | |||||||||
Stock issued during period, shares, new issues (in shares) | 9,583,332 | ||||||||
Class F Units Converted Into Common LLC Units | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion ratio | 1.8942 | ||||||||
Class P Units Converted Into Common LLC Units | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion ratio | 1.9080 | ||||||||
Class M Units Converted Into Common LLC Units | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion ratio | 1.7735 | ||||||||
LLC Units Converted Into Class A And Class D Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion ratio | 1 | 1 | |||||||
Brilliant Earth, LLC | |||||||||
Class of Stock [Line Items] | |||||||||
Economic interest percent | 10.10% | 11.70% | |||||||
Noncontrolling interest, ownership percentage | 88.30% | ||||||||
Class A Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Ratio of common Stock held to number of LLC interests held | 1 | ||||||||
Common stock, shares issued (in shares) | 9,614,523 | 11,246,694 | 9,614,523 | ||||||
Common stock, shares outstanding (in shares) | 9,614,523 | 11,246,694 | 9,614,523 | ||||||
Conversion of stock, shares issued (in shares) | 28,053 | 385,274 | |||||||
Common Class B And Class C | |||||||||
Class of Stock [Line Items] | |||||||||
Ratio of common Stock held to number of LLC interests held | 1 | ||||||||
Common stock, shares issued (in shares) | 84,602,510 | ||||||||
Class B Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Common stock, shares issued (in shares) | 35,658,013 | 35,482,534 | 35,658,013 | ||||||
Common stock, shares outstanding (in shares) | 35,658,013 | 35,482,534 | 35,658,013 | ||||||
Stock issued during period, shares, new issues (in shares) | 36,064,421 | 144,031 | 720,299 | ||||||
Conversion of stock, shares issued (in shares) | 895,778 | ||||||||
Class C Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Common stock, shares issued (in shares) | 49,505,250 | 49,119,976 | 49,505,250 | ||||||
Common stock, shares outstanding (in shares) | 49,505,250 | 49,119,976 | 49,505,250 | ||||||
Stock issued during period, shares, new issues (in shares) | 50,232,863 | ||||||||
Class D Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Common stock, shares issued (in shares) | 0 | 0 | 0 | ||||||
Common stock, shares outstanding (in shares) | 0 | 0 | 0 | ||||||
Class F Units | |||||||||
Class of Stock [Line Items] | |||||||||
Number of directors elected | director | 4 | 4 | |||||||
Allocation of net profit (loss) in excess of threshold | $ | 11,300,000 | ||||||||
Class F Units | Member Units | |||||||||
Class of Stock [Line Items] | |||||||||
Special distribution to members | $ | 20,000,000 | ||||||||
Class F and Class P Units | |||||||||
Class of Stock [Line Items] | |||||||||
Allocation of net profit (loss) in excess of threshold | $ | $ 14,000,000 | 10,300,000 | |||||||
Class P Units | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion ratio | 1 | ||||||||
Number of directors elected | director | 3 | 3 | |||||||
Special distribution to members | $ | 10,000,000 | ||||||||
Cash settlement period | 2 years | ||||||||
Increase (decrease) in redeemable convertible preferred units to redemption value | $ | $ 327,200,000 | $ 8,499,000 | |||||||
Class P and Class M Units | |||||||||
Class of Stock [Line Items] | |||||||||
Weighting percentage per method | 33.30% | 33.30% | 33.30% |
Stockholders' Equity and Memb_5
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units - Member Units (Details) - shares | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 23, 2021 | Sep. 22, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | ||||||
Temporary equity, shares authorized (in shares) | 33,162,444 | |||||
Common LLC Units outstanding (in shares) | 84,602,510 | 85,163,263 | 0 | 52,770,654 | 52,595,807 | |
Temporary equity, shares issued (in shares) | 32,435,595 | |||||
Temporary equity, shares outstanding (in shares) | 0 | 0 | 32,435,595 | 0 | 32,435,595 | 32,435,595 |
Common LLC Units issued (in shares) | 84,602,510 | 85,163,263 | ||||
Class F Units | ||||||
Class of Stock [Line Items] | ||||||
Units authorized (in shares) | 50,954,445 | |||||
Common LLC Units outstanding (in shares) | 50,232,863 | |||||
Common LLC Units issued (in shares) | 50,232,863 | |||||
Class M Units | ||||||
Class of Stock [Line Items] | ||||||
Units authorized (in shares) | 7,791,744 | |||||
Common LLC Units outstanding (in shares) | 3,904,237 | |||||
Common LLC Units issued (in shares) | 3,904,237 |
Stockholders' Equity and Memb_6
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units - Warrants Outstanding (Details) - Class P Warrants - $ / shares | Sep. 22, 2021 | Dec. 17, 2020 | Sep. 30, 2019 |
Class of Warrant or Right [Line Items] | |||
Number of units under warrants | 534,589 | 37,297 | 497,292 |
Exercise price of warrants (in dollars per share) | $ 6.70 | $ 3.52 | |
Fair value per warrant on issue date (in dollars per share) | $ 0.01 | $ 0.17 |
Stockholders' Equity and Memb_7
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units - Quantitative Information and Valuation Methods (Details) - Fair Value, Inputs, Level 3 | 9 Months Ended | 12 Months Ended |
Sep. 22, 2022 | Dec. 31, 2020 | |
Class of Warrant or Right [Line Items] | ||
Control premium | 20% | 20% |
Valuation Technique, Discounted Cash Flow | ||
Class of Warrant or Right [Line Items] | ||
Discount rate | 22% | |
Valuation Technique, Discounted Cash Flow | Minimum | ||
Class of Warrant or Right [Line Items] | ||
Discount rate | 22% | |
Valuation Technique, Discounted Cash Flow | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Discount rate | 25% | |
Class P Warrants and Class M Units | ||
Class of Warrant or Right [Line Items] | ||
Volatility | 40% | 45% |
Risk free rate | 0.07% | 0.10% |
Class P Warrants and Class M Units | Minimum | ||
Class of Warrant or Right [Line Items] | ||
Time to Liquidity in years | 9 months 18 days | 1 year 2 months 12 days |
Discount for lack of marketability | 7.50% | 12% |
Class P Warrants and Class M Units | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Time to Liquidity in years | 1 year | 1 year 6 months |
Discount for lack of marketability | 10% | 15% |
Stockholders' Equity and Memb_8
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units - Fair Value Amounts (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Sep. 22, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Class P Unit redemption value | |||||
Special distribution to members | $ (10,000) | $ (10,000) | |||
Adjustment of redeemable convertible preferred units to redemption value | $ 327,189 | $ 327,189 | (8,499) | ||
Tax distributions to members | (9,755) | (9,755) | |||
Class P Unit warrant liability | |||||
Increase/decrease | $ 0 | 6,331 | 0 | ||
Class P Units | |||||
Class P Unit redemption value | |||||
Beginning balance, redemption value | 66,327 | 66,327 | 80,829 | ||
Special distribution to members | (10,000) | ||||
Net income allocable to Class P Units | 5,466 | 3,997 | |||
Adjustment of redeemable convertible preferred units to redemption value | (327,200) | (8,499) | |||
Increase/decrease | 327,189 | ||||
Tax distributions to members | (9,755) | ||||
Reorganization Transactions | (389,227) | ||||
Ending balance, redemption value | 66,327 | 0 | 66,327 | ||
Class P Warrants | |||||
Class P Unit warrant liability | |||||
Warrant liability beginning balance | 84 | 84 | 83 | ||
Increase/decrease | 6,331 | $ 6,300 | 1 | ||
Reorganization Transactions | (6,415) | ||||
Warrant liability ending balance | $ 84 | $ 0 | $ 84 |
Stockholders' Equity and Memb_9
Stockholders' Equity and Members Units Including Redeemable Convertible Class P Units - Change in Units Prior to Reorganization (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 22, 2021 | Dec. 31, 2020 | Sep. 22, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||
Class P Units, beginning balance (in shares) | 32,435,595 | 0 | 32,435,595 | 32,435,595 | ||
Class P Units, beginning balance | $ 66,327 | $ 0 | $ 66,327 | $ 80,829 | ||
Special distribution to members | $ (10,000) | (10,000) | ||||
Tax distributions to members prior to the Reorganization Transactions and IPO | (9,755) | (9,755) | ||||
Net income | 5,466 | 5,466 | 3,997 | |||
Adjustment of redeemable convertible preferred units to redemption value | $ 327,189 | $ 327,189 | $ (8,499) | |||
Reorganization Transactions (in shares) | (32,435,595) | (32,435,595) | ||||
Reorganization Transactions | $ (389,200) | $ (389,227) | $ (389,227) | |||
Class P Units, ending balance (in shares) | 0 | 32,435,595 | 0 | 0 | 0 | 32,435,595 |
Class P Units, ending balance | $ 0 | $ 66,327 | $ 0 | $ 0 | $ 0 | $ 66,327 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Units, beginning balance (in shares) | 52,770,654 | 85,163,263 | 52,770,654 | 52,595,807 | ||
Units, beginning balance | $ (85,395) | $ (85,395) | $ (91,519) | |||
Special distribution to members | $ (20,000) | |||||
Tax distributions to members subsequent to the Reorganization Transactions and IPO | $ (11,643) | $ (18,316) | (43) | |||
Vested Class M Units (in shares) | 556,446 | 174,847 | ||||
Equity-based compensation | $ 246 | 246 | $ 46 | |||
Net income | 19,025 | 26,256 | 21,576 | |||
Adjustment of redeemable convertible preferred units to redemption value | (327,189) | (327,189) | 8,499 | |||
Net income | $ 8,526 | $ 19,025 | $ 17,579 | |||
Reorganization Transactions (in shares) | (53,327,100) | |||||
Reorganization Transactions | $ 415,455 | $ 395,651 | ||||
Units, ending balance (in shares) | 0 | 52,770,654 | 0 | 84,602,510 | 85,163,263 | 52,770,654 |
Units, ending balance | $ 0 | $ (85,395) | $ 0 | $ (85,395) | ||
Member Units | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Units, beginning balance (in shares) | 52,770,654 | 0 | 52,770,654 | 52,595,807 | ||
Units, beginning balance | $ (85,395) | $ 0 | $ (85,395) | $ (91,519) | ||
Special distribution to members | $ (20,000) | $ (20,000) | ||||
Vested Class M Units (in shares) | 556,446 | 174,847 | ||||
Equity-based compensation | $ 246 | $ 46 | ||||
Adjustment of redeemable convertible preferred units to redemption value | $ (327,189) | 8,499 | ||||
Net income | $ 17,579 | |||||
Reorganization Transactions (in shares) | (53,327,100) | |||||
Reorganization Transactions | $ 415,455 | |||||
Units, ending balance (in shares) | 52,770,654 | 0 | 0 | 52,770,654 | ||
Units, ending balance | $ (85,395) | $ 0 | $ 0 | $ (85,395) | ||
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 | |||
Units, beginning balance | $ (85,695) | $ (85,695) | $ (91,773) | |||
Special distribution to members | (20,000) | |||||
Tax distributions to members subsequent to the Reorganization Transactions and IPO | (11,643) | |||||
Adjustment of redeemable convertible preferred units to redemption value | (327,189) | 8,499 | ||||
Net income | $ 8,526 | $ 17,579 | ||||
Reorganization Transactions (in shares) | (50,232,863) | |||||
Reorganization Transactions | $ 416,001 | |||||
Units, ending balance (in shares) | 0 | 50,232,863 | 0 | 50,232,863 | ||
Units, ending balance | $ 0 | $ (85,695) | $ 0 | $ (85,695) | ||
Class M Units | Member Units | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Units, beginning balance (in shares) | 2,537,791 | 2,537,791 | 2,362,944 | |||
Units, beginning balance | $ 300 | $ 300 | $ 254 | |||
Vested Class M Units (in shares) | 556,446 | 174,847 | ||||
Equity-based compensation | $ 246 | $ 46 | ||||
Reorganization Transactions (in shares) | (3,094,237) | |||||
Reorganization Transactions | $ (546) | |||||
Units, ending balance (in shares) | 0 | 2,537,791 | 0 | 2,537,791 | ||
Units, ending balance | $ 0 | $ 300 | $ 0 | $ 300 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | 15 Months Ended | |||||
Sep. 23, 2021 shares | Sep. 22, 2021 $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2019 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 11,404,638 | 11,404,638 | ||||||
Award vesting period | 4 years | |||||||
Tax benefit from share-based compensation expense | $ | $ 0 | |||||||
Options, grants in period (in shares) | 1,618,064 | |||||||
Strike price (in dollars per share) | $ / shares | $ 12 | $ 12 | $ 12 | $ 12 | $ 12 | |||
Weighted average remaining contractual term, vested and expected to vest | 8 years 8 months 12 days | |||||||
Option, cost not yet recognized | $ | $ 1,600 | $ 1,600 | ||||||
Weighted average remaining contractual term | 8 years 8 months 12 days | 9 years 8 months 12 days | ||||||
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% | |||||||
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) | 2,046,008 | 1,901,977 | 615,000 | 1,901,977 | 1,485,946 | 615,000 | 457,227 | |
Conversion ratio | 1.8588 | |||||||
Share-based compensation expense | $ | $ 400 | |||||||
Cost not yet recognized, period for recognition | 2 years | |||||||
LLC Units | Selling, General and Administrative Expenses | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation expense | $ | $ 300 | $ 300 | $ 100 | |||||
RSUs | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 1,377,728 | 3,158,686 | 1,377,728 | 3,158,686 | ||||
Award vesting rights, percentage | 25% | |||||||
Unvested units (in shares) | 1,377,728 | 3,158,686 | 1,377,728 | 3,158,686 | ||||
Share-based compensation expense | $ | $ 1,000 | $ 7,200 | ||||||
Tax benefit from share-based compensation expense | $ | $ 100 | $ 0 | ||||||
Unamortized compensation cost | $ | $ 24,700 | $ 24,700 | ||||||
Cost not yet recognized, period for recognition | 3 years 1 month 6 days | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested in Period, Fair Value | $ | $ 4,500 | $ 100 | ||||||
Stock options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 1,449,181 | 857,615 | 1,449,181 | 857,615 | ||||
Share-based compensation expense | $ | $ 1,400 | $ 1,400 | ||||||
Cost not yet recognized, period for recognition | 2 years 1 month 6 days | |||||||
Expiration period | 10 years | |||||||
2021 Incentive Award Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Increase in number of shares available for grant, percentage of shares outstanding | 5% | |||||||
Maximum shares issued upon exercise (in shares) | 81,929,342 | |||||||
Number of shares available for grant (in shares) | 7,032,467 | 7,032,467 | ||||||
2021 Incentive Award Plan | ESPP | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Common stock reserved for issuances (in shares) | 1,734,731 | 1,734,731 |
Equity-Based Compensation - RSU
Equity-Based Compensation - RSU Activity (Details) - Unvested RSUs | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Restricted Stock Units | |
Unvested, beginning balance (in shares) | shares | 1,377,728 |
Grants in period (in shares) | shares | 2,891,551 |
Vested (in shares) | shares | (351,119) |
Forfeited (in shares) | shares | (759,474) |
Unvested, ending balance (in shares) | shares | 3,158,686 |
Weighted average grant date fair value | |
Unvested beginning balance (in dollars per share) | $ / shares | $ 13.15 |
Granted (in dollars per share) | $ / shares | 7.68 |
Vested (in dollars per share) | $ / shares | 12.72 |
Forfeited (in dollars per share) | $ / shares | 9.74 |
Unvested ending balance (in dollars per share) | $ / shares | $ 9.01 |
Equity-Based Compensation - Sto
Equity-Based Compensation - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Sep. 22, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Number of options | |||
Outstanding as of December 31, 2021 (in shares) | 1,612,133 | ||
Granted ( in shares) | 1,618,064 | ||
Forfeited (in shares) | (754,518) | ||
Outstanding as of December 31, 2022 (in shares) | 857,615 | 1,612,133 | |
Weighted average exercise price | |||
Outstanding as of December 31, 2021 (in dollars per share) | $ 12 | ||
Forfeited (in dollars per share) | 12 | ||
Outstanding as of December 31, 2022 (in dollars per share) | $ 12 | 12 | $ 12 |
Weighted average grant date fair value | |||
Outstanding as of December 31, 2021 (in dollars per share) | 4.28 | ||
Forfeited (in dollars per share) | 4.29 | ||
Outstanding as of December 31, 2022 (in dollars per share) | $ 4.27 | $ 4.28 | |
Weighted average remaining contractual term (years) | |||
Weighted average remaining contractual term | 8 years 8 months 12 days | 9 years 8 months 12 days | |
Weighted average remaining contractual term, exercisable | 8 years 8 months 12 days | ||
Weighted average remaining contractual term, Unvested | 8 years 8 months 12 days | ||
Weighted average remaining contractual term, vested and expected to vest | 8 years 8 months 12 days | ||
Options, Vested and Expected to Vest | |||
Options exercisable (in shares) | 476,932 | ||
Options unvested (in shares) | 380,683 | ||
Options, vested and expected to vest (in shares) | 857,615 | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 12 | ||
Options unvested, weighted average exercise price (in dollars per share) | 12 | ||
Vested and expected to vest, weighted average exercise price (in dollars per share) | 12 | ||
Options exercisable, weighted average grant date fair value (in dollars per share) | 4.26 | ||
Options unvested, weighted average grant date fair value (in dollars per share) | 4.29 | ||
Options vested and expected to vest, weighted average grant date fair value (in dollars per share) | $ 4.27 |
Equity-Based Compensation - Val
Equity-Based Compensation - Valuation Assumptions (Details) - Stock options | 12 Months Ended | 15 Months Ended |
Dec. 31, 2022 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 35% | |
Expected dividend yield | 0% | |
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 18 days |
Equity-Based Compensation - LLC
Equity-Based Compensation - LLC Unit Activity (Details) - LLC Units - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of LLC Units | |||
Unvested, beginning balance (in shares) | 1,901,977 | 1,485,946 | 457,227 |
Granted (in shares) | 1,515,276 | 1,444,831 | |
Forfeited (in shares) | (566,678) | (398,768) | (241,265) |
Vested (in shares) | (720,299) | (700,477) | (174,847) |
Unvested, ending balance (in shares) | 615,000 | 1,901,977 | 1,485,946 |
Weighted average grant date fair value | |||
Unvested beginning balance (in dollars per share) | $ 0.52 | $ 0.28 | $ 0.16 |
Granted (in dollars per share) | 0.67 | 0.29 | |
Forfeited (in dollars per share) | 0.42 | 0.22 | 0.27 |
Vested (in dollars per share) | 0.51 | 0.46 | 0.27 |
Unvested ending balance (in dollars per share) | $ 0.61 | $ 0.52 | $ 0.28 |
Income Taxes and Tax Receivab_3
Income Taxes and Tax Receivable Agreement - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 27, 2021 | Sep. 23, 2021 | |
Income Tax Contingency [Line Items] | ||||||
Deferred tax assets related to tax receivable agreement | $ 8,500 | $ 4,400 | ||||
Income tax benefit | $ 316 | 168 | $ 316 | $ 0 | ||
Federal net operating loss carryforwards | $ 1,900 | |||||
Tax benefit distributions to noncontrolling interest holders, percent | 85% | 85% | 85% | |||
Tax receivable agreement liability | $ 7,400 | |||||
Tax receivable agreement, recognition in additional-paid-in-capital | $ 1,100 | |||||
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 |
Income Taxes and Tax Receivab_4
Income Taxes and Tax Receivable Agreement - Earnings Used to Compute Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||||
Pre-tax earnings of the Company | $ 25,940 | $ 18,857 | $ 25,940 | $ 21,576 | |
Earnings allocable to NCI (not allocable to the Company) | (24,728) | (16,890) | (24,728) | ||
Pre-tax earnings of Brilliant Earth, Inc. | 1,212 | 1,967 | |||
Income tax benefit of Brilliant Earth, Inc. | 316 | 168 | 316 | $ 0 | |
Net income allocable to Brilliant Earth Group, Inc. | $ 2,135 | $ 1,528 | $ 2,135 | $ 1,528 |
Income Taxes and Tax Receivab_5
Income Taxes and Tax Receivable Agreement - Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current tax benefit | ||||
Federal | $ 0 | $ 0 | ||
State | 0 | 0 | ||
Total current income tax benefit | 0 | 0 | ||
Deferred tax benefit | ||||
Federal | (136) | (259) | ||
State | (32) | (57) | ||
Total deferred income tax benefit | (168) | (316) | $ 0 | |
Income tax benefit | $ (316) | $ (168) | $ (316) | $ 0 |
Income Taxes and Tax Receivab_6
Income Taxes and Tax Receivable Agreement - Effective Income Tax Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Tax effect | ||||
Brilliant Earth Group, Inc. expected tax expense at statutory rate | $ 413 | $ 255 | ||
Less: equity interest in earnings of subsidiary not taxable (permanent difference) | (645) | (272) | ||
Brilliant Earth Group, Inc. level pre-tax loss as adjusted for tax | (232) | (17) | ||
Income (loss) from investee per K-1 (inside basis difference) | 602 | (148) | ||
Loss from step up in outside basis | (538) | (151) | ||
Income tax benefit | $ (316) | $ (168) | $ (316) | $ 0 |
Rate | ||||
Brilliant Earth Group, Inc. expected tax expense at statutory rate | 21% | 21% | ||
Less: equity interest in earnings of subsidiary not taxable (permanent difference) | (32.80%) | (22.40%) | ||
Brilliant Earth Group, Inc. level pre-tax loss as adjusted for tax | (11.80%) | (1.40%) | ||
Income (loss) from investee per K-1 (inside basis difference) | 30.60% | (12.20%) | ||
Loss from step up in outside basis | (27.40%) | (12.50%) | ||
Income tax benefit at effective rate | (8.60%) | (26.10%) |
Income Taxes and Tax Receivab_7
Income Taxes and Tax Receivable Agreement - Component of Deferred Tax Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Outside basis difference in investment | $ 8,464 | $ 4,091 |
Net operating loss carryforwards | 484 | 316 |
Net deferred tax asset | $ 8,948 | $ 4,407 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Long-term Purchase Commitment [Line Items] | |||
Purchase obligation, total | $ 5,300 | ||
Defined contribution plan, cost | 900 | $ 500 | $ 400 |
Capital Addition Purchase Commitments | |||
Long-term Purchase Commitment [Line Items] | |||
Capital commitment | $ 2,800 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Mar. 21, 2023 | May 24, 2022 |
Silicon Valley Bank Credit Agreement | Secured Debt | ||
Subsequent Event [Line Items] | ||
Debt instrument, face amount | $ 65,000,000 | |
Silicon Valley Bank Credit Agreement | Line of Credit | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ 40,000,000 | |
Subsequent Event | Silicon Valley Bridge Bank, N.A. | ||
Subsequent Event [Line Items] | ||
Deposits | $ 200,000 |