Good day and thank you for standing by. Welcome to the Brilliant Earth Third Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. After this presentation, there will be a question-and-answer session. [Operator Instructions] And please be advised that today's conference is being recorded.

I would now like to turn the call over to Stefanie Layton, Senior Vice President, Investor Relations..

Thank you and good afternoon, everyone. Welcome to Brilliant Earth's third quarter 2023 earnings conference call. Joining me today are Beth Gerstein, our Chief Executive Officer; and Jeff Kuo, our Chief Financial Officer.

During the call today, management will make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Please refer to our SEC filings for a description of the risks that could cause our actual performance and results to differ materially from those expressed or implied in these forward-looking statements.

These forward-looking statements reflect our opinion only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events unless required by law.

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

Good afternoon and thank you for joining us today. Our team is already hard at work with the holiday season that's just kicked off, but this is a good opportunity for us to reflect on the many achievements in the third quarter.

Our Q3 results highlight the power of Brilliant Earth's brand to connect with our customers to drive share gains and to deliver sustainable, profitable growth, even in a dynamic environment. Here are just a few of the highlights.

Net sales were $114.2 million or an increase of 2.5% year-over-year, a significant outperformance compared to the jewelry industry overall. Adjusted EBITDA was $7.6 million in Q3, which marks our ninth consecutive quarter of positive adjusted EBITDA as a public company, demonstrating our ability to deliver sustainable profitability.

Order volume increased 17% year-over-year and we opened five new showrooms, bringing us to a total of 37 showrooms across the United States. During the quarter, we also made good progress on the strategic priorities that have and we believe will continue to drive high-quality results and increase our ability to deliver long-term shareholder value.

I'd like to start by noting our continued ability to grow and gain share. While this has been a challenging year for many in the jewelry industry, we have continued to gain substantial market share and deliver profitable growth.

Based on industry reports, we estimate our revenue growth has outpaced the jewelry industry by more than a 1,000 basis points in the third quarter.

While we estimate the bridal market and other portions of the industry are down double digits and others have pulled back their investments, we continue to lean in and are proud of our growth and market share gains.

In the past, this has been a strategy we've used with great success and we see opportunities in Q4 to continue to invest in long-term growth. We have all seen the headwinds in the bridal market, as fewer people have been getting engaged versus historical averages and we are not immune.

While our quarter-to-date performance has been softer than expected, we are seeing strong momentum as we enter the holiday season. The bulk of the season lies ahead and we believe we are well positioned to deliver another profitable fourth quarter with the largest quarterly sales in our history.

And looking ahead to next year, I believe we are well positioned to continue gaining market share and that the investments we are making today will pay dividends as the industry begins to normalize. Turning to our brand. Every quarter, you hear me talk about the investments we are making in building and expanding the Brilliant Earth brand.

This quarter is no exception, but what's notable is the accelerating pace and momentum of our efforts. Since the end of the second quarter, we have launched five significant marketing campaigns, including our first ever national brand campaign.

We are seeing tremendous consumer response, growing interest and demand for unique partnerships and increasing popularity among style and celebrity icon to love brilliant Earth. In fact, our unaided brand awareness among our target demographic has more than doubled from May 2022 to September this year, highlighting the effectiveness of our strategy.

In August, we introduced a limited edition collection with Los Angeles-based designer, Logan Hollowell. In addition to generating tremendous press coverage, we drove strong content and demand across our social media channels. We estimate that launch coverage generated over 250 million impressions across social media and press.

The Brilliant Earth brand, combined with our beautiful product offerings is capturing the attention of many notable icons. We were delighted to see the Duchess of Sussex, Meghan Markle and Pop Superstar, Miley Cyrus, both wearing Brilliant Earth jewelry, Meghan in one of our popular Zodiac necklaces and Miley in a personalized medallion necklace.

They are great examples of high-profile celebrities, increasingly embracing our distinctive designs. And finally, as I mentioned, we've recently launched our first ever national brand campaign, introducing the Sol Collection. We spent two years creating this assortment, pulling from the heritage of our unique and proprietary designs.

Each piece reflects what makes Brilliant Earth so distinctive, craftsmanship, recognizable design and a commitment to quality. This collection highlights our incredible in-house talent and is a result of tremendous hard work and dedication.

The marketing campaign for our Sol Collection also includes a number of firsts for us, including a multicity takeover with major out-of-home advertising in New York, Los Angeles and San Francisco, as well as our partnership with Emmy-nominated actress, Camila Morrone, our celebrity face of the campaign.

In addition, we've created an immersive omnichannel experience and storytelling that will continue to support the Sol launch throughout the holiday season. As with any brand level campaign, we are making both a near and long-term investment in our growth and we are delighted with the early response.

Since our launch on October 19, we've generated over 750 million media impressions, over 20 million social media impressions and generated record engagement rates across our website and digital platforms. This early response reinforces our confidence in our plans and excitement about our future.

Consumers love our unique distinctive designs and high-quality craftsmanship and they connect with our mission. We intend to build on this positive momentum as we further elevate and evolve our strategic marketing. Turning to our distinctive and curated products.

Our plan is to continue driving out sized growth in fine jewelry, amplify our signature products, create newness by continuously editing and refreshing our bridal offerings and to continue leading the industry with both beyond conflict-free natural diamonds and differentiated lab-ground diamond assortments.

In Q3, our differentiated approach, unique products and vast assortment of curated diamonds continued to support our unit growth and market share gains in bridal. In addition, we continued to see strong growth in fine jewelry bookings year-over-year and with an increased average selling price year-over-year.

This growth has been driven by our resonance with both self-purchase and gifting customers, as well as new and repeat purchasers.

Furthermore, our ability to tap into trend-relevant designs like yellow gold, pearls, tennis necklaces and layering and to design into those areas with our proprietary offerings like our Zodiac collection has yielded positive results.

As a reminder, fine jewelry is a small but growing portion of our overall sales, giving us significant room for market share gains in this area. Our Beyond Conflict Free natural diamond collection continues to highlight our industry leadership as we evolve our supply chain.

Since beginning our collaboration in June with Tracr a leading digital platform for tracing natural diamonds from their source, we've substantially increased the number of suppliers we work with using blockchain technology.

As a digitally native company, we've been at the forefront in using emerging technology to achieve industry-leading sustainability and transparency standards. Tracr's technology supports our mission and further enhances our and our customers' expectation of transparency. Another focus for products is our differentiated lab-grown diamond offerings.

We are a pioneer in the lab-created diamond space.

We were one of the first sellers to offer customers lab-grown diamonds in 2012 and we again broke new ground in the second quarter this year, with the introduction of our Capture Collection, lab diamonds grown using carbon captured before it can be released into the atmosphere and the Renewable Collection, featuring lab diamonds manufactured with 100% renewable energy.

Early sales from these collections, which are approximately three to five times more productive than our broader diamond assortment, reinforced just how strongly our mission and differentiated products resonate with consumers. Shifting to our omnichannel experience. We opened five new showrooms in Q3 for a total of 12 new showrooms this year.

This brings us to 37 total showrooms, exceeding our year-end goal of at least 35%. Three of the five new showrooms we opened this quarter are indoor mall locations. Indoor malls are a new format for us and the next evolution of our omnichannel footprint.

Early indications are positive as we have been able to engage more walk-in customers, while still providing the personalized appointments we are known for. Clusters with multiple showrooms in a single metro are another relatively new strategy.

Cluster locations that have been opened at least one year are exceeding our expectations and yielding strong incremental growth. These positive results validate our focus on increasing density in select markets. Our goal is to meet customers where they are and how they shop to support a best-in-class customer experience.

To do this, we continually draw upon our wealth of customer data to open locations and formats, closely tailored to the needs of customers in each market we enter. With 22 of our 37 showrooms opening in the last two years and the introduction of several new formats, we are diligently analyzing new data from these openings.

For example, we intend to use our test and learn approach to continue to elevate the customer experience at high walk-in customer locations, amplify our brand across multiple locations within a single metro and further enhance the omnichannel customer experience through technology.

We plan to apply these learnings in our existing showrooms in our upcoming cohorts of showroom openings and to inform our future strategy. Taking a responsible and disciplined approach to growth by making well-informed, data-driven decisions, enhances our ability to continue growing profitably.

In closing, we are leaning into our growth drivers more than ever. We've exceeded our goal for new showroom openings, launched our biggest brand campaign in the company's history and expanded our curated and distinctive product collections. We are proud to share these accomplishments, along with our profitable growth and strong market share gains.

I'm also so proud of our talented and dedicated team. Their contributions are a key reason why we are excelling. We couldn't be more excited about our brand momentum and the expansive opportunities we have to grow this holiday season and for many years to come. With that, I'll now turn the call over to Jeff..

Thanks, Beth, and good afternoon, everyone. As Beth mentioned, we're pleased to report the quarter that was in line with our expectations and reinforces our ability to continue achieving profitable growth and significant outperformance compared to the industry. Let me take you through the details.

Net sales of $114.2 million, represented a 2.5% increase year-over-year and growth of 22% on a four-year CAGR basis. The increase in net sales was driven by a 17% increase in order volume year-over-year, partially offset by a 12% decline in average order value or AOV.

The year-over-year change in AOV reflects similar trends to what we have seen this year. As we continue growing fine jewelry, overall company AOV is expected to decrease year-over-year in Q4, particularly given that Q4 is seasonally the largest fine jewelry quarter.

Looking at the collections independently, the average selling price for engagement rings has been relatively stable during 2023 and sequentially increased in Q3 compared to Q2. ASP for fine jewelry sequentially increased from Q2 to Q3 this year and is up year-over-year in Q3.

As we've mentioned before, our customers tend to shop with a budget in mind and we're able to meet their needs with a curated assortment of jewelry. Q3 gross margin was 58.5%, which is a 380-basis point expansion over Q3 last year.

As I mentioned last quarter, the main driver supporting this increase include our premium brand, our price optimization engine, procurement efficiencies and our enhanced extended warranty program. We delivered a Q3 adjusted EBITD1A of $7.6 million or 6.7% adjusted EBITDA margin exceeding our expectations.

Our strong gross margin performance, together with prudent management of operating expenses contributed to our strong profitability results this quarter, operating profitably while growing in a disciplined manner sets us apart from many other recent consumer IPOs. Q3 SG&A was 57% of net sales compared to 49% of net sales in Q3 2022.

Approximately 600 basis points of this increase was to support our growth initiatives, including marketing spend to improve brand awareness and drive the expansion of fine jewelry, as well as strategic investments in our team and other G&A to support our future growth.

The remaining increase includes expenses that are added back in our presentation of adjusted EBITDA, such as equity-based compensation, showroom pre-opening expenses, depreciation and amortization and other non-recurring expenses.

As part of our strategy, we increased our third quarter marketing spend as a percentage of net sales by approximately 430 basis points compared to Q3 last year. The investment we have made in building brand awareness is producing strong results. We've continued to gain market share and increase brand awareness, while increasing our margins.

As a growth company, we believe building brand awareness is one of our largest areas of opportunity and we are leaning into this with a well-designed and intentional marketing strategy that supports both near-term opportunities like the holiday season and our long-term goals like the expansion of fine jewelry.

Like our intentional approach to marketing, we manage all our expenses in a disciplined and responsible manner. Our strategy is to selectively capture opportunities for operating expense leverage, while continuing to make appropriate growth-oriented investments.

This approach has supported five consecutive quarters of progressively reducing our year-over-year deleverage in employee costs. For the third quarter, employee cost as a percentage of net sales were higher by approximately 60 basis points as adjusted year-over-year, reflecting additional showroom employee costs.

Other G&A as a percentage of net sales increased by approximately 110 basis points as adjusted year-over-year, as we continue to prudently invest in our business. This spend includes investments in technology and increased rent associated with our expanding showroom footprint.

Our data-driven, capital-efficient and inventory-light operating model continues to provide competitive advantages. We've been able to leverage this model to reduce our overall inventory levels compared to year-end 2022, despite our robust showroom count increase and our significant growth in fine jewelry.

Our lower risk and agile inventory model continue to differentiate us from the industry. We ended the third quarter with $147 million in cash. In addition, we continue to maintain a strong balance sheet with no net debt.

We are proud of our financial health and believe our past performance validates our ability to continue delivering long-term shareholder value. Before turning to our guidance, I would like to highlight a change in our adjusted EPS methodology. Beginning in Q3, we will no longer adjust for other income in our adjusted EPS calculation.

This change more accurately reflects the benefit Brilliant Earth captures from recent increases in interest income. Applying the same methodology to the second quarter would increase the Q2 2023 adjusted EPS from $0.04 to $0.05. Adjusted EPS in all other prior quarters remains unchanged.

Turning to our guidance, as we close the year, we expect to continue to drive sales growth, strong increases in order volume and market share gains, but are cognizant of the challenging jewelry industry backdrop. As expected, our growth this year has been back half weighted.

However, the macroeconomic environment has been more challenging than we originally anticipated and normalization of bridal demand has been slower than anticipated as we exit the year. Reflecting these industry conditions, we expect our full year net sales to be below our prior guidance. We expect Q4 net sales between $122 million and $128 million.

This represents an accelerated growth rate compared to recent quarters, a 2% to 7% increase over Q4 2022 and a four-year CAGR of 18% to 19%. This growth rate is consistent with what we saw in October. We are updating our full year 2023 net sales guidance to $444 million to $450 million.

This represents a 1% to 2% increase over 2022 and a four-year CAGR of approximately 22%. This guidance reflects continued share gains, strong order growth and significant outperformance versus the overall industry.

Drivers supporting sales growth in Q4 include the continued maturation of our recently opened showrooms, the major brand campaigns that Beth described earlier, our outperformance in fine jewelry, particularly as we enter the seasonally largest quarter for fine jewelry with the holidays and the expectation that bridal growth rates will start to normalize towards the end of this year.

As we look ahead to 2024, we expect that we will continue to build on our momentum and benefit from the anticipated normalization in the bridal industry. We believe we are in a very strong position to drive acceleration of our growth rate compared to 2023.

We are preliminarily planning a mid-single-digit year-over-year growth rate for 2024, with accelerating growth throughout the year as bridal demand normalizes. We also expect to continue driving strong gross margin performance with Q4's gross margin percentage in a similar range to what we have seen year-to-date.

While we have seen strong recent outperformance in gross margin, we are still early in evaluating the recent enhancements to our price optimization engine and expectations for the longer term. We are narrowing our adjusted EBITDA range for the year to be $22 million to $24 million, which is within the range we had previously provided.

As we have discussed, we expect to continue to make investments to drive long-term growth and market share gain. We will, as we always have, be disciplined in these investments and cognizant of the macro environment and the returns that we are seeing from these investments.

Our ability to maintain our profitability within our previously provided range speaks to the effectiveness of our agile structure, the speed which we can adapt in a dynamic environment and our ongoing discipline in expense management.

In closing, our premium brand, differentiated business model, including our data-driven decision-making, seamless omnichannel platform, an asset-light structure support our potential to gain share in a variety of different environments.

Our performance year-to-date reinforces our ability to execute and capitalize on the opportunities that drive long-term sustainable and profitable growth. With that, I will turn the call back over to the operator for questions..

Thank you. [Operator Instructions] And our first question is going to come from the line of Oliver Chen with TD Cowen. Your line is open. Please go ahead..

Hi, thank you very much. On the guidance, as you fine-tune the guidance to the low end on the EBITDA, what was driving that change? That would be very helpful.

Also second, in terms of normalization of bridal demand, it sounds like it happened a little bit slower than you would have expected, but would love your thoughts on what's happening, acknowledging that there have been lots of macro challenges that have been worse than expected? Thank you..

Hi, Oliver. I can start with just talking about the bridal demand. So as you mentioned, we are seeing some headwinds in the bridal market with fewer engagements overall than we were anticipating. That said, I'm really pleased with the outperformance that we have versus the industry.

The fact that we have outpaced the industry by 1,000 basis points, I think says a lot to how we are continuing to increase our market share overall. And it's due to a lot of the investments that we've been making.

So I would say, overall, while we're not immune to what's happening in the industry, the growth that we have is still robust in this environment. So we're pleased by that.

Jeff, do you want to talk through guidance and the first part of Oliver's question?.

Sure. Our guidance for Q4 really reflects continuing to drive significant outperformance versus the industry share gains with strong order growth and making the investments in a sustainable long-term growth.

We do recognize that there are current headwinds from bridal demand that's lower than historical averages and the current macro backdrop and we factor that into our guidance. But we're leaning into making investments even as others are pulling back.

And as Beth mentioned, that's something that's been a successful strategy for us in the past and really positions us well for the long-term.

And with all that in mind, we're still applying a discipline as we always have towards looking at the ROI of investments being thoughtful about the returns that we're seeing and able to still deliver a Q4 outlook that is for profitable growth..

Thank you. And congrats as well on the Sol Collection.

To that point, how should we think about jewelry penetration over times and AOV normalizations? And also any key learnings from that launch as well?.

Sure. Maybe I can just start with the overall collection. This was -- as I mentioned in my remarks, our biggest national brand campaign and it's a product collection that we're also incredibly proud of. So just wanted to point that out because there's a lot of hard work on our side to make that happen.

In terms of how we're thinking about it, we do think of it as supporting jewelry as a category, as well as our brand overall and just increasingly being known as a fine jewelry destination for that next generation. And as we're continuing to invest in fine jewelry, we do see continued performance, very strong performance there.

And that's based on the marketing efforts. It's based on our assortment, which continues to be more differentiated, more curated, trend-leading overall. And so that's something we're continuing to just see a lot of upside and a lot of potential in going forward.

We haven't put down the line in terms of the specific jewelry penetration, but given we're talking about a $300 billion market, we see a ton of upside there and we're still very, very low penetration, relative to where we think we could be..

Thanks, Beth and Jeff. Appreciate it. Best regards. Happy holidays as well. .

Thank you, Oliver. .

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Rick Patel with Raymond James. Your line is open. Please go ahead..

Thank you. Good afternoon, everyone. I'm hoping you can talk about the slowdown that you've seen that prompts the guidance revision.

So I'm curious did it happen early in the fourth quarter? Did you start to see it in the third quarter? And can you also provide color on whether these softer trends are concentrated towards certain categories or price points?.

Yeah, I would say -- so in terms of what drove some of the revisions for the guidance, it's not actually a slowdown. If you look at the growth, the growth has actually been accelerating and you can see that throughout the year. I think our expectations were that the bridal demand would return faster.

And obviously, there's been more disruption over the past few years. So we are seeing increased momentum and increased growth overall, but it's just not quite as high as we were anticipating. In terms of what's driving the trends, it's really about the number of engagements that are happening.

So if you look across our assortment, we're doing really well. We're driving very strong order growth, 17% and that's showing you that the products we have are resonating, the brand is resonating with our customers. But at the end of the day, the fact that there are less engagements does have an impact..

And how should we think about the cadence of showroom openings in light of uncertain macro and engagement trends? I'm assuming that you've already had to make some commitments for next year. So I'm just curious how many stores may be in the pipeline..

So we haven't committed to -- we haven't provided the specific numbers in terms of the commitments that we have for the future, that's something that we'll plan to talk about when we talk through our 2024 plans. What I will say is that we continue to have conviction in omnichannel as a model for us.

We know that this is a category where customers really like to come in person. We think that we have an industry-leading, very personalized curated experience overall. And so the showrooms continue to drive strong performance, that metro uplift that we've been talking about really produces nice paybacks, as well as strong four walls.

So overall, I think we're pleased with how the showrooms are doing. And overall, see a lot of opportunity there. I talked about clusters earlier and just how we're able to see strong performance, even having multiple showrooms in the specific metro. We've seen great performance in ground.

So overall, we still remain very optimistic relating to the omnichannel experience that we've created. But we'll talk through cadence in upcoming earnings calls..

Thank you very much. And all the best this holiday. .

Sure. .

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Ashley Owens with KeyBanc Capital Markets. Your line is open. Please go ahead..

Hi, good afternoon. Thanks for taking the question. Just an update on the showrooms. You've added a few mall-based locations to your footprint now.

Is there anything to highlight in terms of differences in demographics or trends compared to your more traditional fleet? And then in general, has this shifted your overall approach to the location of showroom openings in the future?.

Yeah. I would say that it's still pretty early as it relates to the data that we're gathering from mall base. We're pleased to see the early results, the fact that we're getting nice walk-in traffic, the fact that we're also able to serve those very highly personalized appointments.

So that's an important part of the model that we continue to see in malls, but I think it's still a little early to call and so it's something we're going to be watching over the holiday season and the upcoming quarters..

Okay, great. And then just quickly on bridal. You mentioned some softness in during the quarter, but momentum kind of entering that holiday period.

Do you think for the customers that are making the purchase maybe they're kind of elongating that decision time due to the macro? Or what are you seeing there?.

I think that we saw that elongation starting last October, I would say we're seeing similar types of behaviors overall in terms of the overall macro.

I think what's more of a driver is just that we've experienced more of a disruption over the last few years of the pandemic and we're still normalizing -- still have a lot of confidence in bridal as being very resilient for the long-term, but it's just going to take a little longer to normalize based on what we've seen..

Understood. Thanks so much. .

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Dana Telsey with Telsey Advisory Group. Your line is open. Please go ahead..

Hi, good afternoon, everyone.

As you think of the fine jewelry category and obviously the launch that you had this quarter, the new introduction, how do you think about the overall AOV? And what's your updated sense of where fine jewelry can go as a percentage of the mix, given the managing of going through bridal with the normalization that's occurring there right now? And then lastly, on the gross margin, just raw materials, what are you seeing in prices of raw materials? And are you experiencing or planning to adjust any prices also? Thank you..

Great. Thanks, Dana. As it relates to fine jewelry, I think we had mentioned in our remarks that overall ASP has actually increased, which is something that we're really proud of. And we do see ourselves as a premium offering highly curated. So the fact that we're driving higher ASPs I think just shows that a lot of our efforts are working there.

As it relates to the overall AOV, we do expect it to decrease that. But I think that is actually still very accretive, it drives higher repeat rates. We see a lot more affinity in terms of the brand and the overall website experience as it relates to fine jewelry. So I think that's really a positive.

In terms of how we think about the mix, if you look at most jewelers, fine jewelry as the majority of the sales, so the fact that we are well under that just shows you all the upside that we have there and why we've been investing in it as a category.

Jeff, do you want to talk through the gross margin and pricing?.

So in terms of gross margin, as we've talked about in some of our past calls, we do take a really dynamic approach towards how we price and our pricing engine really allows us to act in a much more agile fashion than most others in that we're able to take our light inventory, we're able to see conditions that are evolving in the market, including prices of raw materials and price for that right mix of revenue and gross margin percentage.

And it's something that's dynamic, that there's a feedback loop and really provides us a lot of flexibility in adjusting to market conditions and being able to perform well in a variety of different environments. And I think this -- this environment is no different in that regard and then our agility serve as a competitive advantage..

And I would just add to that, that we are a premium brand. So we are thinking about how we can price based on the premium nature both in terms of the quality that we're offering, our sustainability, the overall experience.

And so the brand differentiation that we have, the product differentiation that we have also is, I think, a source of value and helps to drive our gross margins..

Thank you. .

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Edward Yruma with Piper Sandler. Your line is open. Please go ahead..

Hey, good afternoon, guys. Thanks for taking the question. I guess, first, just not to harp on bridal, but are you seeing any kind of ASP shift? Are you seeing evidence that consumer is trading down within bridal or is it simply just fewer engagements? And then as a follow-up, we're starting to hear rumblings of tighter consumer credit.

I know you guys have a multitude of different partners, but trying to understand if you see any changes in penetration financing or ability to get your consumers financed? Thank you. .

Sure. As it relates to ASP, I can start with that as it relates to bridal. We're seeing ASPs be pretty stable. We talked about how this is a category where customers really shop with the budget and that's something that's borne out this year. We also have actually seen ASP in Q3 be somewhat higher than in Q2. So I would say relatively stable.

We're not really seeing more trade down or anything like that versus what we have seen over the -- really from the beginning of the year.

Jeff, do you want to talk to credit?.

Yeah. And as it relates to consumer credit, as you pointed out, Ed, we're pleased to be able to offer a selection of different financing options for our customers, so they can pay in a way that suits them. And we haven't seen any material changes in terms of that part of the business.

It's an important part of how some of our customers pay for their orders and we're glad to be able to offer a range of different options..

Great. And then just maybe one other follow-up. What kind of finance penetration are you seeing on fine jewelry? I understand that it has a lower ASP. Does the consumer normally pay that themselves? Or is that something that they're financing as well? Thank you. .

We haven't broken out the finance penetration by different types of products.

I would say, just related to my previous response and say, overall, we -- important for us to be able to offer a variety of choices for customers to be able to pay for their orders and we see financing as well as other payment options to continue to be an important part of the mix..

Thanks so much. Happy holidays. Thanks..

Thank you. And one moment as we move on to our next question. And our next question is a follow-up question from Oliver Chen with TD Cowen. Your line is open. Please go ahead..

Thanks a lot, Beth and Jeff. Just a question on the longer-term growth algorithm. In earlier innings, it was in the low-20s, just what are your thoughts on that resuming and/or the catalyst or the pieces to reaccelerate likely it has a lot to do with like the structural trends you're seeing in the market.

And then as you quoted mid-single-digit revenue growth and looking forward to that, how does that roughly break out? Were you speaking more to a number of transactions and volume? Thanks a lot. .

I can maybe kick that off. As it relates to long-term growth algorithm, we still have a lot of confidence in the overall long-term growth aspects and that's part of the reason that we've been leaning in and really gaining share even as others have been pulling back.

So really, as we think about the bridal industry normalizing, you'll start to see that acceleration just based on the gains that we've had to date and the fact that we've been so successful in terms of growing our overall brand awareness.

Jeff, do you want to expand on that?.

Yeah. And then as regards -- with regards to the 2024 outlook and the mid-single digit year-over-year growth rate, that's a revenue growth rate that we're describing with accelerating growth throughout the year as we anticipate we see bridal demand beginning to normalize.

And so I think that the investments that we've been making and having significant success in combined with the anticipated normalization or beginning the normalization of bridal growth will provide us with significant tailwinds to continue our path toward growing, continuing to gain market share, drive significant order growth and that's what leads us to that mid-single-digit year-over-year revenue growth rate, a preliminary projection for 2024..

Okay. That's very helpful. And one follow-up on, you're very agile in understanding ROIC on digital marketing. The environment has been fairly volatile with IDFA and first-party zero party data.

Just what are you seeing with your marketing efficiency and how you're thinking about mix in this environment? And Q4 can be also a unique time where it can be pretty competitive. Thanks. .

Sure. I would just say that we manage the business in a very agile way here. We've been doing digital marketing since really for 20 years and we recognize that and you have to be very responsive based on what you're seeing in terms of performance.

And we take a balanced approach towards upper funnel, mid funnel, bottom funnel, also recognizing that we're seeing more and more changes in the overall landscape. So it's something that we continue to make sure that we're driving efficiencies, that we're driving strong ROAs and that we're taking a balanced approach across the channels..

Thanks a lot. Best regards. .

Thank you. And I'm showing no further questions at this time and I'd like to hand the conference back over to Beth Gerstein for closing remarks..

Great. Well, thanks, everyone, for joining our Q3, 2023 earnings call. We are looking forward to a great holiday season and look forward to talking to you on the next call..

This concludes today's conference call. Thank you for participating. You may now disconnect..