Good day. Thank you for standing by. Welcome to the Brilliant Earth first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Allison Malkin of ICR. Thank you. Good afternoon, everyone. Thank you for joining us for our first quarter FY 23 earnings conference call. Joining me today are Beth Gerstein, our Chief Executive Officer, and Jeff Kuo, our Chief Financial Officer. For our call today, Beth will begin with highlights of our first quarter financial and operational performance and update the progress we have made on our strategic priorities. Jeff will follow with more details on the quarter and share our outlook. Following this, the operator will begin the Q&A session with our presenters, Beth and Jeff, available to answer the questions you have for us today. Before we start, I would like to remind you that management will make certain remarks today that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These future forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a description of the risks that could cause our actual performance and the results to differ materially from those expressed or implied in these forward-looking statements. These forward-looking statements reflect our opinion only as of the date of this call. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events, unless required by law. During this call, we will discuss both GAAP and non-GAAP financial measures. You will find additional information regarding these GAAP financial measures and a reconciliation of these GAAP to non-GAAP measures in today's earnings release, which is available at the investor relations section of our website at investors.brilliantearth.com. A live broadcast of this call is also available at the investor relations section of our website. With that, I'll turn the call over to Beth. Good afternoon. Thank you for joining us today to review our first quarter fiscal 2023 results. It's been a good start to the year, with our performance reflecting the continued execution against our near and long-term growth goals, with an unrelenting focus on building our brand, growing our share in a dynamic and highly fragmented market, and delivering ongoing sustained profitability. I'm pleased to report that in the eight weeks since we shared our year-end performance, we are reporting first quarter results today that have again exceeded our expectations. We're pleased to deliver these results in a macro environment that has remained relatively unchanged from just two months ago. Highlights include: Revenue was $97.7 million, which represents -2% year-over-year growth and a 27% four-year CAGR. Gross margin was 54.9%, a 480 basis point increase versus Q1 2022. We delivered Adjusted EBITDA of $5.5 million or a 6% Adjusted EBITDA margin. For those of you who know Brilliant Earth, you will recognize the consistency of our mission-driven focus to disrupt and transform the jewelry industry and to extend our lead as the jeweler for today's consumer. As I said on our year-end earnings call, our priorities for 2023 will remain consistent: To continue on our path to become the premier global jewelry brand for today's and tomorrow's consumer, driving awareness, resonance, and relevance. To expand and refine our product offerings to create distinctive, high-quality products. To expand and elevate a seamless omnichannel experience across our showrooms and e-commerce. To invest in the technology and systems to enable our growth. Today, I'd like to touch briefly on a few of the first quarter drivers of our performance against those priorities. As always, it starts with our brand. For us, sustainability, transparency, and inclusivity are embedded in our DNA, and we aim to reflect them in the product and stories that we share with our customers. As we do, we see growing awareness and share gains for our brand. In Q1, we grew our share of voice with 85% more media impressions than last year by featuring our trend-leading product with influencers like Nick Viall from The Bachelor, who shared his proposal with a Brilliant Earth ring with his 1.1 million Instagram followers, or singer-songwriter Kelsea Ballerini wearing Brilliant Earth at the Grammys. Our ability to execute milestone moments with our distinctive product and social and cultural influencers extends our reach as the largest single-brand independent jewelry company in the US. It has also elevated our position to be among the top jewelry brands for share of voice. In our most recent brand survey, aided brand awareness with our demographic grew to 66%. This is a 12-point increase from our measurement approximately two years ago, and an indicator of the continuing success we've had in engaging with our millennial and Gen Z target audience. Over the past many years, word-of-mouth recommendations have been primary building blocks for the brand. We expect that to continue while we also expand the channels, platforms, and people that amplify our voice and bring new consumers to Brilliant Earth. We've seen expansion of our reach reflected in our total customer growth, as well as growing fine jewelry self-purchase rates. One of the biggest moments in Q1 was, of course, Valentine's Day. We take tremendous pride in our ability to capture moments of celebration and love for our customers. What better example than Valentine's Day? Our heart diamond assortment generated strong results along with our expanding assortment of personalized and customizable products. As a result, for the Valentine's Day holiday gifting period, we generated approximately 70% year-over-year growth in fine jewelry orders. Just as sustainability, transparency, and inclusivity are core to our brand, so too is the quality, craftsmanship, and uniqueness of our product. Our partnership with Steph Shep, founder of Future Earth, is a great example of how we bring those principles to life with beautiful and meaningful product. This Earth Day, together with Stef, we launched a 10-day campaign to advance our shared mission. In addition to educating our community about small steps they can take toward a more sustainable Earth, this partnership highlights what makes our fine jewelry special. We use recycled precious metals and ethically sourced and sustainably created diamonds and gemstones to deliver on our promise to provide beautiful, unique, trend-leading, and coveted products to our customers. This builds on our already strong bridal offering. Customers recognize Brilliant Earth as a leader and innovator in bridal, from the new trend-leading and proprietary designs we create to the varied on-trend fancy shapes and broad selection of natural and lab diamonds across all budgets. In Q1, we launched the Mosaics collection, exclusively available at Brilliant Earth, further reinforcing our design leadership with distinctive engagement rings and wedding bands. As you've heard me say often, bridal is a highly resilient category, even as we know we are coming off an unprecedented period for weddings. While we anticipate some normalizing throughout this year, we are quite confident in our ability to continue to grow both demand and market share as we are increasingly recognized as the go-to brand for high-quality, distinctive bridal jewelry. As planned, we started the year with openings of six new showrooms in Charlotte, Brooklyn, Tampa, Pasadena, Nashville, and Fairfax, bringing our total showrooms to 31. The overall sales uplift that our showrooms generate when we open in new markets is, of course, an important business driver, and we've continued to see strong performance, including a year one post-opening metro bookings uplift of approximately 100% for showrooms open at least one year. Showrooms are also an important part of our overall brand-building efforts. Take Brooklyn, for example. We had our eyes on Williamsburg in Brooklyn for some time, as we all know that it's a vibrant community, and our data suggests it would be a great market for us, given its popularity with Gen Z and millennials. We opened in a great location on Sixth Street, which is a popular spot for other luxury retailers and D2C millennial-focused brands. Opening weekend was a huge success as our appointment schedule was 100% booked, and we've had great early response to both our bridal and fine jewelry collections. As we progress through the year, you can expect that we will continue to test and evolve our showroom concepts and executions, including new formats such as mall-based showrooms and evolving the overall customer experience. We're on track to end the year with at least 35 showrooms in total. As a digital-first company, our success in scaling our omni-channel model is fueled by the investments we continue to make in the technology and systems that will enable our growth, as well as our continuous test, learn, and iterate approach. Our agile development cycle allows us to release new features and functionality every several weeks, including features that enhance our ability to adapt and individualize customer shopping experience to their preferences, ongoing refinements to curation and personalization, and our ever-improving and evolving e-commerce experience. These all reflect our obsession with the customer and, in turn, our commitment to providing the most personalized and joyful experience for them. I'll close by reiterating how pleased we are with our start to the year and by thanking our team and expressing my confidence in our team's ability to continue to execute both our near and long-term growth plans. With Mother's Day only three days away, we're excited to help our customers celebrate a great Mother's Day. Thank you for your continued interest and support. Here's Jeff. Thanks, Beth. Good afternoon, everyone. Thank You for joining us today to discuss our first quarter fiscal 2023 results. As Beth mentioned, we are pleased with our start to the new year with the delivery of first quarter revenue and profitability ahead of our expectations, again demonstrating our ability to operate the business in an agile fashion. We are particularly pleased to report these results in a macro and consumer environment that remains relatively uncertain. Beth talked about our priorities for 2023 and our focus on continuing to expand the reach and resonance of our brand while also delivering healthy, sustainable, profitable growth. Today's results reflect those efforts. In the first quarter, we reported revenue of $97.7 million, a 2% decline year-over-year, and growth of 27% on a four-year CAGR basis. This result was better than the expected range we communicated on our Q4 earnings call and is consistent with our expectation of continued year-over-year order growth, which for the quarter was approximately 10%, offset by an anticipated decline in AOV, which for the quarter was approximately 11%. I'm pleased to report that we also continued to deliver robust gross margins. Q1 gross margin expanded 480 basis points year-over-year to 54.9%. Consistent with prior quarters, the sustained strength of our gross margin illustrates how our agile, asset-light, data-driven business model allows us to nimbly adapt to dynamic market conditions to optimize both margin and revenue. This better than expected expansion was driven by the continued growing resonance of our brand, the differentiation we provide in our product offerings that are increasingly well received by consumers, and ongoing benefits from our price optimization engine, procurement efficiencies in our supply chain, and our enhanced extended warranty program. SG&A for the quarter continued to reflect our investments in growing the Brilliant Earth brand, expanding our omni-channel reach, including through our showroom rollouts, and in scaling the business. For the quarter, SG&A was 55% of revenue, compared to 44.8% of revenue in Q1 2022, with approximately 270 basis points of the change driven by expenses that are added back in our presentation of Adjusted EBITDA, such as equity-based compensation, showroom pre-opening expenses, depreciation and amortization, and non-recurring expenses. The remaining approximately 750 basis points of Q1 year-over-year change in SG&A expenses are as follows. Marketing costs as a percentage of sales grew by approximately 330 basis points year-over-year. Our ongoing investments in building the Brilliant Earth brand continue to pay off in terms of growing awareness and demand for Brilliant Earth, particularly as we continue to reach new customers with the expansion of our omni-channel strategy and growth of fine jewelry. Keep in mind that we continue to manage our marketing spend dynamically to balance marketing efficiency while growing our brand. We were pleased to realize strong brand growth while managing a sequential decline in marketing as a percentage of sales for Q1 2023 versus Q4 2022. During the quarter, employee costs were higher by approximately 260 basis points year-over-year. As we discussed previously, we remain disciplined in our approach to investing in new employee growth to support our showroom expansion as well as key corporate talent. Over each of the past three quarters, we have reduced the year-over-year deleverage in employee costs as a% of sales. Other G&A as a% of sales increased by approximately 160 basis points during the quarter, driven by higher technology expenses to support our growth and rent associated with our increased number of showrooms. Over each of the past three quarters, we have also reduced year-over-year deleverage in other G&A as a% of sales as we have anniversaried our public company operating costs and maintain a disciplined focus on management of G&A expenses. Our strong gross margin performance, together with prudent management of OpEx in Q1, contributed to us exceeding our Adjusted EBITDA expectations to deliver a Q1 Adjusted EBITDA of $5.5 million or a 6% Adjusted EBITDA margin. Our profitability and capital efficient operating model continue to differentiate us among direct-to-consumer companies. We ended Q1 with $146 million in cash. We continue to maintain a strong balance sheet with no net debt. We operate the business in an asset-light fashion with efficient working capital, and our inventory terms are among the highest in the industry. As we've mentioned in the past, as we successfully expand fine jewelry to be a larger part of our business and grow our showroom footprint, we do anticipate our inventory model will evolve to accommodate those needs. That said, at the end of Q1, we reported our second consecutive quarter of sequential decline in inventory as we continue to tightly manage our inventory in a data-driven fashion. As we have said, our plans for 2023 reflect the priorities best outlined earlier, coupled with our clear and focused commitment to delivering profitable growth. As stated in our earnings release, we've reiterated our annual guidance, which reflects our ability to gain share in an uncertain macroeconomic environment. Our guidance continues to include our expectation that full- year 2023 net sales will be in the range of $460 million-$490 million, which represents 5%-11% growth versus FY2 2. A four-year CAGR of 23%-25% and a four-year stacked growth of 128%-143%. We do anticipate higher year-over-year revenue growth rates in the second half of the year as we lap lower comparative growth rates from the prior year and continue to see success in our showrooms and the performance of our fine jewelry assortment. We expect the distribution of revenue in the remaining 3 quarters of 2023 to be generally consistent with the shape of these quarters in 2021, which was representative of our historical seasonality pattern with a slightly higher second half weighting compared to 2021, given our outsized growth in fine jewelry and expansion of our showroom footprint. We also expect to continue driving strong gross margin performance. While there may be puts and takes in any given quarter, we expect to continue managing full- year 2023 gross margin towards our long-term gross margin targets in the mid-50% range. As I said last quarter, we are planning to exit 2023 driving year-over-year leverage on a run rate basis in Adjusted SG&A as we continue our focus on driving sustainable, profitable growth. Our full- year Adjusted EBITDA guidance in the range of $17 million-$32 million also remains unchanged as we expect to continue prudently managing investments to gain market share while managing the business for profitability. In closing, on behalf of Beth, myself, and our entire team, we thank you for your support, we'll be happy to answer your questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and one follow-up, and then re-queue for any additional questions. Our first question comes from Oliver Chen with TD Cowen. You may proceed. Hi, Beth and Jeff. Nice quarter. On the quarter itself, which factors led to better revenue? Or what was underlying some of the better performance there? As we look at our models, the expected AOV decline, what's assumed in terms of guidance as how that will evolve as you continue to succeed and find... A follow-up, Beth, would love your thoughts on wedding and engagement trends overall in the market, and how you're gaining share, but what you also see happening with those dynamics, you know, given the tough compares and some of the headwinds we're seeing too. Thank you. Thanks, Oliver. Maybe I can start with the wedding and engagement trends. As I mentioned in the earlier remarks, we are coming off of some really big outsized performance as it relates to bridal and weddings. Last year was 2.6 million weddings, so the biggest year in decades. We know as we're heading through the rest of the year that bridal overall is gonna normalize, and we feel really confident that we've been outperforming the industry here, and that the product offering that we have, the brand resonance we have, and the fact that we've been bridal leaders in this category really sets us up well as we see the trends start to improve toward the end of the year. As it relates to the better revenue that we saw in Q1, we were really pleased to see the outperformance that we had. I think it's really the success of all of the factors that I talked about. The fact that we're growing brand awareness, that we are resonating with our younger millennial and Gen Z audience, as well as the performance of our showrooms and the fact that we're able to launch these new showrooms really successfully overall, as well as fine jewelry, I think seeing some early success there. All of those, I think, really led to the revenue. I wouldn't isolate it to any one particular factor. Jeff, maybe you can hit AOV decline. Sure. As we look to AOV, we do expect to see, as we grow our fine jewelry assortment and grow there, some AOV decline due to the lower price point of fine jewelry and the success that we're having in expanding there. That is something that we do expect to see, you know, for Q1. As we've mentioned before, we have seen some moderation at the $10K plus price point. Those are the factors that are going into the AOV decline. Best regards. Thank you. Our next question comes from Dana Telsey with Telsey Advisory Group. You may proceed. Good afternoon, everyone, nice to see the progress. As you think about the guidance that you laid out for the year and thinking about Q2 and the balance of the year, you currently beat some of the expectations in Q1. What are you seeing in terms of current trends in the consumer and how you're framing the second through fourth quarters? Just lastly, can you talk about the uptick in the gross margin, pricing, fine jewelry, bridal? What did you see by category and how you're thinking about pricing? Thank you. Great. Thanks, Dana. Maybe we can start a little bit in just the overall guidance. I think we continue to have full confidence in the overall year, and I think a lot of the success that we've seen, we continue to expect great things as relates to launching our showrooms. We know fine jewelry, especially in Q4, tends to outperform, and we have a lot planned overall. All of that, I think, just gives us a lot of confidence overall in the guidance that we have for the year. As it relates to current trends, you know, as I mentioned in the earlier remarks, we really haven't seen a noticeable difference in consumer behavior from what we talked about in our last earnings call. I think Jeff had mentioned a little bit on the shape of the year, so maybe Jeff, you can go into that specifically. For the shape of the year, as I described in my remarks, we're expecting the shape of the revenue of the following nine months to be similar to the shape that we saw in 2021 generally, which is representative of the historical seasonality pattern in our business, with some slightly higher weighting towards the second half, given that we're continuing to open showrooms and seeing success there and driving outsized growth in fine jewelry. Fine jewelry, as you know, is a more Q4. Q4 is a big quarter for fine jewelry. That's how we're thinking about the overall shape of the year. I think, just as it relates to gross margin, how we think about pricing, I think the fact that we've really invested in the brand, and we're really focused on growing a premium brand with exclusive curated products and really a destination for our consumer base, that we are thinking about how we can have that price optimization and really be able to take advantage of the brand positioning that we have overall. You know, keep in mind that our pricing is always very dynamic. We're always thinking about making sure that we can optimize overall margin dollars while still recognize that we're a premium brand in the marketplace. Thank you. Thank you. Our next question comes from Noah Zatzkin with KeyBanc Capital Markets. You may proceed. Hi. Thanks for taking my question. I guess on the, on the gross margin line, you know, you made some nice progress there and obviously approaching your kinda longer-term target. You know, as you increase mix to fine jewelry, like, do you see any incremental opportunity there, or just how should we kinda think about that, looking longer term? Additionally, you know, in terms of cadence moving through the year, do you expect gross margin to be kinda fairly consistent? Thanks. I think maybe I can start this off. You know, certainly, I think we have a lot of opportunity with higher margin fine jewelry products, especially as we offer a differentiated product there, and people are coming to us for our personalized, unique designs. That is, I think, a good opportunity for us and one that we are seeing some positive results there. Jeff, do you wanna talk a little bit more about just how we're thinking about it for the year? The way that we're thinking about the year is working for the year's gross margin towards that long-term mid-50s% gross margin. We were pleased that the performance that exceeded our expectations in Q1. It is gonna be something that if you look on a quarter-over-quarter basis, there will be some fluctuations and puts and takes as we're continually optimizing to drive the right mix between revenue and margin. The overall shape is that we're working towards that mid-50s for the annual gross margin. Got it. Very helpful. Not to beat the cadence questions to death, but just in terms of OpEx, anything to call out in terms of how we should be thinking about the OpEx line moving through the year? Thanks. I can take that. I think there's a few things to point out. I think one is that consistent with what we described last time, we're working to planning to exit 2023, driving year-over-year leverage on a run rate basis in Adjusted SG&A. We continue to be disciplined about how we think about cost, managing our costs while driving sustainable growth and making the appropriate investments. As I mentioned during the call, we were glad to see that over the last three quarters for employee costs and for other G&A, we've seen a sequential reductions in deleverage on a year-over-year basis. I think that reflects our discipline and focus in being thoughtful about those cost lines while we still make appropriate investments. We do manage marketing dynamically as we, you know, can toggle that and use data to see where the demand is and make the right balance between investing in the brand and driving efficiencies. The overall shape is that we're working towards a run rate, driving leverage on Adjusted SG&A towards the exit of 2023. I would just add that, you know, we're in a really good cash position. We're profitable. I think we have a lot of opportunity for investment as long as we're seeing some strong ROI. That puts us in a, I think, a really good space. Thank you. Thank you. Our next question comes from Matthew Boss with JP Morgan. You may proceed. Great. Thanks. It's Amanda Douglas on for Matthew Boss. To start, Beth Gerstein, could you elaborate on any notable areas of strength within the product assortment or any new product launches that you believe are driving the market share gains as you've cited throughout your remarks? How have you seen repeat purchase rates trend as you continue to expand into fine jewelry? Sure. Thanks, Amanda. I would say we're seeing pretty broad-based strength overall with the product launches that we have. I think that, you know, we've been building on some of the success that we've seen with personalized jewelry, for example. We just released some really beautiful pendants that you can add initials specifically to. For example, we've added personalized nameplates. What I think we're really good at is using the data sources that we have and understanding where our collection is resonating, then building a really productive collection overall by looking at the data and the trends that we see and then building on that success. Based on that, we've seen great success with our cocktail ring collection that we launched last year. We've seen really great great opportunity within some of the zodiac pendants that we've launched. Overall, I think we're just thinking about building a really productive overall collection. In bridal, I think we're really trend leaders there. We just released a new Mosaics collection, as I mentioned earlier. Really, I think we're at the forefront of introducing thoughtful designs to our customers. We're leading here and really showcasing to customers what I think is exciting in the marketplace. Overall, I would just say that it's really us firing on all cylinders across our product portfolio. As it relates to repeat, we're pleased to see the resonance that we're having with our customer base and really being able to sell fine jewelry for both occasions as well as self-purchase. I think I've mentioned just the success we've seen with self-purchase, given that we are a brand that resonates with her as much as him. I think, you know, overall, there's a lot of opportunity there. I think, you know, as we continue to evolve our CRM program and to evolve our overall marketing, as well as our assortment, but seeing some early success there and feel confident that that's a real opportunity for us going forward. Thanks. That's great color. Maybe a follow-up for Jeff. I know you cited managing full- year 2023 gross margins within that mid-50s long-term target. I guess my question is multi-year. Is there any reason why you couldn't actually exceed mid-50s, or is mid-50s a ceiling? What just gives you confidence in sustaining the significant gross margin expansion that you've seen over the past two years? Sure. In terms of our long-term target, you know, I think we have communicated that mid-50s target is something that reflects the. Maybe I'll answer back part of your question first. Like, why, you know, why we have confidence and why we've been able to do that is that we have that strong premium brand and products that really resonate with customers. We have the price optimization engine that allows us to operationally optimize for revenue growth and gross margin, procurement efficiencies, including as we continue to scale, and our enhanced extended warranty program. Those are the same factors that have taken us to where we are, and we think there continue to be opportunities to grow along those, along those lines. As we think about the gross margin target, we are managing to balance both, you know, revenue growth and gross margin. You know, we are confident that we're driving towards that mid-50s%. There will be puts and takes, as I mentioned, as we're, there is an optimization and testing process as we work through each given quarter. We think that the levers that we've pulled to date, you know, continue to give us room to run. That's helpful. Thank you. Thank you. Thank you. Our next question comes from Edward Yruma with Piper Sandler. You may proceed. Hey, Good afternoon, guys. Thanks for taking the question. I guess first, I know you use third-party credit providers, but kind of interested to see if there have been any changes. We're hearing a lot about consumer credit pullback, if you've seen any change in behavior in their underwriting for your products. As a follow-up, Jeff, I think you mentioned in your prepared remarks, you know, that over time you may need to build inventory as the showroom ramps. I guess when should we expect this potential inventory build? And kind of if you could dimensionalize the impact to cash, that would be great. Thank you. Maybe I can start with the first one. You know, as it relates to third-party financing, I wouldn't say we've seen any material change or impact to our revenues there. Keep in mind this is a smaller part of our revenue base, actually, I think it represents a nice opportunity for us. But it's not something that is really material in terms of our impact. Jeff, do you wanna talk a little about inventory with the showroom? Sure. I did mention, as you pointed out, the evolution of our inventory model to support the growth of showrooms and fine jewelry. I think the answer is that we are already seeing some of that effect as we've gone from lesser number of showrooms a few years ago to 31, and we're seeing growth in fine jewelry. We are seeing that reflected in our inventory mix now, and we'll expect, you know, some continued changes there. I would like to point out, though, that we do manage for both of those types of inventory in a very data-driven fashion with working capital efficiency and being asset light in mind. I think that you can see some of that in the fact that over the last two quarters, we've seen sequential declines in inventory, even as we've had success in fine jewelry and growth in the number of showrooms. It's something that our discipline and our mindset will be to be asset light, to be working capital efficient. We will wanna serve those showroom and fine jewelry parts of the business as we see growth there. I think the fact that we've been able to manage and even have inventory declines in the last two quarters speaks to how we think about being tight and disciplined in that management. Maybe one other follow-up, if I may. You know, some other, your peers have gotten more promotional. I know, you know, Ring Concierge is doing a 20% off right now. I guess, have you seen any change in promotional environment? I know there were a couple of questions around gross margin, but does that change kind of the near term outlook in terms of you continuing to take price through, algo optimization? Thanks. I wouldn't say we've noticed anything really significant as it relates to the promotional environment. I mean, keep in mind, there are gonna be brands that depend on discounting. You know, we as a brand do not discount. We really think about adding value to our customers and really being a premium brand there. I think overall, that's just not a tactic that we're gonna engage in, and one that we do see broadly in the industry, especially in times where, for example, Mother's Day is coming up, as we all know. I don't, I don't see that being a particular impact to us other than we just wanna make sure we're protecting and growing the brand overall. Thank you. Thank you. Our next question comes from Randy Konik with Jefferies. He may proceed. Thanks a lot. Really appreciate it. A couple of things. Just first and foremost, can we just get some perspective on maybe differences you're seeing in traffic and conversion and volatility of those metrics or lack thereof between the showrooms and the website? Can we get some kind of, you know, give us some perspective there on what you're seeing? Thanks. Sure. Thanks, Randy. I would say that, you know, it's really hard to disintermediate the website from the showrooms, given the omni-channel nature. We know that the vast majority of our customers start their journey online or on social media, then they'll visit the showroom, then oftentimes they'll purchase on the site. There's such an interplay there that I wouldn't say that, you know, we notice anything, you know, very stark in one versus the other and really wanna think about the overall omni-channel journey. You know, I would say that we're still seeing strong traffic, strong conversion, overall in both the e-commerce as well as in the showrooms, but, you know, just having a harder time kind of pulling it apart, especially as we're investing in metros, you know, that are, I think, really strong for us from our customer data perspective. Great. Maybe lastly, maybe you can remind us, maybe especially for those that might be new to the story, just kind of how the showroom economics look. You know, what are you looking at from a payback period perspective? Then just give us some updated thoughts on over the next, let's say, 12-24 months, where would you mostly kind of think about, you know, showroom strategy in terms of infill versus new market approach? Just give us that perspective as well. Thanks, guys. Sure. I can talk a little bit about showrooms overall, and then, Jeff, if you wanna get more specific on in terms of the economics. You know, we really think about the overall metro uplift because of that interplay I was just talking about between e-commerce and showrooms, and have been really pleased to see that consistency that we're growing over 100% in metro revenue for showrooms that are open over 12 months. As it relates to how we think about kind of expanding showrooms, I think because we're able to use our customer data, we have really good insight into which showroom openings where are gonna be successful there. I still think we're learning a lot. You know, we've seen success with ground floor. We're gonna be opening malls in the near future. I think all of that's gonna inform the strategy on a go-forward basis. You know, early on, I think we're pretty excited in how different formats are working as well as, you know, as we open stores in the same geography, seeing success there as well. Yeah. Then I can- Oh, go ahead, Jeff. Go ahead. I think I can add just, you know, in terms of the, you know, you asked about the economics. Just echoing Beth in terms of the omni-channel nature, we really do look at that metro bookings uplift for the first year, you know, post-opening of, you know, over 100, you know, approximately 100% for showrooms that have been open at least one year. I think, you know, from perspective of things like payback period, you know, we believe that our payback periods are good and compare favorably with industry leaders. Great. Thanks, guys. Thanks, Randy. Thank you. Our next question comes from Rick Patel with Raymond James. He may proceed. Thank you. Good afternoon, everyone. Would you be able to rank the drivers of gross margin improvement? I believe that the factors that you called out were pretty consistent with what you've said in the past. We're curious how the tailwinds stack up and which of the gross margin drivers do you have the most confidence in in terms of being sustainable tailwinds versus those that you have a lot of progress and maybe further along? Jeff, do you wanna take that one? Sure. Thanks, Rick. We'd say that of the drivers that we've talked about, which have been able to support our strong gross margin, say that many of them are all important and, you know, continue to have room to run. Let me just go through those just as a brief recap. I think the underlying it is the strength of our brand, the differentiation and proprietary products that we offer. We also operationally enhance that with our price optimization engine, procurement efficiencies, and we think that those all have been meaningful contributors, and we continue to have room to run with those into the future. We also have had benefits from our enhanced extended warranty program, which has also been accretive to gross margin. I would say that overall, the factors that have gotten us here still have room for us to continue to optimize and grow from. We're heartened by the fact that the levers that we've been pulling continue to have, continue to be able to drive future improvements. Thanks, Jeff. Can you also talk about the trend line for demand? I appreciate that macro was pretty consistent in the quarter, we're curious if demand was also consistent or if it was front or back-end loaded. You came out ahead of first quarter expectations, guidance for the year is the same, I'm curious if there's anything that we should read into. Yeah, I don't think there's anything to read into it. I think that we did see relatively consistent trends through, you know, the first part of this year. Nothing really of note there as it relates to a specific trend line. Thanks very much. Thank you. Our next question comes from Oliver Chen with TD Cowen. You may proceed. Hi. Thanks a lot. One trend we've been monitoring is active customer growth across digital. Do you have any thoughts on how that's proceeding for you? It's been, frankly, a little lighter, you know, across the industry, given different opportunities, but I know you've done really creative things in terms of digital marketing. Related to that question is maybe you could brief us on what's on your mind, you know, for the performance marketing and how you're approaching, you know, TikTokification and live streaming since you've been early to that. We had an incoming question related to store productivity. Is there a way you could give us some thoughts on how last year's stores are performing, you know, in year two? That'd be great. Thank you. Great. As it relates to active customer growth, I'm not sure we're specific on customers, Jeff, correct me if I'm wrong, but I think a good proxy is, you know, thinking about 10% order growth overall. We are seeing good performance there in terms of how we're growing new customers, and I think fine jewelry is a great category for us to attract new customers as well into our brand. We've seen really good success overall at being able to drive new customers in that category, in that segment. You know, as it relates to our digital marketing efforts, I like the term TikTokification that you used, Oliver. You know, certainly I think that we are leaders here in terms of being able to engage our community on social, and we've seen really nice success. I think we have an outsized performance relative to our overall scale on TikTok as well as other social platforms. You know, continue to lean in there and understanding that millennial and Gen Z audience, this is where oftentimes they begin their search process and they begin their discovery. I think this is a real advantage to us overall. Jeff, do you wanna talk a little bit about store, how we think about store productivity? How we think about store productivity is really about the metro uplift that we see in metros post-opening. Because it is a true omni-channel purchase, you know, I think we see that we're able to drive uplift across an entire metro, you know, both in terms of showroom sales as well as e-com in that metro. We're early on in that journey, and we feel that there, you know, continues to be upside, you know, upside in terms of how we're able to use our showroom expansion to drive additional revenue. Okay. Beth, the follow-up, lab diamonds continue to be pretty exciting. What are just some major points you're focused on for the continued innovation there and what customers want and how you're thinking about continuing to healthily grow that market and opportunity? Yeah, absolutely. You know, we've really been innovators here and have been offering lab diamonds for over a decade. Really are, I think, leading the way. We see a lot of opportunity, especially as it relates to fine jewelry and introducing new lab fine jewelry. I think it's a way to really broaden the market appeal. We see that it really resonates with our customer base, and I do think that it's going to be a really nice opportunity that we're able to capitalize on. Then we continue to offer really differentiated product there. We're leaning into sustainability. We have a large collection of sustainably rated lab diamonds as well as new efforts on the way there, which I think is also really exciting and just shows our, I think, mission-based values and the way that we're able to differentiate within the marketplace. Thank you. Best regards. Thanks, Oliver. Thank you. Our next question comes from Dylan Carden with William Blair. You may proceed. Thank you. With store growth and, you know, higher penetration presumably of fine jewelry being a higher repeat category, how do you contextualize the sort of deleverage you've seen pretty consistently and pretty heavily on marketing? Sort of anticipation of you saying that you manage it dynamically, I guess, what does that mean? I mean, is that because you think you're gaining a customer and that does have higher rates of spending? When would you start sort of seeing that flow through the model? Is that part of sort of the SG&A run rate deleverage you're kind of anticipating or seeing exiting this year? Thanks. I think just overall, you know, keep in mind that we're still majority bridal, that we're early in our fine jewelry trajectory and in terms of being able to capitalize on that opportunity. It's important that we continue to invest in marketing as well as continue to grow our overall awareness. This is a $300 billion market. It's highly fragmented, and we're still quite a small player relative to the overall opportunity. As we see ROI, strong ROI from our marketing efforts, we're gonna continue to lean in and take a more balanced approach with making sure that we're maintaining marketing efficiency while continuing to grow our brand overall. We think about managing dynamically in the way that as we, you know, we are very data-driven as we're looking at customer demand, then we lean in towards those marketing efforts. We're also able to deliver that based on our asset-light model and capture the demand. It's a very dynamic optimization that we're doing based on the customer demand that we see as well as the ROI from those efforts. I would just add maybe two things, Dylan, to your point about the exit run rate of driving leverage on a year-over-year basis for Adjusted SG&A. That is inclusive of marketing as part of that Adjusted SG&A as we think about driving to that exit run rate of driving leverage. I think 1 sequential proof point from recently that I believe I mentioned during my remarks is that for Q1 of this year versus Q4 of 2022, we did see a reduction in the marketing expense as a percentage of revenue. That's a more recent proof point of some of the results of the efforts that we've seen, but it is something that we're conscious of and disciplined about. Excellent. As the model, you know, it's hard to know, not knowing sort of where you are with fine, but sort of the comments about how fine can or will impact the inventory management dynamics to some extent. You know, you're able to pass through in real time input pricing on the, you know, the curated side of the business. Do you expose yourself to more input commodity pricing risks further along the path to find or does the pricing tool allow you to kind of circumnavigate most if not, you know, all of that? I would say that, you know, the way we see it, yes, we're able to optimize prices and really command a premium as it relates to more differentiated design. Also the halo of the brand, I think also extends to more of the classic products that we offer. I think we see that, you know, people come to us for a curated experience overall, both in terms of digital, in the showrooms, in our very high touch approach that we have. As a result, we're able to command a premium there across the whole product portfolio. Okay. Thank you guys for the time. Sure. Thanks. Thank you. This concludes the Q&A session. I'd now like to turn the call back over to Beth Gerstein for any closing remarks. Thank you everyone for joining us on our Q1 2023 conference call. I wanted to wish all the mothers out there a Happy Mother's Day. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.