e.l.f. Beauty (ELF) 8 May 192019 Q1 Earnings call transcript

Greetings. And welcome to the e.l.f. Beauty’s Transition Period Ended March 31, 2019 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. reminder, is a recorded. As Instructions] this being conference [Operator your pleasure McManmon, It my introduce host, is now to Willa Investor Relations. Thank you.

You begin. may

Operator, on A recording call available the copy Investor everyone. of afternoon, today’s press today the Beauty’s and section elfcosmetics.com. available for XX of period for you, in is transition results. us e.l.f. to be of Thank earnings will XXXX Relations also release joining days discuss Thank you good elfcosmetics.com. A

results contains forward-looking such beliefs to call and or results and therefore, fiscal to company’s that are estimates As statements Important projections. management’s forward-looking may this a are including known from actual factors company’s filings. those the detailed release implied statements based on and risks to materially. press and expressed in cause and SEC subject reminder, unknown XXXX today’s outlook, by uncertainties, the expectations, assumptions, and differ differ those are These statements, actual relating that may

from addition, Executive With Officer. Senior management Tarang measures. a and I are will In Chief that, you With me release GAAP President directly and and today press most on presented Chairman differences over call today’s to We information Officer; for Tarang. non-GAAP the to Amin, includes Fields, Mandy Financial and today Vice Chief basis. of turn the the a non-GAAP refer the comparable between presentation company’s reconciliation the presentation

afternoon, good and Willa, Thanks, everyone.

Our $XX $XX million. expectations transition million and net results period exceeded EBITDA of our adjusted with of sales

marketing These results Project benefit were new versus e.l.f. sales year up Unicorn activations ago. impact first-to-mass our of of products. the Excluding the behind X% stores and increased net reflect a

and five that consumer our awareness. making brand have and form integrated key e.l.f. reinvigorate progress an are repositioning strategic designed to strategy We raise initiatives the together on defined

which believe is time initiatives. are we against realize, progress our fiscal XXXX will to the reflected the brand take began initial We as to in We these fully guidance. seeing making investments we execute in are

key Let hand-in-hand, major of demand greater the each in our go initiatives context of a Two me driving provide and in on step up digital. these initiatives. brand

first-to-mass free. awareness to such compared double-digits universal and and the are these integrating social. on drumbeat same was looking search a progress consumer proxy our and we XXXX. tenets plan period digital as, fiscal of constant influencers capabilities, to Google, see by metrics fewer behind our a that appeal, interest we up core unbelievable and We at To measure live are February, Chief joined us Kory more and eye brand. ground redefining Marchisotto know, What’s consumers. brand the running e.l.f. These our powers. from and are consumers changing Marketing what proposition our Officer, and the quality, strategy super users that resonates marketing e.l.f.’s telling in you the e.l.f.’s face every hit into making our with bringing a to accessible As we we beauty crystallizing in tenets which the in of events the value, value has fact our our approach we core cruelty unique to story. and best are way love, is the products the Shiseido. transforming coined vegan are of in course, campaign bolder reinvigorate activate driving and Kory still Kory stories, team when for have as year-over-year in brand premium

on passed strongest and brand. our followers, we X.X products this up our impact tracking where reflects the influencer coming awareness to halo organic million had earned close of social We call our to including media our updating results in of the a in In campaign effect and were digital, for influencers months we a our was demand value Instagram, creating year one XX% enthusiasm that reflect elfcosmetics.com, last year-over-year. overall surge which quarter’s periodically our media particularly was social driving reach from We already Jkissa. and EMV, to-date. progress. up move the collaboration reflected our look across compared our these forward own digital a making to in to or efforts bug shared our proactive These awareness Star to particularly through you of new Our was in difference. our reach on The recent double by success down we saw with mentions media about which is metrics from XX% and several influencer on plan expand which and outreach postings earnings Jeffrey prior first-to-mass on a

have a to primary The and productivity shrinking packaging key is a Project is retailers. in our elevating about aimed which lot third driver our abilities navigate national at improving our initiative presentation which We consumer’s improving talked this footprint, sets. Unicorn, brand the behind is our

XXX SKUs or volume. our During the half Unicorn, over Project the we of transition period, are impacted first implemented which of phase

improved trend productivity Unicorn and the marketing activations. during to Our due period our Project

of the of addition and seeing X to Target, see Unicorn, approach Project of increased the as Phase marketing out roll where At strong at and new stores. our our shelf Concealer. centers. we Walmart, space Along hour position one brushes the XX in beauty number U.K., are fall Superdrug the incorporating Camo of market-leading are designs. stores Project growth have new can innovation in primers. impact Walgreens. At reflected is the merchandising You has Unicorn our behind integrated our will elevating marketing better seeing converts with our on better sets, in when Also four-way results in we our brushes are and comp to walk our a you we your has retailers in in-stock Unicorn flex as number towers

stores as also seeing across We we roll in began the are traction U.K. out at boots to

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to of as weeks. ability our proud quite XX innovate as fast are in We

reinforce innovation primers Going forward brushes, product use categories capabilities to in key strength as such browse. we plan to and our our

We of the an each prestige proposition of on our our sure past went value. elfcosmetics.com. at our we core In are also making value marketed new primarily price regardless of quality point they meeting that products when products is extraordinary

year shifting integrated these examples they leadership complection measure the which Putty Poreless market cream our segment. Nielsen. which Concealer will point over marketing campaigns plan Hello this brushes, skincare we market We go we are just a a support first-to-mass year. and these doing build on sign-ups has with we a how curlers by price relative are into $X which rankings despite setting at Proudly supporting $XX. helping NotifyMe primers, To prestige in by We ended and to as eyelash include Recent also rolled products key our track national in initiative offers as quality by XXXX, leadership partners. to spray elfcosmetics.com, out are in products at is throughout measured approach Camo challenging our the retail Primer, XX,XXX Hydration product

initiative an marketing help where Our by stores and around the move our digital cost on last to that strategic us is G&A basis e.l.f. close to reduced savings XX% fund should expected provide ongoing savings, our key is and investments. our headcount

the our selective to price to a to we operational higher offsets will help with impact. China tariff tariffs of and savings, XX% tariff vendor rise mitigate to rate. the help mix further improvements offset look of increases operations our If mitigation Additionally, concessions FX strategy, the and in XX%, tariff

in Our savings efficiencies to Columbus automation fiscal million Ontario warehouse cost U.S. our $X in XXXX. manufacturing, other which and improve expect projects to liquid ongoing operational generate California include fuel and we

and start her has CFO Finance Before planning I FP&A turn and portfolio most Mandy role call tenure as our and to difference a let Mandy Company’s delighted Gap her. we joined Best the bit of at retailer on I the focus initiatives. BevMo!, share team. our Mandy She’s only deep role been Francisco making and turn of three Coast. Mandy. financial specialty over her with results was from in has approach has in background are Analytics call San Business to the over West by number she to Times Fields $XX that, one of to we the key the little is beverage a Vice is guidance, in million already XXX stores e.l.f. cover year to a last With which awarded about and the and recent consumer to as will me private experience analysis Non-public her CFO Albertsons for brands President the CFO the weeks way

a of part you, am team. e.l.f. the excited Thank to I be Tarang.

to the into numbers, my about to dive journey e.l.f. I I’d bit share a Before like

impressed After everyone. energy of a and revitalization. for we look been differentiated focus I e.l.f. and first e.l.f. the brand e.l.f. me mentioned, the brand with career to consumer. poised that I core and working values move of consumer left As clear and with on and my start since in of a has honesty the challenges e.l.f. with to world is recent with equally the as value culture Tarang all the the core approaching forward. admire its with and meeting truly is proposition commitment the is incredible It to team beauty impressed which forward of I team accessible the you, for the I have Tarang, immersed my

reported, stores, million same investment closing the marketing increased primarily our Net as to the basis the would diluted million and will SG&A the about $X.X XX% of compared channels. than Project period ago. stores, compared XXXX. have million other versus share, was of timing XX% $XX.X X%. income XX I million sales, in an our mainly by Gross for from line in basis, net results X% per was or or share through XX% stores and behind gross excluding year net sales $XX.X to of of the was period $X.X period. up e.l.f. and digital versus the million $XX XXXX, was our discuss margins stores net On margin e.l.f. Adjusted in to of e.l.f. as partially our $X.XX excluding $XX.X is a a per activations within adjusted $X.XX XX% with margin down volume increased points $XX.X prior lower diluted year, of year due Adjusted This marketing offset driven the million, to Unicorn the EBITDA or at transition period Now shipments net ago. or yielded pipeline efforts. our million higher same sales been XXX increased sales by

$X.X primarily improvement receivables our management driven and to from million XX, by of continued operations, over flow March period balance cash $XX.X continued XXXX, compared the of cash transition year. The million our progress $XX.X of disciplined management. was on in timing to last as We capital generating working the million bringing inventory

relevancy. brand our We are behind increase consumer key awareness build investment to prioritizing initiatives and

cash assessed of million $XX our on the we balance excess in target cash Given levels. sheet, our

result, that As we program repurchase in $XX up a share today, approved our earnings a release announced our million. Board to

we initiatives through that in can cash to be strategic operations pleased to from program. also are cash with and return our We shareholders a excess fund position this

one-time in XXXX right and depreciation incurred including to it choice was while closing million, approximately of expenses. difficult Turning store the financial believe digital. million in accounting to impact $X.X was in national majority $XX.X million the our retailers represented period, support we expense charges in a the e.l.f. focus stores and accelerated on decision, non-cash rent we restructuring expense, of the and accelerate is The of closures, February which the this $XX.X

me let our guidance. discuss Now XXXX

of X% to sales $X.XX between or $XX Excluding per net explain behind or because $X.XX adjusted we to thinking net wholesale and stores, and million XXXX count million. $XX XXX without be margin net $XXX like share gross $XX adjusted sales. to that on the particularly with to XX.X I’d million share direct million points million the retail million, on down EBITDA million are with basis, margins. to between income higher roughly fiscal ranges, and our basis $XX X% fully stores stores $XXX margins Recall than a is diluted lower than expect our

given particularly FT&A an that to believe mentioned, it’s recent Tarang from trends. background moderated prudent a approach in I take our come forecasting, As and

the year. is dependent you e.l.f. business, more for not improved than in volatile. track and the be of upon as improvements does account can half make know seeing but our are We quarter an channels, heavily revenue which

the of We are also repositioning. our in initial days strategic

for result reflects these time is guidance take in adjusted progress, forecasted discussed, have main fully elfcosmetics.com. the seen e-commerce past sales user discreetly the factors, and declines EBITDA of we marketing and note to additional have early on acquisition will decline guidance that I the discussed as spend and expenditures. our I have from expect in initiatives we should marketing realize some this. two The year-over-year primarily While just spend we the

discuss fiscal believe digital, the XXXX As sense plus two we expenses e-commerce In to X% we marketing it of sales. were together. on net makes down double

of to these approximately sales increase net expect fiscal We to XX% in to XX% XXXX.

to We in the of expect in the lack spend. many additional cases the the cost ROI top as activity investments short-term funnel on deleverage marketing

how on commentary calls. provide will ROIs marketing on We trending future

turn summarize. to the the back portion turn the Tarang to to let we Before me of call, question-and-answer call

Mandy. you, Thank

XXXX, strategically a as clear right our fiscal at Looking supported path I on we with initiatives. the are set positioning of believe

coming now questions. Mandy. One of me with the remain looks look team, Operator, strongly the addition believe the our short-term. call the the Cory for the the for of may We that long-term I things to quarters promising, is over you and open confidence gives quality cautious including discuss progress. yet of you in engaging

question with the first Please questions. with Company. from Our proceed & comes Instructions] Oliver [Operator Cowen you. line Chen of your Thank

you, Tarang Mandy. Thank and Hi.

what AURs happening, and UPT and to retail to trending with the am you. work wholesale Thank those to are consumer how about on strategy also think curious the the the in timing in the relative and your beauty on good of of and for versus am how and category unit the because they sell-outs Related sense, managing sequencing how reception versus would about just average want? that versus I your curious you positioning levels sell-ins terms repositioning, beauty change the of in-stock about and of buyers in-stock that, demand strategic are just choices planning? make relative that the selling partners I most some thoughts the Regarding important and

Sure. stab Hi, take Oliver. This the at I is Tarang. Why don’t first questions. your

actual in part resets talked coming the stores. Project the in initiatives a In we that Putty the have see terms we our first-to-mass through concert good of the that and in our the behind Unicorn after items right focus very right the about on as is progress we stores these feel fast are starts Unicorn walk assortment spring comes really putting leg of has of them. just you the Poreless strategic Camo that to as major as both it different about five we Primer, each we can Concealer when really are kind we In have marketing repositioning, well-positioned with feel other. the us really on of working up Project having way, particular We gave well you as presented behind the stores

signs. So the strategic repositioning is well underway, and we see some promising

Concealer, In is you were where first terms range unit retails that if that it up it per us transaction average a anywhere retail priced I balancing the example the average that’s $XX we our what units at of average A a up unit is prestige screaming item, in as of focus we equation. we sure our XX% overall retails traditionally the than Camo value better yet, plus our to great X% $X, unit at less and quarter making retail, of have well compares mean, have really which done, between as is are XX% a value. looked unit and that both strategic units, to versus often reinforcing are average

how So our good terms and major in progress our customers the Unicorn we the Project with feel at on gates. doing of of it’s acceptance particularly initial

over in be product happen think cosmetics and your engage changes non-cosmetic of what is we the story ideas. simplify your the aware is amplify time about or on evolution of? mix new roughly to some you then And there versus should composition last should products question to Okay. there as and of What of also Euro

to the is speed, well our and terms tools ability the one we I certainly, as innovation in across of Well, and with of skin both care. of as our breadth key mean, innovate hallmarks always, eyes face

massive terms kind approaching feeding to in shelf, You feel kind more reading probably, and than items first-to-mass first-to-mass focus what what that off seeing to where at a is are greater shift biggest of don’t had good so we and the are items I those items I And on focus rhythm of category. shifts I a the always going planograms. the will other number concerted have taking assortment see take on when key items items in just of shelf, on seeing on a the you way, call year that effort particular our we best look our of I particular be some believe be taking every of and we of would much a these shelves, prioritizing

items You will total launching. us see are about the talk of number less we

the the the us of most talk about of the integrations hear we important. will a scale lot deem on more we of kind that kind have ones You

Okay. Thank regards. you. Best

Thanks.

you. Thank

comes with Our SunTrust. with Chappell next your proceed line question. from the question Please Bill of

Thanks. Good afternoon.

Good afternoon.

message of Mandy had trajectory And then, if new our bar that we the right how some guidance. rebuild We to that trust. of Is need digits the so talked at to -- can past at we that’s to a Marketing investor who of really come Officer you had to Is the way me, the can would really run sales you and want Chief you of go the look back. guess the see to it? in and you like we not you here, sales, about to never in because say we I set just going are felt the thought and one business digits step going Just that’s advertising how look reset a need terms two thought marketing meaningful best of if full welcome place double said maybe translate that in some your change to I percentage new fair would mid-single would would CFO it a are kind make a the as was we not to from ran up? you and your

of she about Bill, directly to of is Why so first talk question Sure. turn don’t this Tarang. can the answer kind guidance. I over the part Mandy, then the

marketing, first us X% definition the if SEC that the marketing, On you definitional, the on X% which you for net just first, we was about to on always of sales. know to talk use see around

from sales investment sales. take we X% kind I marketing you net of net in about only FYXX So of X.X% know you think of a if was roughly look had the

really as to you The so heard of sales not step-up as together. it. net as as of spending, is combined FYXX X% combine people and you SEC of view or more are well our have break is big As to and we that step approach if sales about talking more about have part Cory see spending it’s we e-commerce as transition in XX% both to e-commerce. as spending XX% That even you are us require to to in doesn’t taking accurate get what well and our and particularly the one saying, are with the digital in viral guidance out in marketing, engagement the XX%, in if site, net nature, though And combining metrics coming better forward a activities. us, holistic consumer our She’s to a we first we measure in the our period, very that marketing given spend our about is and in X% because XX%. a investors the was it of as mainly for that that was those combine we we the spending

second e-commerce SGA a our down bringing need and strategic now the really redeployed of being stores close amount was you take is together. was involved the we stores in confidence it’s turnover move a And that franchise. the -- look, if that macro to consumers our really the activities in and on -- into marketing our terms tremendous The of SG&A more

marketing. we about So guidance. to is of to the talk a the of little about business to way you What better long-term to the turned kind you a feel go bit Mandy give the perspective I to for of

Hi, Bill.

in So guidance… terms of

Hi.

about I to little just philosophy approach. my bit and a want talk

the if we So would out of look things while approach back half me quarter we what plus and I’d X% kind ‘XX so where we with trend. in just forecasting to take take a are If been negative on been half have the transition in a historically, step at that take we encouraged transition a at have saw the a look of period, about we if like I we we moderate saw negative gives the trend. calendar the X% coming back back and

a net then, of seeing basis progress I kind chance to but bookings And traction see are ahead a that, ourselves. we encouraged again, sales of we too want that from on a So get positive the are we guidance before standpoint. by sustained range far

Okay.

translates I with thinking. I what think was that that

spring color is kind now Second a through little other place more it more kind a how to other Unicorn, or now? just quantify give making you us to of this it anything maybe expanded are set retailers mean, of difference is resets, around to I can that’s in be SKUs Project and there we the will right largely year

good really we Well, Unicorn. Project are feeling Sure. about

So first has been phase the implemented.

what at terms particularly look think of Ulta, Walmart, of those shelves our I customers improvement design been we been of have Unicorn’s in an if and results The we that the in is XXX more in kind I and a put SKUs have see Unicorn that of efficient kind about three productivity in line. So packaging. all trend redrawn have Target our

really So it. are about good we feeling

they For to able customers, them will they that balance efficiently. of later it do are but Unicorn more be the packaging, draw get

of Phase X of brushes mentioned presentation parts segments really better and elements of will our on fall say kind will a I X kind in of be X will and to of Phase of position as a There in X. terms to were the the they our Unicorn, SKUs little ability leadership terms brushes and SKUs the those to take that’s lineup of Unicorn, a did of self-convert back we this U.S. I is, at call So of of do how to in but year. have Phase broader core our start in Unicorn navigate. SKUs in up some be bit involves about we self and look main call that converted similar Phase the we market that consumers we Unicorn our I’d other helping as

continue We it. hear encouraged will early about the more you to are by signs and

last Okay. historical the overall I just, to for trend you kind grow forward your line overall that going me versus X% similar do are or you the slower the does one of get the And than then faster negative will of expectations trend. What your category? you for category, line imply or going -- think to be in

Right. line. least but Right down better, quarter was of in to kind mass the we cosmetics kind wanted see, our color in Mandy’s year, at the I If now relatively at it’s will that is X%, the category intention do look to obviously, first to the expectations. point we of of moderator

Got it. Thank you.

your with Thank proceed Please the with you. question. comes Wissink The line of next Steph from Jefferies. question

with continues. potential business course or better leverages see growth deliver increased do little on spend, everyone. Thanks. help question to bridge follow-up want say further. I we March hypothetically Tarang, if margins a to there the year? to a pattern given meaning, to the were decompose business we over us quarter digital does the some the Good the business and with in Can afternoon, rate, you of bit Bill’s return digest just the the start if incremental flat the

deleverage tell have the sales minus if seeing of leverage see will of is kind certainly, with seeing decline, there What growth you I if to there. be as had would are you flattening in XX%, Steph. Hi, if the you a or did you business, some is leverage instead

benefits upside, the back but flow So your spend to be bottom line? rather to to wouldn’t see plan through the any

I but out if want think, the mean, based on of both accelerate kind to seeing investments panning it kind that, depends to right. come how how comes the assumption, they topline. our update of these ability and are to the of I really current we and see on we we are I -- will further and like is, back Cory mean, obviously reserve return out, kind also if both of pan results part good That’s want faster, it Mandy our we if

All just am can right. is then That’s last productivity us to been just performance to fully Project wondering quantitative give the And of converted if the help one enhancement around degree you us the stores strategy. I measures control strategy the group Unicorn average, show on of great. some that have starting that retail? a understand versus at an is that those or

Yeah.

do places you it So way retailers and target maybe of because all the can the so the I Unicorn in show SKUs up probably sorts and see best best can Walmart Ulta.

of in call as important two it’s unless The nearly frankly, thing. our to an as in universe. months chicken target unless over months, so covered had of you Walmart pre three that. on right shelves. in our plus assortment it, you we the The at Unicorn kind isolate last, gives marketing kind say Unicorn data of marketing versus the it, kind are and assortment post And the And activities. track can are see lease track hand well The effective and indication change be those trajectory Unicorn in we do go egg kind of hand, amplifying to wouldn’t the not we of both would amplifying as saw

quarter to, attribute kind just two Unicorn things see that in can last Project marketing only XXXX, quarter, plus period -- both remain that of of kind there’s you if a take three so the that we fourth of and the four versus of really year at really transition you And kind base calendar the look you we to will activations the talked at about.

inventory. on conditional level retail Last Okay. the quickly question, really just is

have you to like feel You momentum channel going? keep in the enough inventory the consumption

Primer have issues feel we our couple Concealer. of out-of-stock particularly had, on inventory. are little on We and about good a Camo Putty If a first-to-mass we these Poreless Yeah. items tight retail anything

with made our centers So we we able position those four overall strides, saw have retail for year. some be first of we out-of-stocks Walmart. our last example of partners, are in continue get to better year of kind fiscal serious working we to back well to great our in innovation new But way our partner quarter kind in at

stocks are working As overall our we our mentioned in that much on. there, focused good, and I always our we of something but in-stocks unit kind is earlier, better given movement doing that are it’s on look something pretty

Thank you.

Thank you.

with question of Parikh Rupesh from Co. proceed next & with line question. Oppenheimer Our comes the Please your

afternoon my thanks Good questions. for and taking

So little I questions, granularity. I had was a provide you can modern few a hoping more

there’s puts and margin the you gross terms wondering I key growth you line, was And see year? the of you any how provide could and this on first the year? if just this I any provide in was also earnings phasing specifics then at if takes there of look can clarity curious So as more you

Okay.

So start that with points basis the without been lot the rate. Currently, the lower a in in margin, I as XX% would I assumes gross tariff stores XXX Really forward gross change and margin. will not trend so so of can rate modeling. margin you gross stated just we have the your

rate. strategies assumed it there on spoke the XX% to are some forward. now Tarang goes we to if as for But XX% have the mitigation go As have the we

seasonality you quarters. be us would would so you some as and and QX business that’s earnings, to But of for QX going important what phasing lesser give QX say on give QX guidance. know, there’s in quarterly most I having I our the of terms we are In the don’t impact, quarters the with that

category, called then at a the it is like Tarang, -- cosmetics beauty question category, all sounds we question I color least it a although, out challenging. seems And Great. have on just for beauty like a weak players still guess,

both you if I even curious mass any continue challenges have and why the out there of on side in think see recently? terms procedures slowed you Just thoughts

of a been Yeah. kind long I perplexing the little It’s honest. be will how has softness there.

taken category a at have a long We time. look the over period of

if pretty We are the or the kind innovation been a encouraged to you products category I what hitters. of kind come the the What really surprised -- soft. in strong are that long the like we kind level of of couple know we category of tell little by has are total have. how core have totality there. We always that to of category of kind I dimensions new back be would we look don’t is that in big has a how feel

two, measurement. all continue kind We So But question wonder would often that’s we own business I be we up. that look the on And saw are so our then period. we picking just we particularly moving the see positioned one. of measure that always categories that well there’s me momentum if even can that for much of the at feel some transition if online when in

you. Thank Great.

Thank you.

line of the Jaffray. proceed next comes Murphy with Our Erinn your question. Please from Piper with question

Great. Thanks. afternoon, and Good welcome, Mandy.

Thanks.

a just of couple for think questions I me.

that the First in about on today terms over of seeing percent you sales what time? us the e-commerce remind channel maybe you that and that of Can and growth just you being of could is it initiative. what where strategic talk a then go currently are

Sure.

versus this the we our national out I you don’t. Tarang. year break We break Erinn quarters direct but the the we will in-between you kind end and out retailers that of past channel separately, broke of So e-commerce kind now see of think again of don’t is kind right in

In terms which first. consumers, of entire a that our was for business us, on it brand is engage new years, main important, one in e-commerce digitally of it obviously a put where our is few stands innovation our native we it vehicles critically for our was

in the so in more elfcosmetics.com focus strategies. in that initiatives, of that discussed particular growth think of there, I getting more a mentioned what on in And now out But we I quite were new strategic earlier strongest in we it’s that request growth one the we our right brand, in stock. notified of of stock digital this on Poreless I e-commerce have the more terms I product driving that XX,XXX the I initiatives back is, days but did of the think time our when reflection in mention about have people the stock Primer, demand terms saw and on Putty quarters when prepared some in rates remarks

elfcosmetics.com, think e-commerce. but best digital well see I go of strategies you work really many efforts our on the beyond

Sure.

this of then and spend towards been change And similar philosophy there low-double you about of sticking spend of of a mix that marketing theme digits. as forward kind to what starting the of curious Okay. was are you over But maybe could where have channels just look collectively on e-com mix the just Has historically? you maybe what on that it socially going that index in call. lot about talked a the the on moving terms think versus

think, sometimes nature. spending. both in we spend mean, is Yet, in of the types always I marketing past e-commerce our -- digital or siloed kind I on spend Sure. of primarily

spending together understand be was direct other coins one social our scale bring we know some what some superpowers other a of of the or is of some website, programs engaging our of in to response really you and much some beauty more things really it be influencer is other whether are are holistic Our putting programs in market related view I to particularly e-commerce marketing things spending don’t very making forward whereas it go people consumers will that affiliates, our search, our a kind whether on that. to kind that how of consumer and soda our think she Corey bringing sure of you

activities. standpoint So probably, think lower I from from if continue a upper funnel awareness of as see as to of an marketing well funnel you us, kind funnel will activities, our

will You more activities able site. be a continue activities. people funnel increasingly see -- our do But bring a upper us on to the you funnel bit to level and attribute lot to upper quite the lower on see to

driving the and even of really platforms you terms we We transition on take social, of haven’t look a a up the digital spend in if nearly in look of if at as stepping fact and that past period really awareness the stepping more of done number much we our site. incremental up have you in encouraged ability there lot by are

have in how vision much entire team we the kind funnel the an Corey our activities that ties the you more standpoint, have think into full and we be consumers. I from believe of to very it it being effective awareness of engage able we leverage in terms

talked the Mandy year you in being most of you bit Thank talk about the then clarification on rate should just from Got And cadence? kind count. assume kind the of XX.X eight buyback but for the when of and little the QX it. and less above help implying no that four then in below for then Are guidance just on we and you. growth Should you the the clarification, response or then a out, be think one XQ dilution you break just don’t typically you just being million one guide of of any guide the options? And average and important relevant. XQ sales former the you, to down it in and that’s other QX the the down shaping others you that XQ and share that’s that

Yeah.

Okay.

QX me the on are question reference it’s first which No, simply QX the So holiday, let because quarterly typically… and pre-holiday answer importance. my to are and

Okay.

us. quarters for …larger

So will no implication there the negative. to the that be QX and of QX upsize range

diluted share the count million, yes, you XX.X count. the On right. just share It’s are

Perfect. Okay.

would that So no be buyback incremental?

Correct.

you. Thank

Please from the line question. comes question with with next Our proceed your Teixeira JPMorgan. Andrea of

doors? the on first question part some separate help your more out bridge if can -- it’s above the advertisement you take line? And to when more if broader components, to your EBITDA are to so margin, your of more Tarang, on discussed, as I channels of brand or Hi. and see you is that was if is is approach deleverage it your the sales R&D can you Unicorn to e.l.f. conservative, or like getting to and of or the doors think you that some elaborate Tarang revenues, can Cory. a of increase you that. productivity, you impact some kind and revenue XX% there like there start more from I if If welcome also the productivity more of the the Mandy to is so and to are can that just is distribution stores. below just like seeing how company us am now operated new par trying But the the working non-strike with that existing how how are investment, guidance, trying Thank about per deleverage so going leverage X% making Hi, can the if finally you you. marketing, Project and awareness or a on line And the those it just closing both to of XX% you hoping you store. of to marketing you or

marketing can should overhead those? media start more you on we you. that If of like known how thinking the or leveraging and expenses be no Thank

This add. Okay. Mandy Hi, to Tarang. is Andrea. and question I take the will have

Yeah. Okay.

So, we on digital our that the the marketing, related. e-commerce of in FY spending to first, X% highly of range marketing from XX%, XX% plus in terms going to spend awareness that the is provided the XXXX nature

social So it’s awareness to our new driving digitally not bringing and transition very from activities everything via the to quarter. in with site saw period drive the activities, people to primarily not of to drive range it’s campaign it’s other greater much distribution, our you what

the productivity, maybe, terms the e.l.f.’s of that good And bigger kind in stage. question kind feel that to that’s of leverage nature on talk in Mandy a about we of then of and kind just spend history of about ask So will that. spend authentic I much

a if And as take so there. Yeah. any at marketing, you Andrea, EBITDA about marketing, are think as look any, we the as said we there leverage

deleverage obviously investing for guess -- XX% right think sales put as we the I sales to I the e-commerce the and makes down there. XXXX is, that so in to it range But mentioned. the And that so are way you in some we in X% XX% marketing and X% about should

earlier start to an So, back around would I see moderate think, sales there of -- that bit point would. if it was and we a come

our are e-commerce for come you are kind going forward, we initiatives know and the of forward, platforms then you that and and laying will foundation I subsequently. sales think marketing is the going seeing what So putting our

are forward is we sorry, Okay. savings or that’s a like terms going of what been follow-up, just But trying to terms like you, of in your in your process? going of anything push terms second to to there should activists about think have overhead be are in what expenses,

Sure.

of So, we into that cost to is repurposed one, I we generate all step e.l.f. take have a XX big e-commerce in you would order our say, initiatives. stores back e.l.f. some over know saving you our move a if and stores, marketing closed

generate taken think steps I to savings. have some cost So we

steps think we ability about we taken have tariff XX% that there mitigated As our feeling we impact to have well P&L. are on and not the the as

$X XXXX there’s cost we that discussed to I facility, prepared out our that see we warehouses our remarks. well say million as impact Secondly, in should so and that manufacturing and called as you tied would savings in that’s our

always our that And are kind take at on to Andrea, just a cost look structure. at of abilities we looking building

revitalize impact, pretty the want sure investors priority bold we think are is our and moves in to to of closing well, our automation to are sure have look, are but initiatives about help the clear I made we mitigating in talked what tariff make will brand clear our some making the and all stores we how were we we people kind number growth. investing of we one is continue

you helpful. Thank both. That’s

Thank you.

Thank you.

your question. Astrachan the Stifel. comes Please Mark question with from of proceed next line Our with

everyone. last could percent afternoon, you variable follow fixed on to initiatives, productivity maybe of wanted would costs? be quickly just the help just these broadly sales with I and us on question versus Thanks,

specific more a in Sorry. what are bit Can you little asking? you be

are better to you cost just piece. Well, to we to variable get of is if what to guess be sales goods guess, to year SG&A what how in you $XX and is general, fixed sense and come of versus of what to sense of much may to? sense your how within a than try worse flex out the fixed for can is trying look be can But if or $XX this that million effectively much leverage I at million get so the get I back what guiding just to be G&A a

marketing from, would say just let’s talk about I I So the think. piece

set invested marketing funds have to be We our behind initiatives. aside e-commerce and

if to start as in sales see about business. that so think would as you the our behind you materialize And investment leverage fixed that

at of as terms that are other across different P&L… have, our the opportunities flexibility looking we always cost Tarang we to In mentioned, save in

how coming are just of there would I like, Mark, I help And terms add in you point. to is much in this where Yeah. much, business your leverage can from get hey, how quantify there, you you

exactly and -- decide the that kind come how start before, kind let why me back to so we about to something, and how haven’t huddle if much and important whether address let that disclosing of us understand us want be reason kind would we that’s want of leverage think I We disclosed let of is and there.

And just from Great. Okay. standpoint. a then switching business gears

I guess, of what some I curious of months, category in makeup that all have talked overall of but can recent a do given scanning in trends? am in the get end kind is it much it to be categories about certainly like terms seems of skin you be I So how focus like a all the just bit better especially maybe started that business,

Yeah. No.

I are a on real if the in mentioned, both this a period a were which on for of strategic trajectories we value call that. cosmetics, it, take same time quality for us, I kind for as transition encouraged is to I mainly is of, we can you extraordinary Skincare prestige for as trends Skincare, board We we we it’s what long seeing. the are color as look and think, highly the that us, used have last highly because model Makeup, bring scanner and overall kind and there need well across by year at

our new for Skincare that And main and and has our items been so of skincare for are while. many momentum what Stark a focus, is you the customer seeing behind on

encouraged are chain it tested entire We of to well Beauty take as Ulta kind that food it’s done. given they highly skincare decided how

we all along interested everything reason So this highly interested the are been that those categories are consumer. one to skincare of has back is comes always and in all we in us for The believe innovation. meaningful if we in overall go up to advantage good we and with good you our color skin have hand an have ability both come cosmetics and of to coverage hand insight need

Okay. Thank you.

you. Thank

your comes with Linda question question. of Weiser Davidson. line next the Please D.A. proceed with from Bolton Our

Hi.

the marketing you going has toward specifically secondly, of that increase So retailers, there about less among terms calendar well-known, differences the some but if are of the resets went in performing the in and Thanks. in toward year the some is that naming is then, retail. better that past at influencers? of reset of your in more retailers in or terms in base? and up spending strategically or strategy there beginning were I pretty retailer any you coming, paying it you Can it than mean been influencers uniform the come such your influential your And had the across are names all are changed marketing talked without performance has others where year

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of transition one period mega a quarter Star. the number So the I bit of of kind quite a interest mentioned of from influencers, including we influencers in Jeffree saw

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go or it we collaborations paying still So endorsements, inflow haven’t does breadth our we then collaborate where it strategy talks product someone. the of with which and I of done our for it’s which for that our of beat we the you actually on outreach will trajectory think in us of right saw outside think in terms kind normal think of in, retailers more than terms about one it I uniform see across And I seen kind after where Unicorn that the encouraging is have sets is is change in of we that of post encouraging. customers the Project to things pretty resets, to

better You will variation always are trajectory to in across one at call uniformly or that change have reason customers in pretty the and some where encouraged let we for competitive place wasn’t who’s a least out we our worse, want -- we us won’t doing won’t but side saw us Board.

Thank you.

you. Thank

question from your Herzog Wells comes proceed Fargo. the question with next Bonnie line of Our with Please

in are especially guys in color space, going so terms to of that them makes of are you that, net right. Hi, you back the that everyone. a think to sales back further your retailers, All in from better was would you hoping the hoping I softness more that you FYXX to think circle maybe bit your on and from X% guess, possibly guys hear the resets a fiscal visibility, reason seen just little I decline the FYXX? regarding and you expected drawdown guess, guys bit year was little changed have sales. your what hearing a to have just mentioned category X% some given slowdown if Thank you. I because actually then you have on I key you

Yeah. Sure.

first if allow So, February kind back given see XX%. of to these X% of of guidance it that quarterly first move in your down fiscal year resets question, the guidance of look we on how -- all full we did change are year, of at because the you in good performing. terms was us a believe If in we trend kind February and had the gave was to

we was that of out our shelf each improvement is relative improvement are by an this sets. how and aided ability to that of to coming kind see So

tell of she out with kind in approach is proof seeing second kind first that her The that you how I are versus of on wants to our period. and would separating particularly we and kind to the of approach see guidance what sure make thing kind of Mandy coming will we do transition we guidance

any to We competitors our key customers. of are in our relative core well-positioned

track we first or I channels right channel So now am is if the of we are lot the just you doing Project and what take X% the and just down where a are the better as mentioned well signs are of of both would X%, data out rest we from our as were try category the track was obviously I reflects of marketing that than year. initial quarter early to seeing we activations. signs. Unicorn has promising changed I glad kind fiscal separate plus

well it of of we and then we really ourselves. philosophical, ahead much are have I’d guidance in proof as more a have where better get where We in position see terms the one is say been to would both as and not relative we

because quarters implemented into am the spending far? really many you some putting up on you lag from spending, of lift are from understand any a understand you I trying place how just some further improvement like Tarang, are see up have signs color kind you what I improvements of some stepped some to obviously there’s mentioned the stepped take it of the are before of you so also But and seeing to expecting you and how of changes much trying and -- there the a will see of Okay. to am with

Sure.

by activation response there’s kind So mentioned see of our terms good the in of that amount exceeded and period we I that. against pretty It of lift transition did the a expectations Part had will in the is and Jeffree how you really I Star responsive quarter. was tell videos we aided now. did and massive business what of we

where, of ourselves get bit don’t say, to of… ahead that’s I in So terms I a want little too

Okay.

attribute much we marketing. how … versus to that

that guidance embedded I is assumption categories in what But second noisy e-commerce within you is ourselves, that and do. that up we don’t ahead kind forget this response. are can want could stepping to couple next the there see right. right the absolutely over lag I of thing and hoping where see have… to point investment is a we Your let’s and quarters not is the absolutely a marketing get of we Again, that mean of that in

Okay.

promising want at same … be both, of approach terms are time, both is signs, how true, gone to we and the but cautious we in seeing the we year. for, are seeing

Okay. for other That of makes if that’s sense. And just a couple me okay. questions

space Just just or are shelve not? wanted to ask into if guidance, you that that embedded expecting gain to to FYXX. Is in guys clarify your

in embedded announced is before. So guidance we our have that space right what’s now shelve the

than as of talked well at where we and internationally. that. somewhere are Walgreens assume we quarter So last us It kind space, more giving Ulta more as doesn’t

if was an space what addition doors that it additional that would or up So to out. in came be we put

that to the guys of store the any is to hear Okay. way I’d is online did for months, retailers through you That’s helpful. of the be there all? were able you or final that a any curious a either sales some quantify guys few recapture question or And at national you of from then closing lost to

to than quantify earlier mentioned for close to people It’s stores stores come kind for people elfcosmetics.com. when from of in onto us elfcosmetics.com. coming the did some to was of and of was elfcosmetics.com it some due hard rather of quarters we that we best offers I do incentive on one kind the

choice that that close The really is the strategically we as of would kind took stores we that I of consumer making brand one earlier difficult and other of our beyond would that migrate and sure national the we to confident making e-commerce the why against about it and reasons and spend multichannel consumer I thing and the a focus to put tell retailers is kind and was dotcom… you felt she our they pretty decided talked

Yeah.

feel in … just pretty channels. that one getting was. far consumer experience confident a small footprint e.l.f. our even those reaction from reaction given your and how are from We they other so a of standpoint

Thank All you. right.

we time. this Thank further questions no It have appears you. at

over to back floor any So Amin Tarang the like to comments. I’d pass concluding for additional

and Thanks, everyone. the June first in all quarter look and August. Blair some Jefferies thank Great. Well, we of the you, Really you seeing conferences call and our you to William in speaking appreciate of time at forward to look on everyone. to forward

and for Ladies teleconference. your does Again, you lines disconnect your this gentlemen, today’s this may conclude at we thank participation time. and you