e.l.f. Beauty (ELF) 4 Nov 212022 Q2 Earnings call transcript

Thank you for joining us to discuss e.l.f. Beauty's Second Quarter Fiscal 2022 Results. I'm Melinda Fried, Head of Corporate Communications. With me or Tarang Amin, Chairman and Chief Executive Officer and Mandy fields, Senior Vice President and Chief Financial Officer. We encourage you to tune in to our webcast presentation for the best viewing experience which you can access on our website at investor.elfbeauty.com. could remarks release forward-looking the forward and you'll factors our to please SEC, looking of to find earnings results our reports that statements. many today from statement, contain refer where differ Since materially actual these cause filed with

In the basis. includes on a information addition, presented presentation non-GAAP company's

Tarang. most turn reconciliations measure. With GAAP contains release between the earnings comparable over these differences the let directly me non-GAAP Our of presentation webcast to and the that,

Today we'll raised Thank consecutive the and XXXX. you, We afternoon everyone. as adjusted recognizing a Melinda year our delivered ago. $XX of million were sales as another I by results team. terrific outlook versus versus discuss QX e.l.f. start net EBITDA good up drivers fiscal quarter. Beauty our sales XX% want up well million QX to for growth. We of of quarter net our $XX delivered year of XXth XX% ago, marking

With will full the momentum we're guidance shortly. discuss which our sales year seeing we're raising Mandy

again growth brand Our retail our core significantly We're grow only up slightly by points year-over-year, the levels of top-X to first with post value share X.X% digitally continue of as above color evolution multi-brand was margin. product proposition levels. we're led of In top-X differentiated our by and expanding company. XXXX to WXLL strength In up stepped important this skincare We XXXX our cosmetics and build a and color PEOPLE's volatility brand color extensions sales Soulcare innovation. a of brand beauty. were levels, with related products to we outperforming the Strategic beauty up wide the basis underscoring of model. e.l.f. in largest Keys e.l.f. only levels pent share QX. continue below the offsetting We're cosmetics be part making backdrop strategy, category recently to category XX QX competitors WXLL pre-pandemic launched market the above business ability e.l.f. collection, with continue e.l.f. the speed gain to trends adapt our pre-pandemic COVID was and resonating demand are our fuel clean the performance. to an PEOPLE cosmetics range progress in awareness. encouraged into category and

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strategic innovation. third imperative lead is Our to

brushes, Cosmetics this our superpowers make sponges our which to broad quarter that free, on appeal and core to of at segments, ongoing premium success prices approximately and up consumers. center with products Our ability continue primers, sales. quality E.l.f. our accessible half deliver resonate cruelty beauty our with brows concealers, XXX%

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WXLL in across beauty clean brand portfolio. Our our significantly acquisition efforts PEOPLE accelerated our of

us Keys Soulcare product in developing house instrumental board XXX% clean end. from While be journey as brand. will to by formulations the year people that in dermatologist, brought certified e.l.f.'s one. in announce was who The Dr. e.l.f. XXX% on day And Snyder, accelerated excited clean our Renee we're clean the also acquisition

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with space fourth Our strategic expansion our and is retail imperative driving productivity partners.

to see space continue We shelf opportunity.

As previously XX% major Walmart International and we're doors. at in their just today. with reported, CVS we're we've In expanding XXXX space Superdrug spring pleased with in the our shelf expansion and secured each XXXX. in of our the fall subset with of space a Internationally, whitespace in of spring represents we've XXXX. UK also Boots business

WXLL to post brand. see XX Soulcare's with brand We in shows potential line end e.l.f. progressing as major from Nielsen the about our US edition and the program. growth. retail our number eight part in placement Cult date X strategy now UK Ulta beauty limited with shows also elevating focused working. strategy. Western countries Douglas. is remain a Beauty, its this countries the X Beauty Ulta's We're Our and ranks in with first Ulta Keys year we partners. and to global gain performance to brand the pleased subset Europe continues in last up that from And cosmetics of global data in mass only be latest number spring across XX stores for the in The in international In the PEOPLE in We've excited conscious the cap Harrods. UK top-XX in UK that Beauty accelerating launched retail a with of will XXXX,

imperative delivering is fifth cost fuel Our to investments. savings help brand strategic

team and we for which we e.l.f. proud navigated slowing challenges. global container shipments increasing Beauty in quarters, transportation like incredibly recent costs. companies, and spoke these are the about As port of many we've facing how are imbalance congestion, other our I'm and a

In lead the fact, are as times foregoing key increasing levels XXXX us industry consumer decisions. chain early strategic our Holiday to vendor their recently we August, making our in facing. supply we're supply Walmart and seeing with Back demand and inventory share longer with chain about strong asked learnings spoke balance program partners is we to our

maintain decisions, of these our of able early stock retail in been a we've levels making result As to key approximately partners. XX%

with how supply chain managed pleased we're there While dynamic, we've these were remains environment challenges. global

Before on of Mandy I turn a to brands. me call more Let provide our over strategic company framework bit the overall perspective the and

we We now and accessibility. win. and Today make turn brand fuel accessible values. to expand to our the and with Our by mission five build work e.l.f. Underpinned industry beauty call the I'll with has lip and shape connect extensions Mandy. disrupt culture to us to over strategic support eye, the norms, will of inclusivity face. the ability to every to X and behind execution of our is strategic portfolio designed purpose believe of allowed brand communities imperatives, the imperatives that our Cosmetics our our best continued the foundational portfolio strategic strength brands our positivity

retailers. approximately margin to to national pleased compared and Thank delivered highlights second points year, driven I'm our mix. XXX saw margin and by million, We of prior our international versus in quarter from We basis you, up strength gross the prior our down savings net $XX Gross Tarang. and XXXX results sales XX% benefits Margin was outlook. QX broad-based fiscal cost year. XX% share strong accretive of of

our costs FX expect margin We to from quarter, higher our and subset compared better SG&A to below offset navigate increases on transportation our implemented of came worked gross timing this P&L. the last That XX% year. margin price also were gross by an we mainly due the the was SKUs end internationally. the the expected we as global a bit elevated a of given Overall, benefited as costs percentage adjusted rates to These imbalance. to in rate XXXX. in changing said, these May, of container margin to benefits a On XX% gross than sales year flow than fiscal basis transportation continue headwinds, through when more we

million of XX% investment ago. EBITDA last Our was million, was was and digital digital XX% QX behind increased and or offset sales. for EBITDA was sales ago. non-marketing up net approximately adjusted diluted $X.XX income $X $X.XX spend. million, share, margin Marketing per in related year, Adjusted than XX% investment approximately a by marketing per and year net a year share compared net more or quarter was the $XX of versus adjusted XX% $XX leverage our to versus diluted

Our ended cash to to liquidity million cash our on the of balance balance remained $XX We strong and cash a with at in credit hand, the facility, our $XX a million combination revolving million. approximately ago. with compared $XXX sitting quarter of year access

our down Our in cash overall paying our reducing current debt by million balance the credit $XX reflects quarter. revolving facility,

to expectations balance with inventory line $XX ending ago. Our million as compared our was year million in $XX a

of times longer about Soulcare higher continued business addition transportation we quarter a in As WXLL momentum. our the and last and PEOPLE lead anticipating of from levels inventory Keys costs spoke September combination the higher reminder,

our our and X strategic We supporting investing imperatives on strategic expect extensions. remain behind to cash priorities

Now XXXX. outlook let's of XXXX, from XX% XX% for now XX% XX% expect sales to previously. We our turn versus up fiscal growth approximately to to net fiscal

to between EPS $XX $X.XX and $X.XX and income continue per million million, share. million expect of $XX.X adjusted EBITDA million diluted to adjusted between to net We $XX adjusted $XX.X

XX We approximately be tax our XXXX of to a to XX% diluted fully XX%. approximately expect share count shares million and rate fiscal

color you provide with on more planning fiscal me assumptions for Let our XXXX.

to top-line in QX raised reflects Our expectations. largely our outperformance guidance relative our

result. Looking the to second in container we half, a imbalance as wide elevation the of remain mindful and costs the continued industry

team our As Tarang how date. of these navigated to logistics proud has we're mentioned,

plan costs However, it to elevated we dynamic supply to environment constraints into believe and remains us it's continue a for second the impact and chain prudent to half.

Against still healthy are net adjusted sales X% As $XX higher EBITDA on a outlook. backdrop We cost to outlook, control. holding growth can focused million in this deliver last result, over year expect we quarters to we with what even the between remain line adjusted XX% of global on in expectations to $XX.X we up our year. growth million EBITDA pressures,

mitigate cadence some and we've As to areas focus action top-line performance, of on in the we taking to including discussed our be savings non-marketing expect QX. of cost impact SG&A through on initiatives, costs previously, growth our a key spend. we're a QX in standpoint, financial sharper stronger of these From than

of growth in be pipeline will we a stimulus lapping net with quarter, helped launch related which by associated Keys QX, in was reminder, XX% and sales sales Soulcare. a As part spending, the

As we we volatility in discussed holiday in program. annual of growth and August, likely data top-line lack channel our losses, base, share expect in of while to some continue to QX, expect Nielsen given the periods track the show

a pleased opportunities the core forego are program industry Overall, in reminder, XXXX. container prioritize As to wide results to QX decision of our assortment quite in the made we're fiscal holiday our the with face the about imbalance. we excited and ahead

strategic how brands. last you for the relative over our the questions. performance to quarters, demonstrates remain portfolio and potential Our With X results. category And long-term we open the our confident an the on operator, are XX growth imperatives call of that in absolute to both may basis driving

Thank you.

the question-and-answer with We ahead. Instructions] [Operator will now from the Steph first question Jefferies. Please Wissink begin session. go comes And

you. Thank afternoon, everyone. Good

We more have questions. X tactical

as you the already back that planned them guided the the something year base? keep as so The out represented or it initially? that a the you sales just the first you kind was holiday you allowed had And for that just that what help might half, could program? else on comparability is last on Mandy, us square of in When perspective? you were up plan if us back have you Can to from then, putting you help targets of took in

Yep.

Steph. take that I'll So question,

as For the that a said last net impact for reminder, us. holiday about program, quarter, sales we $X million just was a

last in that how roughly our impact we what embedded And Nielsen so if was when that's guidance it. around time you might retail, you $XX see about or out to It in think there. mentioned a translates million

seeing perspective. from you're of kind So not material that's change any that why

the Then inflation of quantify some to shipping cost you're tied much the give a us as to some your is help you getting percentage of logistics? cost sales container of of how seeing of sales. shipping great. that asked follow scope and Can and We're Okay, a cost up. around just as

Yeah.

are a cost view start more carried that in margin. So I'll with headwinds macro being the our of gross

as so a And tariffs. And us XX% been you know, level we're years. carrying with for that's of couple now

XXX year. we're of that about And carrying to about is a impact. up those XXXX as We delivering freight take that and that headwinds in freight this points that basis mine. quantified have carrying for in feel there, with basis that point EBITDA up have impact. you all XX% of then this we that's And cost the adjusted headwind, Overall, expecting I those into X% account costs things even mixture roughly also still deliver all year. amount to our X% we gross the FX air of have impact of of previously to if EBITDA What XX% great to we're margin we're ocean, adjusted

EBITDA a we lot But disposal thus of those to have really mitigate the of at growth it team, that we to headwinds, of delivering costs. again, far, - navigated portion of a So, the help expecting proud this our still how have pulling levers year. deliver though strong

in last those to one to expect implement and is relation ASP costs Mandy, impacts? you going any increases forward that

Yep.

SKUs internationally. a on we set as a increase. was in SKUs a set larger took And smaller So of you of but here May, much may price that recall, domestically,

And pricing basis quarter the had taking positive in that so points us for about impact XXX increase. that from

do know that's And we the that degree have they at disposal. cost road how pressures are are, these ahead, really versus not. pricing power. lever more we on certainly have permanent about that a the permanent feel we that We think our As we to at looking

our On the want talked also provide to that hand sure that our that, prepared just remarks, of make about value campaign in our and other consumer. we to for value continue we

So But at come more it's I disposal. say our a to lever that. on would

helpful. you Thank very

Andrea comes question with next go from Teixeira Please The ahead. JPMorgan.

you. Thank

I that of you just So that to I how you perspective carry had. a us and but go have the bridge Can that give sales maybe wanted of obviously mix back and you was know, given brands break in ASP. usually to higher to down don't, the pricing, growth you much the volumes of just more

if well or of But any like of? Are forward? program I that companies we've related and shipment there should if you pull seen is be or anything if small. distribution wondering was I ahead relatively for demanding innovation had I'm holiday? and As we as wondering your that aware having - holiday know that faster retailers to So is the

Andrea. Hi, Yeah.

sales driven our the our QX, improve rates. So sales were ahead I expectations. in to core pleased able of we really And say the would drove momentum upon by that really growth that September, fill start brands. in XX% that with thing second is was of to growth our behind portfolio that

DC, that September. that we back So able were to inventory came and into help as in us our customers to out get also did that

I So those QX. us for was drove factors growth in would that really X that it say

carryover first what And we of terms you question assuming from will quarter what the of so pricing third? But comparisons to much just fulfillment the mostly see pricing, see the then quarter, the or second then quarter, hitting if and plus helping I how embedded the of balance you're think? think, and idea the discussed, just in give fourth the momentum that the discussed a in third you the deceleration. the tough on far again, in the and potentially way going And having it's be steep I'm going there? in realize in half to you to the kind that this you timing, back the fourth is in terms us Can of

Yes, that's right.

driven going second be that we're the our said we we stimulus pricing supply quarter the be a our stronger half, we being cycling that than front, us holiday expectations basis expect remarks, in from the given a QX. prudent as to about to dynamic QX to accounting on points mentioned Andrea, in we of is prepared on in And back XXX QX. on your we quarter. And for environment talked base operating by do well. And it's benefit out, impact the that As about look XX% standpoint. our QX will and we're in we're to point, as which that chain We was the

last you squeeze sorry one And to I'm demand. more super in But is have this case Mandy. helpful. In one,

moving us. I Do of of of are obviously you that have a the have ahead we do if the you of pieces containers have you time. But supply? have having products? So the because you prudent you do ahead demand, contracted lot remember

successful So you you of I have been you terms to was to flex much can fulfillment you keep in continue wondering if know as as supply sales? how be with

X-X is get now. I'll our the on has Hi, worried containers the that this terms About want securing ability that We're we securing ago, to holiday the one. to. we're tough months great containers Andrea, We made a able containers. we're about in decision time having work about Tarang. operations we all our right done feel of take team

that's embedded we But overall meet been are ability coming an our cost our and said to consumer elevated feel guidance. Mandy demand. in at As they about good

much. Thank on I'll you it very Perfect. pass

question next go from comes Dara Mohsenian Morgan Stanley. Please ahead. with The

guys. Hey

you the holiday looking guys there. There's So there's year-over-year. type are up availability, follow some guidance on trends the sort program, but rates and just assuming risk to got shipping general mean, product better inter sound half. of of back I like for it around does bill quarter. flattish in revenue Obviously right

here. levels inventory higher got You've

when a issues besides the are you at wondering the haven't holiday over there's quarters, program comp to you delivered really up, environment have that supply it's half potential actually or anything But, given I'm guidance. discrete there sense and back couple raised other as you the half QX. Obviously, in wanted that's each just year. the but else you tougher look secondly, just if substantially the get So come talked comments pricing more are you're about? sort waiting that on temporary? or costs you then see if these they potentially also. Any look out? on Is if of like costs things it that? if to Or factors would get these through around not. and the they're you're, should be season, better stay thoughts we pressures sustained higher cost these Thanks. more as if holiday those just Any And last of back the it that the helpful limiting thoughts sounds after

Perfect.

So growth. I'll the just question take first our on revenue

As basis, so on this look on overall XX% the I is XX% year, sales our X-year a fiscal up When guidance a at for a to XX%. year look stack standpoint. on plus net it's that 'XX I

well feel How we the across that kind about. So quarters. and that great out in of industry competitors something shakes the above

momentum outside about we do of this feel Dara into And compared holiday that QX, have and our we absence we behind as noticed, get great be we of you've have harder brands. cycling As program where the the year that QX. will our in businesses

embedded our on do of through recess. spring And the of look fiscal be to several continue our elevated We'll that'll your time be on is be months fiscal best past during take year. the we've evaluation Usually Dara, forecast additional our pricing. to second we - for into to us the to say we part that And guidance, over price whether on comment. say taking would a I next costs pricing this year. the question balance this

long-term, imbalances different, that take But speak. balance I'd evaluating when see into we good But we into something as our embedded already certainly the come actually tend out, down. year. costs factor we we've I time we're discussions. balance if over they And cost that say container pricing So container this overall, we'll look a the overall, of feel to

very Great, helpful. that's Thanks.

ahead. comes question Sandler. Murphy Erinn Please next go with Piper from The

Great, afternoon. thanks. Good

couple me. Just for a questions of

starting just then well in Mandy, you what XX% accelerated see so both sell you out see You kind could a are some share skincare if again, quarter as bigger CVS at the a you volatility little cosmetics. First, growth that And And little of Thanks broke you're in? cosmetics bit see sell more how categories? going the could about incremental Do talk that on reversing of space? to picture anytime through more shelf we for the little more bit we already seeing much. And the soon, bit versus in benefits secondly, trends? look the in the about as of a mentioned then as skincare. maybe down you

Hi, right. All Erinn.

customers. on quarter, XX% really I Nielsen would a as in growth in you seen what the of of of that to international, of standpoint. And was channel have that track ahead untracked speaks So seeing as would some all some from the we're just that out the our say strength well

Like I our kind So what sale we to were in. of helped as mentioned, about as well we feel ability to fill us as in were well. able great kind we what sell rates of seeing September from a impact through in QX,

the So overall, came feel great quarter about in. how

on much also we're but distribution, smaller CVS seeing And benefit our that's base. the some from overall

over build to that time. expect we'd so And

XXXX for where seen the skincare on in we're it overall of perspective, believe Overall, really there's couple self-expression, as out way competitors was innovation was would on through category months level see they the we do quarter, bullish the well In improve, that seeing that cosmetics improve. but are even important category. what terms very of the we'd still the what we're bullish the the or at cosmetics And there, quite what in category some if related putting balance as we're COVID gives pace We'll of not It's category. cosmetics think an above in to the category seeing say from - the were cosmetics levels. overall, overall I momentum the bullish, delta be us hope as will just on more. a volatility category of trends have QX, the got whether something category. we the variant, else then I And

the skincare well So. quite seen up hold pandemic. throughout We've

channels in track in good QX. We continue categories the and rates X% see to growth up

momentum the terms Our track educate and businesses in better portfolio efforts our up entire we consumers. great on for not XX% to have only brand channels we're doing of in e.l.f. across skin e.l.f;

innovations as But quite beauty as entered pioneer which just cover product to as also WXLL XXX% beauty doing SPF now hydration biggest cosmetics. a PEOPLE, We've Our holy clean PEOPLE. XX are well such in segment WXLL went skincare, the was of limited as clean previously well. the skincare. in Keys out on Soulcare

well. to the plans So great feel to capitalize momentum portfolio on continue about I take our we're skincare the in as across seeing

much. Great so to Thanks hear.

comes James. from Olivia Please with go Tong next ahead. The question Raymond

sorry, had of trouble. I'm little a bit

the point And are slows product or why on to it so So if on so late. want I I what fiscal slowdown, that makeup Because prestige that I'd obviously understand a to any from second I give seems I the materially continues seeing to the in if call year of the combat pause, apologize. of And like to Thanks. it the better. point signs you're variant. delta We've the that challenging to momentum But like the to understand any I way? so, wanted assume half with guide you demand back. If the bit come growth little guess just that? not, got to better some in has B. if you seen impacting is momentum, become gain start more especially you're see A to anything get horizon, that seeing category doing your does

Olivia. Yeah. Hi,

So it core But standpoint, first I'll have. to more part we we from pass of business side. a category that guidance Tarang the give on color about pure the I'll feel great the momentum to over question, that

we of QX We've on that into channel million As I in translate to to we track about to cycle our mentioned net about sales us program $X earlier, in as impact typically see impact absence have going the be $XX you from that might into really will holiday QX, million And is talked to an starting what stimulus. a then of be go just QX. standpoint.

little quarter. are that we we had XX% bit. year, a by cycle as And back we last a was that to QX in stimulus. So expecting that see growth sales net And pull driven

Tarang. it category outlook the and pass color otherwise, So I'll

the on on away. not taken. approach similar right see massive a category, prudent I'd in just And of counting We're terms color rebound we've Yeah. being

off certainly and interest, not getting then a as innovation momentum But us. well would work of well. potential get for consumer really we'll And let categories help upside see consumer on the we forward. the be ahead carries our category the pretty So taking and we feel the ourselves started if that based from strategies if some

could bit - about And percentage What and it? little then sounds just Soulcare, do think PEOPLE Got a legs as little forward? going more become X long-term talk about of opportunity you're distribution. it a like brands talk bit of can could Because those a just have there. if a they you Keys And that the you sort getting WXLL sales?

that is and brand still innings that improve much greater take I'll brand. both been brands. our So reminder, even We're of that very of feel in output, Olivia, much to though on we in on on distribution, pioneer and them. great the had as beauty. PEOPLE potential for drive acquiring a a thesis both very of early we're over there's as path. WXLL growth clean And And consumer expand the around we relevance the could really innovation the decade Part a

last a PEOPLE. brand our of feel more recharge good year particularly expanding innovation think really awareness that And great are the on did entry about about I have we terms pipeline, skincare. into we in getting we distribution. I felt WXLL we especially

with the Soulcare we Douglas, consumer of at. Keys great areas gives me deal feel is But we're of our Doors, PEOPLE clean high confidence study think show and the really beauty. days. Ulta that of I that with in bullish I'd engagement brand on other months Keys feel for the feel of the - terms level Ulta And more a the the into thing Keys of again, Soulcare great previously say of to still very drive partnerships continue And So what long-term. an the very brand. even about is in much would still with I ingredients, other on level incredibly Beauty has only biggest X that sense. think again, to do opportunity of of Soulcare that was And the to the good products But Alicia part kind the Soulcare, able retention seeing days We're that the And important Keys do trial as awareness the we a I'm community. to target, we we're the is of early pioneer the about a primary to herself, our step get on and the of Keys into launch capable we're of ratings quality in is packaging engagement really of and our from distribution, the feel early ability once WXLL subset there. that.

much. you very Appreciate of Thank luck. Best it.

from The Linda D.A. question comes ahead. Please next with Bolton-Weiser go Davidson.

Hi.

already. you've the lot was just curious So of you've volume if I it of bit taken, pricing you terms pretty reaction the already give pricing much had previously, of terms declines? in pricing pricing? was on you as maybe volume more Was that? talked in a the color any response versus to kind done expected? about But Can Or differences, when little the are there us a

that. Linda Sure, I'll take

So unit just nearly to we declines we our saw on and process. took took level We limited that actually U.S. pricing modeled, the action. in significantly, This our of U.S. more as the we pretty the in see in didn't year, a was the background set gross of SKUs pricing our We a we margin third action built had XXXX. up biggest SKUs in response great date that on almost pricing, of

seen a we standpoint. the U.S. of of almost of I'd gross much what had to XXX in we've benefit increase. It price unit took So it points in why modest pricing of a terms we action bigger in And the saw increase one our type And reasons the movement a the again, is deliver we took impact. margin better it's QX. modeled. unit XXXX. was than expected From than where helped we in we the movement. pricing basis level pretty match of like a Again, what International price say

or earlier to And do balance value. months we need I we point, the with that going over take feel couple having to an to not. So if we'll the have of pricing pricing here, evaluate additional power. next extraordinary We're always

fragrance terms big know really just in would consider And of Great, fragrance part that your But trend. growth area that selfcare you. the adding been product is during really lines thank of face. not the of fragrance? of eyes, I Is with then exposures. category of a and to your pandemic kind lips in you has terms one that something

very lifestyle is for vision what in brand many Soulcare talk you a of beauty But will plans. the I that our Keys is won't I transcends Well, categories specific much traditional tell respects beauty.

I'll And Soulcare to was as last body Keys launch care consumers in are responding of so quarter, things brand. that one the us just sense that the skincare well. start that a phenomenal our tell we into on in you, And you saw is have really on

And longer has And certainly it not our can then at, Keys the of see opportunity I some for probably so out part point, adjacencies to category. will relative I same revealing looking something an form feel longer overall The but but I'd further see Soulcare, at of say we're vision. term, the it enter this definitely category there. which term, take we're could to definitely

you thank very much. Great,

Chen go question The with ahead. Please Cowen. from Oliver next comes

questions. This is Thanks Joanna Thank Oliver. on for our for taking you.

your about increased curious a this marketing the marketing sales around in percentage quarter? year versus Obviously, you strategy of as Just fourth the holiday last year.

curious spend Thank how you ROI. you and sort you're And marketing your areas this an spend, about talk year. allocating your are seeing you. of maybe are Just increase also if checking just in

Joanna. Sure,

So of things I one that's think on us. really strategy, working our the that's for marketing

invested our returns And we're the mix through about that strong the Nielsen's multi-variate the the seeing. sales that On regression talked that very is analysis. really gross measure see through we vehicle, by we last we marketing way the of ROI marketing call can isolate dollar per

specific addition, we have, the number what take of user views, our created there. that have the whether total of we're a a followers TikTok at there, on we look - and videos or we the channel metrics, at it and on doing how of number look In platform take billions be number we the Twitch

marketing overall the one in we was take our to So prior reasons that levels of marketing. up have the good our feel in I progress guidance. about that emboldened us It

And so right we're we feel that trajectory. on the

Amodio our the year QX percent see in in And of holiday, As quarter, that engagement. our within with kind drives our and and we well friends sales jumping provided we in things wrong, that marketing the continuation versus for is prepared of the things range XX% consumer talked The answer remarks greater him. with terms to got level got, I'd continue we say of Jeopardy our before that then within Matt unexpected creating how we do do really guidance. XX, in Even when that. strategy a the moment like, cultural of talked we of you on do were specific buzz

success more though So our right go engagement. if strong really overall you driving of a I'd some there Even consumer say less holiday we've elfcosmetics.com specific. that now our had and keyssoulcare.com on holiday about efforts you can see

Thank you much. so

go Please The question with from Wendy ahead. Nicholson comes Citigroup. next

business Hi, quarter? can the online you direct-to-consumer business in your go back say e-commerce or - your did much business you grew how

digits X-year specific triple a we stack But up didn't give it's We number. say a on did basis.

it has your Okay. look at - to gosh, retailers and calm, And amount I'm there's of question elfcosmetics.com that's but there any with look a the doing that are say, But mortar. website. of and in - you're fair us, it not a does your Is on go market promotion doing do wondering there obviously you're And with kind great conflict any, promotion churns great. if direct-to-consumer. holiday on of my I if like any holiday brick

if but choice holiday they're do just direct-to-consumer, believe the store, will. promotions in can't to I that upset. But So you I'm not wondering,

So that of have online amount limited Wendy, there and holiday select a is with we retailers.

corporate as their you of program, went right e.l.f. you'll If part a store holiday their now program. into representing see Target

What during want forego them our we do, end to we prior But our holiday. as we to decision to used main this still to made time. refer on some continue we we holiday want is when supply there So do question. caps constraint. maybe the We to engage that consumers

have because it And it would and the hurry up sell kit, the a see great holiday here. end soon, buy season out retail standpoint, so be And a relationships. you will from of then my before we advice if

container I decisions react were, one versus really facing the with imbalance other first and retailers that appreciated they're ones a one to falling time those what proactively foresaw of players in in things number of expectations. short terms of were that made that the of now them right think allowed the we a maybe

And we've so there. no had conflict

our and overall are efforts retailers fueled that digital Our the elfcosmetics.com model. what understand business

limited a in some winning strong has And engagement so of proven then there some formula. be driving and stores presence from to consumer their

Fair enough.

Okay.

And interesting a sort like that that out then think to of amount Keys and it's looks And Douglas I me in call really between whitespace. this on the it's it's big that interesting of international as massive great. you Soulcare Harrods. it's Sounds strategy, playing part that

And e.l.f. wondering get has amount to you huge how the just where inflection do when do whitespace of of it for whitespace is agreed not you. it brand I growth? that meaningful pacing so I'm business you still becomes internationally? point maybe that really And Or just think about trying the sure an part huge Soulcare? really you kind think of Keys more

Yeah.

we International not nurtured e.l.f. really absolutely specifically. for e.l.f. meaningful and eventually that WXLL right whitespace been see. sure the the the we brand And PEOPLE, market in Soulcare to but strategies and way. I right Keys approach our as a only take So deliberate make

our to even did being Walmart the when Boots work. and with in great for I into we seen there, before same example, Canada, So then Superdrug, feel And went both we've into primary to we've us customers their same then now Superdrug thing that momentum. now shut into they originally expanding can brand good countries. success are with online we're further. Target operations UK the take the other a model Canada to mean, we the starting It's seen we model down

established then in approach countries, the from retailer leading as online think in I is a there. other which follow So we'd similar roll up and

Terrific.

so much. Thanks great. Sounds

The next go Mark comes Please Stifel. ahead. from question Astrachan with

a on previous afternoon, going category and makeup curious, broader category. bigger questions whatever and impact was of categories of beneficial thoughts one U.S. thinking other the just be was the how any on trends. commentary did And whatever more to about effect on guess it some broader in that Thanks. could be sort back but beauty I whatever, I could beauty had stimulus everyone.

your you So your B, impact have that okay, that? do if how a, picture, obviously on year Not do March. impact next sort in asking it just fiscal about ends its you bigger or of on You XX but business? think we was how XQ, on thoughts business sort but for think how any even of directionally about what do you any around about in guidance, gave then months? the think guidance the

Sure.

impact was feel quarters, couple how Mark, see impacted Those we aided look of track numbers could stimulus QX this a the levels our definitely by we it was. came up And you about stimulus, kind up Last were we what business. of of being in XX%. year fiscal we So when our XX%. take of those if at talked year QX last

the for overall, stimulus the by offset restrictions we but think category it definitely of related helped, think the was some to pandemic. I

for in increase lot had, to you as careful disposable wave of was then particularly see one go quarters being terms clear the think see. of be know we standpoint, I not might those far, forward, it by as we're the that drivers we're but of biggest of it so And And a consumers. was, category we to major in what definitely overall third stimulus for us just from of of able income the two

And to being say, going so to are there. those be not just cautious dollars

ahead great and the ourselves. really the momentum about of seeing. we we're get Even let's business So feel that though not

it. Got

helpful. business. in thinking How does product on thinking skincare lastly, e.l.f. well have as that And way then about Broadly, That's a that it the the maybe shelf? business. much separate is from much just is distribution Okay. a And how us core your the online different I that of the brand brick go medium and it for of sense get versus market maybe term? bigger the share where near of helps mortar? of it assume but to least percentage as at could is, business kind a about

Sure.

skincare, market is share on bigger say I'd online. definitely So the

at and those elfxosmetics.com or look less on XX% take if a So almost national business business, XX%. both XX%, it's In represents bit I skincare around sites. our than retailers little of overall a Amazon

So to with is way of we a up of continue have a to as assortment our more in more three brands. again, ability pick shelf go. all space, long related skincare, across skincare to more it do and And put our to lot to we

our is gives and the level get skincare So more uptake one distribution skincare me strategy online to of that able behind just we've things of in in. being seen the confidence

that. on just then And follow evolves. Do that to you think up then

mortar arguments adding and does bigger space? it XX% one of you to of that shelf quite that that distribution. today get about we get maybe So But the and than doesn't is brick the retailers where make can are

the an able consumer. shopping at skincare, It's only it's with very well. for we have have a shelf in allows see quarter where of terms that but quite cross that part as conversation even And sets, within shelf terms on play our few that sufficient up by integrate skincare it space and it's we last of retailers. up categories shelves for spots. bit at take e.l.f. of of And, I our part was Ulta have e.l.f. e.l.f. skincare for retailer. set. Cosmetics, the in a of momentum to nature our At that their also discussions giving space, like point of varies we are that But They able Beauty not both At Target Skin. definitely then set. overall make in more to have largest coming to we we'll XX% that probably much the right kind category space, then integrate And some versus in Beauty a innovation when And we the our skincare with we're Ulta think now X. approach along into the we across

Got you. it. Thank

ahead. Please Parikh with next The go Oppenheimer. question comes from Rupesh

gross Good Thanks to Mandy of are I my wanted taking answered. comments your afternoon. go for on my Most back questions question. just margins. But to

year. prior be they the versus to So down indicate you did expected

can takes on front. curious balance of margin year the gross on the for the us talk if just just puts So you the and

Yeah.

we're I So think expected. prepared as QX And we my when comes of going gross a our better I to hit costs of remarks, these the P&L. to margin mentioned the in down some see that than for was bit largely little timing

year, for So margin XXX-XXX first was roughly half basis the the around gross points. of down

targeting balance to onto I that the the year, expect year. the out see think we look that decrease type see of to we still of on as

as So we some the talked with again, freight it's the impact going the persist XXX driven we've kind balance points about. of to by be of slight those basis year. for seeing But talked ocean higher costs, that still FX offset as with pricing,

one great. Then just maybe up. Okay, follow

in going prior Just March up question.

look XX% at your you first year, up the a are almost sales X-year So half basis. on of

first had stimulus like has it impact clearly the the positive So least of on half sounds a year. at

or pent whether go next anything demand delivery based is maybe If year, for would else lap you concern quarters up else look are and cause that at your year? lap concern that this there you anything a you that when next these not

our mean, feel business we I mentioned No. brands. across as of seeing we're momentum earlier, all that I our about core great

I strong. QX large the numbers remain get so into intact and fundamentals And up for still against next say core we as cycling our those or year, QX mean, business quite

you. great. Okay, Thank

conference the closing concludes the remarks. Amin This Chairman and to to over session. our CEO Tarang like turn back would for question-and-answer any I

incredible grateful at e.l.f. delivering our again thank you us results. Well, team I'm outstanding for for today. for joining so

strategic some our performance ability you resonating, strong. with brand believe look continue results. we'll our speaking be our we are Thank win. category you products our Our And to February, forward We at when will our And quarter X momentum is to discuss in of and continued meetings. seeing of third and imperatives investor well. upcoming to execution fuel you

today's now concluded. The conference attending Thank has for you presentation.

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