e.l.f. Beauty (ELF) 26 May 222022 Q4 Earnings call transcript

Thank you for joining us today to discuss e.l.f. Beauty’s, Fourth Quarter and Fiscal ‘22 Results. I’m KC Katten, Vice President of Corporate Development & Investor Relations. With me today are Tarang Amin, Chairman and Chief Executive Officer; and Mandy Fields, Senior Vice President and Chief Financial Officer. We encourage you to tune into 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-looking and you’ll factors our to please SEC, statements. of to find earnings results our reports that many today from statements, contain refer where differ Since materially actual these cause filed with

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

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

Today, we fiscal Thank discuss and to you, be afternoon everyone. in ‘XX. results Beauty for KC, of proud drivers outlook start e.l.f. fiscal QX to ‘XX. will our We’ve the good the want much team. of by and recognizing I

at continue e.l.f. our performance. Our fuel speed proposition digitally innovation, strategy, adapt core to led value to and ability

marked by for sales our grew well we our consecutive speak fiscal growth. EBITDA quarter net original sales for results year. themselves. adjusted of XX%, In and XXth net Our the ‘XX, expectations above by XX% QX

market We cosmetics also continue to basis share with up XX category, of points. mass the X.X% gain

pre-pandemic only the above grow share margin. by a brand wide to are top five We levels

Before likely on of that our topics a briefly are I to touch few recent accomplishments, I detail mind. top want

year our and as on category two bullish improved, mass on consumer the category. We First, outlook usage increase. Overall, in weeks basis guidance: a are and both one remain recent cosmetics occasions and have trends positive on

to our to about importantly, share. ability continue we optimistic remain More gain

growth each to to initial net the XX% year, double Our for consumption strong, the expected quarter. at guidance sales trends are in XX% the us digit issue giving growth confidence with

select Soulcare majority products WXLL increases: of and price We on in on increased mid-March. e.l.f. SKU a and Keys Second, PEOPLE prices

of elasticity expected, While is our better power than still early, brands. the underscoring price

restrictions where in Third, we chain: products additional manufactured. many companies, our China are Like COVID face on supply

great the has our I remains dynamic, team how While situation about feel responded.

years, of recent throughout supply to continue variety so in We’ve a navigated the ship and chain do We lockdowns. expect fiscal successfully challenges product to ‘XX. despite the

execution a I’ve strategic Over has and ago talk to it’s was selling step the DNA. five the years take premium idea past imperatives We strategic disrupt, XX three our in driven. advantage. relentless the it want competitive founded provided points and Today, born of to e.l.f. I back and were on key of our through our Internet. the proof with $X the for quality framework areas years of over cosmetics growth

value enough our to inclusive, lip proposition. We beauty accessible core of the points. get accessible beauty eye, We best products are XXX% consumers every can’t cruelty-free, are known price superpowers at The face. for of quality clean, our make and premium

seven give market key and confidence of continue share. to that sales, areas me advantage grow competitive EBITDA can we Our

First, we have right the team.

We diversity deep and inclusion. to a have commitment

XX% nearly and which And our just it’s diverse over women base, majority of XX% base, Z and Officers is communities representative and employee the of women, Gen not over Executive our Board employee Directors over millennial XX% XX% is is Our and we diverse. serve. overall

culture performance high that team fosters engagement. a have employee We

the consumer than and most Our goods higher were XX industry scores employee services engagement points recent benchmark.

our of e.l.f. all to are companies, employees Issuing outstanding. public our consumer employees XXX enterprise is interest all of among XX% Beauty, deliver shareholders shareholders value. products of with our our nearly and total shares to in team employees at ownership equity long-term a the Importantly, rare employee with aligns incentivizes

how is area know second of consumers. we and Our to that engage advantage attract

marketing digital-first speed disruptive, culture. of the Our at moves engine

of investment marketing years from to Over the our we’ve past X% increased XX%. sales net three

marketing consumer is working, Our driving of ROI high engagement. and investment strong levels

billion challenge views. nearly with latest XX our a generating hashtag We four are billionaire now time TikTok #elfitup

gaming We disruptors. cultural and are with pioneer music, collaborating in like-minded

garnering year collaboration one collaboration four makeup media jumped from with X new number almost to among favorite earned still impressions. consumers. teens, recent billion last two billion number e.l.f. In up that Z a favorite. bring opportunity the generated two brand number our see years impressions, in buzz Gen X significant award-winning generated is e.l.f again with and cosmetics to QX Chipotle our ago. Dunkin’ Following We once

We’re usage opportunity showed the have continue overall legacy levels cosmetics our That unaided that some brands. of our compared X with millennial consumer improvement considerable encouraged in annual awareness said, and we attitude with particular. Gen and to awareness to study color in significant

brand we’re to with has runway Data, brand share. cosmetics X.X% grow. at number share, lot the number Looking XX% we Nielsen one of The today Channel a Track five see

we’re that advantage is area third Our an innovation powerhouse. of

built brows concealers, of sales. key innovation across leadership has engine time, five and make sponges, up which e.l.f cosmetic primers, across Our half segments; brushes, approximately

one number two each segments all the in sales double-digit and in drove have five We or year. last position growth

on grails innovation Our holy focus remains stay-in power. delivering with

and are has Our key innovation multi-year shared how driven in Putty examples of Primer segments. Camo families great leadership our

strength versus $XX QX jaw-dropping the $XX category. number in of Our the Its product prestige in selling it Primer become elfcosmetics.com recently our upon a on across viral equivalent sensation a Grip Primer media. value to Power one launched and at propelled builds social

was was has that Looking portfolio. stronger. remains up our Skin pipeline of our major a believe never XX% a fiscal e.l.f up compared ahead, brand ‘XX care X%. category been Skin In focus to we innovation consumption

for even both the as top us rankings in such are higher. brand skin Skin QX. time skin Pure care first and our our QX teens product rankings helped Amongst care ever New propel the launches XX line in

only series skin with in first we’re mobile the recent top remains becoming became digitally the a site. We’re cosmetics native [Advertisement Let app, product at launched weeks ulta.com. viral fourth a offering Video] area media, Illuminating brand advantage with care across sensation mass and This e.l.f. of app. particularly quickly a in priming Soulcare’s as mass out keyssoulcare.com selling five direct-to-consumer This brand makeup In is hybrids. top Key both Serum. Glow April skin a latest that mobile Me Our of is social complexion native brand, and care excited offering, about only five digital-first. cosmetics color a new the we serum also Founded a the

serve our as ‘XX, year our prior ago Squad to enhance digits strategy business channels total our and Fiscal X% Squad We grew entire a powers trends of led see opportunity membership experience. digital Loyalty we’re penetration, our as Members Our consumption compared by In us up drove and consumption ‘XX Digital digital two in XX% able fiscal on basis. years XX% to continues ‘XX Beauty XX% year. to Beauty to stack digitally two our triple ago. year particularly and were increase fiscal well. versus a we loyalty grow

million part our first of and ecosystem a an valuable are integral source Our highly digital loyalty of members X.X party data.

best of world we speed combination industry. is area advantage we fifth of have believe cost, in operations. We and quality Our our have that the class

hybrid expertise depth and chain model sourcing, beauty of fully e.l.f. across Shanghai, outsourced out XXXX leveraged Our external proud the challenges we’ve of the the advantage years. in asset COVID-XX supply lean this to China, to nearly for operational. early majority come on I logistics XX% products. manufacturing competitive how In the of over In navigate overcame XX in employees our R&D, combines company with are manufacturing. XXXX China like beauty China, of team our a in quality, of first we restrictions we am tariffs

faced capacity in In are and global we first after we just imbalance week, full the running Our at five weeks. suppliers congestion. XXXX business port container are a in back and

cost, about again our Our response. leaned of the operations in to consumer sustain other More China. on challenge. many impact at to are great stock the XX%. SKUs has financial store To companies, we risen COVID with team the mitigate executed transportation increased our restrictions recently, rates managing the feel level and chain pricing with excellence, around in early our in power in and faced initial team help additional we pleased like supply We how XXXX

managed products. also Our the goods proactively to our taken are logistics key producing shipping continue suppliers levels. our We’ve we’ve inventory up and

we challenges will that China ahead, transitory, believe as Looking ease. the in restrictions normalize are

of in area know we the advantage win to is sixth how market. Our

gives over our XX,XXX with linear of eight year great developed with and expanded to Target confidence What retail for this a longest gain Target, example. most XXX,XXX our past retail the standing national partners. me of how retailers. space is best-in-class opportunity is we Even from drive feet. growth, we’ve each to Over footprint feet space continued see our years ahead linear with productivity is to we’ve the our even more retailer.

Our XX% incremental and by average store feet we space ‘XX about without XX grew footprint is business today gains. in target our fiscal over

resets. results early the recent with pleased from our spring quite We’re

We continue lapped we weeks QX trends deliver stimulus to in to-date, and spending. even March of as related strong consumption

our year a launch Keys business in expansion. went elfcosmetics.com position with beyond Walmart of partners. Keys We in white U.K. our XX% international advantage years great our by our strategy just Drug grew our seven number Canada business the to new seventh a fiscal Mart, our from of XX% disciplined as and Our Canada brand. expanded example to cosmetics We and U.S., open with Sephora adding and the Sephora to now the country global both In the we’ve e.l.f ’XX year [Advertisement with retail strengthened the number e.l.f. of eight past site. our international beauty over building doors presence and into major elevate retail international different brand local second kind entry Soulcare company. at from Canada seven brand, Looking the of is represents retail in space our having continues up to [Inaudible] area to fastest-growing last commitment last sales the is today. of of Soulcare no Shoppers Canada. we in in Video] launch business the our

positivity, that connect Our accessibility. inclusivity mission to build communities through is shape culture norms, industry and and disrupt brands

a to values. with acquisition Soulcare allowed success PEOPLE, exceptional With Skin, that and quality our WXLL our we to XXXX, has commitment the distinct, of strategically e.l.f. complementary yet of the deep Keys Cosmetics for portfolio of support brands. of and of brand the Our price fueled purpose built unveiling our expand brands the cruelty-free e.l.f have us of launch portfolio and our since clean, flagship beauty

seven our realizing I’ll In to Looking to are ahead, consumer ability ahead, add fast-growing differentiated turn brands we win believe expand to brand business. or of believe look different to we Mandy. fiscal segments, areas we early advantage. call portfolio, potential our leveraging portfolio our to adjacent our fuel as summary, and of we now the in into over stages of We our categories XXXX potential will multiple and the still in the our advantage capabilities competitive areas while of beyond. full see

full ‘XX ‘XX. fiscal for results, We to Thank ended you, and Tarang. year share year I’m our our as of the outlook fourth the as highlights strong. pleased fiscal quarter well

and international national XX% quarter net grew year-over-year, based broad fourth strength retailers. our sales by Our driven across

in of margin to trends of continue We spring including as products mix, significant innovation. savings we strength related spending. in compared importantly, XX% and stimulus are recent by deliver was benefits our and This We QX saw from lapped the core of XXX up positive and year. accretive expectations, consumption weeks gross quarter, benefits the both supported we our even gross innovation. margin from prior launch basis approximately margin cost to exceeded points

compensation, increases of the XXX a primarily implemented We offset points up SG&A FX The was These and in adjusted investments. as margin impact than to and price the percentage basis, was versus May basis an we last XX%, marketing increase transportation also elevated gross related and XXXX year. approximately XXXX. costs. March On sales benefits benefited benefits more in of from

last basis year. approximately to the sales investment versus Marketing as was for compared SG&A XX% and the For year XX of down points year. XX%, was digital approximately XX% QX net full quarter in adjusted last

digital diluted to was compared $X in the per For million. $X.XX and approximately or $X QX per was or adjusted sales, our with net investment Adjusted million of $X.XX income a million marketing line EBITDA diluted share year net expectations. ago. $XX XX% year was share

results. dynamic to turn now fiscal our as our environment. a year full navigated short, our exceptional ‘XX In Let’s team results were

sales XX%. net adjusted and EBITDA For the by grew by we year XX%

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

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

higher higher due and plan times, lead As momentum. a to combination inventory we carry of our the levels business longer transportation continued costs, to reminder,

recent the We this in strategy have disruptions from benefited proactive China. during inventory COVID related

coming our expect year strategic We the behind for strategic imperatives cash our to on remain priorities and five investing extensions. supporting

fiscal let’s Now turn to guidance. ‘XX

$X.XX million to XX% to to approximately of adjusted we EPS adjusted EBITDA between diluted growth between of million, share. adjusted For the million million full income $XX $X.XX year net $XX.X to sales expect $XX.X per XX%, and $XX.X net

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

our you each provide with quarter to fiscal with for growth in double me post Let top additional line, Starting ‘XX. we planning of line color digit ‘XX. fiscal on expect assumptions top

we discussed, bullish category the to our gain are Tarang As ability cosmetics share. and on

remain trends believe over combination the from more COVID consumption trends After rates. year our spending, variability and normalized consumption the in we weekly levels go-forward Our of higher sales have to rebased and strong. significant stimulus-related past

margin Turning up to mix flat year-over-year from be to and to costs. slightly cost elevated gross with savings pricing, helping gross margin to margin, we expect transportation offset benefits accretive

Cosmetic increases These prices as to Keys Soulcare e.l.f. approximately we quarter, As the we as and within of well discussed WXLL items certain price mid-March seeing. cost offset help skews, two-thirds increased elevated we’re environment impacted PEOPLE. last

round was expectations. deliver to our value. price on this that extraordinary unchanged, at rounds, than enabling points trending volume products early are previous are to of than encouraged continue e.l.f. elasticities broader initial opening pricing but better an remain days, our It’s high-quality While we still us

now Turning EBITDA. to adjusted

approximately adjusted XX% X% expect year-over-year. to EBITDA We grow to

fiscal companies cost to healthy growth weigh growth we top many year, in XX% adjusted EBITDA expect the this XXXX. of we on pressures EBITDA margin While on still like adjusted anticipate

step From we’re and Our in fiscal fuel net gross in to up sales, transportation perspective, related outlook anticipated our and up investment the planning marketing of captured addition costs, costs marketing and logistics in non-marketing to to XX% to pressures to bakes outbound XX% approximately from digital in margin. inbound our XX% cost a SG&A ‘XX.

discussed, Tarang strong investments consumer marketing ROI levels engagement. our As driving are and high of

about believe by of investments we’re long-term marketing a optimistic fiscal from investing energized fiscal results these and ‘XX our ‘XX. position and We’re growth. fuel strength increased will Overall,

our how category the With are brands. you long-term on basis demonstrates to may the that operator, call and performance, We an portfolio competitive absolute our potential Our results. both relative advantages driving to for in confident remain the open of questions.

questions, actually an another acknowledge defenseless mass dive of at and we the want Texas shootings before took we into tragedy that targeted It’s in and events to unsettling And place innocent trend yesterday. people. devastating

thoughts to Our are open been the tragedies. hearts questions. our are deeply saddened of with have families recent We all by impacted it and these who now may

you. Instructions]. [Operator Thank

Dara from Morgan Stanley. Our Please ahead. go first question comes with Mohsenian

Hey guys! Good afternoon!

Good afternoon!

top on start line. to wanted just I

the far the two so expecting year You’re expecting double-digit or on really not then for toughest and of a by growth the in in more one fiscal year QX basis, comp the year. despite full you’re balance growth, XX% much revenue

goes And a if So of full external for maybe talk strong that? assumed great guys know typically about I you’ve given you’d those start beating last What’s revenue go and to about you room guidance? can another assume done just up volatility. you want top are thinking how guys of growth the of year some that conservative sort don’t get strong wiggle of I ending don’t and or sort right year, year areas you built-in of everything right, sense initial job numbers, of the growth some with you know but on sort a

So, clarity of then the given be QX versus volatility of on helpful. year revenue would built what’s sort some the balance of and external in

Yes.

and So, ahead I’ll take go that.

guidance sales this dynamic come XX%, we’re confidence pleased ‘XX you that start as in by our I’ll environment. just as That one, behind that very the net momentum range data see our well. channel us fiscal out range with additionally, and in to XX% this with brands, saying I’m gave to tracked So of seeing

call, fiscal your even this ‘XX, cycle to we in growth stimulus, Now, expect you on still each know expecting through the of QX. are that we QX, growth as quarter double-digit double-digit mentioned point on I in

guidance, take I approach think environment. as with it’s especially to prudent I a dynamic in balanced for us always this have

that’s XX% and So take XX%, initial see where there. to guidance, we from we’ll it

from e.l.f about Tarang, some and on can you risk in perspective. take the us business, thoughts, that a as you Okay, from quick could could follow-ups; two given And more that macro maybe benefit be you perspective, makes trade-down perspective then think theory of so macro from both an level just there then your particularly category sense. through a potentially

of chain. struggled you very supply issues think emerge to potential both top-line think then business, you the with to you your impact risk supply and this know with just how in category And Thanks. spending through you macro just do and much particularly about and supply chain, and chain, how e.l.f. the plans level of So have of the and environment so guidance there’s maybe terms robust see of China do consumer mitigating sort on in given a lot occurring if companies year

Thanks, more of first with Beauty. particularly Dara! category. the say would I As above positive I’ll I’m quite are consumer rates pre-pandemic than strong the couple far over category. as cosmetics months levels. bullish the and there response e.l.f. macro on growth seen for last start the risks environment, color We’ve

well positioned. Within the is category, particularly e.l.f.

combination price of one points and its reasons so in environment of best been robustly been sets I the to it’s and expect providing of at continue we’ve apart, grow to able Our share. grow the to beauty accessible fully us think share

recession. of terms know environment happens from everyone other now I’d has fears inflation macro the on right say if a and I things, what there’s In a

we’ve how team, suppliers incredibly strategy of but team supply our that navigated the I’m give in to price so. our proposition mass particularly pretty cosmetics value our in points the being at China has entire team, incredible clearly On we’re and best work think I of fundamental proud Again, operations that environment to seeing marketplace. it and been and resilient on comes chain, lockdowns. these back e.l.f our particularly in our able the

been production shipping key All have suppliers of remained products. our have in

resilient of just chain is. supply it’s another how our indication think yet I

performance In balanced factored how will terms of a how embeds that our play in, that from our fulfillment expect a I view overall of and think standpoint, we we’d pretty what guidance out that through consumer we’re seeing. the now worries meet in and terms to trends able year. the particularly right demand But I our of don’t be have to ability any given

overall I’m is. say of last showed So chain supply I’d China just the in two again in how once months this confident more feeling latest lockdowns e.l.f., in over even so our test the the resilient category, and

Great! Thanks very much.

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

single great. the basis getting the between prices assuming on into if pricing in ask on is angle increase numbers! from afternoon! algorithm I’m ask increasing the at with you’re $X, end the a understand. and average XXX retail know assuming price doing bit points sense, also good little call Is to just probably you to like volume. my the And think? so which like I you’re and what your that volume gains there? that easy algorithm, wanted the a you just I Congrats I you’re that’s makes pricing. in still or line math, way growth it gives different coming that were If that of that and to not you But wanted on understand if the growth Thank shelf, can so and get top despite the you level ones entry to a your level changed, price confidence a digit keeps low points low I’m

an the that’s we’re price right, not front you unchanged. know our a take Andrea! pricing I did standpoint, thus And with I quite pleased so you? I’m pricing $X we’re great. what How But there. you left level those from what keep We can that standpoint, you we to think hi the entry that price from So far are did tell in is elasticity you’re so on quoted increment. So, numbers seeing getting points volume those we same,

to thoughts think see before so data initial to able we we’re more going maintaining are a your to clarity give and what be more all that to we weeks be, $X points standpoint, what that expecting those entry but is we’ll couple take correct. here call and to around of from say August on I probably want pricing price this have read the by and it’s a the

up like your terms world. in called you can and that, from in you out distribution some what assuming and the the I If of gained Canada I’m – other Great! follow in footage so in have gains Mandy you before some that on places of – you’ve called international of still out, gains

your you algorithm, you’re you’re can against a benefit, what you then that XX and if us course distribution can like volume gains the incase like like So of of XX, bit about give mid-single in if elasticity? pricing, terms to of like headwind you little be if color think is math have my a like of a terms saying price in to – the correct, getting

expansion. pretty momentum Boots our into can know talked Distribution has Yes, Nielsen right. with remained has know space we’ve you that fiscal ‘XX. us you the Superdrug different so But given even with previously, I would did strong. internationally have CBS a data, even the you’re strong with say, delivering gains, the said, remained some yes, we ones in distribution Unit you, but growth and even you of to secure But volume do XX% previously this year over and we it and core and in mentioned full pretty absence growth We about those last momentum like just price that gains volume the see strong and in so consumer for of we outside our market as us. us I so more mentioned gains, gains Target give that, can for to in increases, business little bit was we want time reaction. see I tell distribution has

pricing, well line. a top helping the So have and that we component to do productivity as as drive strong us, remains for do distribution gains, then we have

is add our the see is we have distribution significantly, that based We balance. initial XX% that to guidance XX% and And confidence to in productivity. Andre, What benefit, most benefits, Tarang. this on the pricing of I’d unit is

growth since there. in our Just Mandy one the on numbers did mention Target productivity note

the biggest care, you past that both last the e.l.f. and brands. if cosmetics care skin skin year be facial cosmetics carries so in channels be think where Nielsen brand our about facial and combine we and we second surpassed the Neutrogena according to passed Nielsen I’m I we Target productivity a pleased so just including the ago their position. momentum, just been or three very and feel environments L’Oreal we’ve Just without incremental to amongst great months, in number space to have. we Neutrogena color six We’ve that and track really and model

Congratulations and best Thank of luck! you!

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

kind hello! as are you So seen are. competitors make you’ve pricing unusual you Thanks. seen the obviously competitive making competitors Yes, there Anything as pressure front, well? facing that can on – the same you’ve go front? what pricing the make about well? of as Can comments Have cost you up you movements on seen any

up now recess Yes, for just difficult to during difficult or you, track because a mix. often right see say We innovation it’s so little spring what announcements. still don’t I’d tell us. competitor it’s go you tend I’d through moves But pricing AUR

we the So haven’t innovation been apart is straight versus increases how to tease this mix. much normal of spring price through able

a said, what that Mandy us initial our again, hope looks picture with on who that like, pleased holds. and As are much August come elasticities and clearer pricing, we’ll have followed of

doubters retailers. is is certainly from I’ve sort and a there out there any kind Alicia among performance space way convey basis? is some door of Keys. but like investors – Thank store your And you But the it’s you the Okay. positive gaining of like you. very heard questions on well, just growth like of there’s brand of kind I just can that Keys you absolute the then, some of performing guess on know can Alicia verbiage

out brands as One, tell is our Ulta, broken is see will continue single we we’ve a haven’t to we know the couple longest. you improvement any or Keys the I You been which What things. of in customer sequential is at of the one unit. reporting Alicia though

The be Douglas customer would we entered second the who into. second was

In just at particular quarter a the some we’re color-skin recently including out with product, the recent had Keys we see that Soulcare That in out. great entry customers. sold seeing bet hit I first with we we again, Sephora and product it’s got builds to serum. So we our our like We more. so so feel you illuminating viral quickly about good it hybrid into in are our sells where and momentum Canada. that again, both

much. you Okay, thank very

comes from ahead. Wissink Steph go Please question next with Jefferies. Your

you is everyone! We a question us level Meeting you question. about was XX% to Tarang this had marketing, have maybe a philosophical several for of Hi! over a Thank modeled and two-part just years. kind targeted that question. you, a

borrowing slightly bit for again, from to you but a and Now of brand, XX% XX%. powering marketing you’re spend up this EBITDA the it is talk up you you’re taking Maybe so that little I marketing historically growth. the what for gross margin about year, think were effectively right guiding to level think advancement, you’re to flat

that’s Thank if truly bit kind a ad or more it that talk the X% – of the just is like-for-like midpoint, a more me, revenue going little that at us, marketing, then excuse is you. share you part And about there inflation ad So with rate impact? that’s philosophically. cost up Mandy, of could more rate

and what a on So that line philosophy we’re Steph! Hi working. our our ROI, the deliver like what I’d look been you in to I tell is seeing. and able it’s momentum take we’ve at strong we marketing top our

we our And approach so it. over have stair-stepped time is

range be a this say year within about of let’s the our strategy, expect and plans. out terms that it and to come year, so range in we stair-stepped we’ve we what just good start relative Sometimes feel said fiscal to our

great standpoint reflective strong ROI, engagement what XX% we’re line and both So and of I’d the to a is seeing top it. the about say XX% we from feel

to of we did ended One fiscal have but to of only we proof line growth. where is, just XX% look if where started, great about had we not our at growth, ‘XX feeling guidance points you relative EBITDA top the our it up, adjusted we XX%

So we feel really model well. that works that

thing EBITDA borrowing I it’s don’t think growth. second you tell I’d from The is,

we so we’re basis recall, carrying time. not headwinds, to over you X,XXX and do of points them If still cost expect persist all of

So got the of also see a business. this in look good environment of in or capturing depending environment, having. up tremendous the and pretty this transportation think leverage costs leverage the the cost feel been ends on there’s that going what like only business, we happening we job take fiscal time, the ’XX, as at done other parts we a costs but the we Not tremendous but non-marketing in with do we of forward, we we’ve SG&A some know, formula over with tariff known the leverage we’ve costs these in we the

the three our the years quarters grown higher pretty brand in And share years, is company the strong addition. space front. of and growth last Over depending consecutive on and get only sales to cost that on XX all could we’re profit potentially think I what only had net see profit starting now growth that’s three that’s happens in growth

then the midpoint, is answer an portion question behind investments. cost majority standpoint. putting ROI inflation, the investment to, there that on advertising And from Tarang related is of further your marketing But inflation spoke to at two high the just points just more Steph, as a to those

that color Okay, Tarang helpful. you for especially! that’s very Thank

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

digit just about little – you could one to in trades you nicely Great! you and potentially know you you growth being is Could impact you bit the you your and pricing in Thank talk whether you. pinched around how consumer obviously what you! period, Thank very or prior know into be a double more the great near brands seen the during obviously gains. about the think you’ve recession know just some future? performance quarter, space bullish sound with First every downturns, a one shelf coming from

Hi Tarang. Olivia! This is

So some cosmetics mass our times, as a taken what in pretty of actually data tell you up recessionary we’ve past look I’d is, at well. has held

I think resilient. it’s been pretty

in I think recession cosmetics, a bigger done color tends Prestige much take mass and has e.l.f. then within Cosmetics hit, to well.

But of couple much we our the into taking months, trends good real feel contract business, consumption last which saw by terms our that gives caveat terms pricing. in head we the of we confidence smaller I’ll over I me consumption where versus are recession particularly as seen business, last the Now we post now. that a the of this. strength fundamentals were of in We’ve saying a right

very and I you know really pricing the best is where it’s we price as look two-thirds prices I’d of go, Mandy a $X took were a opening our going liked unchanged. Nobody while sentiment. Now take we we which said, we’re about part points, kept our balanced on but up at always approach third of as of point, what knows cautious say items $X, consumer our price items, to our

options it to So gives I consumer e.l.f. Beauty. different really find two think the

First, is prestige unique making more and quality bringing our them products where capability accessible.

two, $XX have our that’s then environment, you one Grip Power And which e.l.f. inflationary compares you still It like Primer $X, items are can So of a over a $X $XX. to is if from wealth item prestige because number that get the item. our still of $X, pinched you

even So extraordinary difficult have make we of in approach value of being times. beauty, in the and like able it bring accessible terms that to best

with to cost there’s across associated where in basis Thank of for it XXX more some acceleration various year, how terms this is the versus you other higher that’s social Great! And areas? costs pretty spend particular you, you marking, that of focusing a buckets then that talked just ratable of But about there or helpful. incremental marketing. you’re is area planning are point XXX

vehicles the marketing strength a We’ve from seen various standpoint. across

and gains study, unaided not program, is it we PR addition advertising, the spending direct mentioned influencer in feeding to in Particularly strong millennials, already terms XXX% digital. our We’ve our in so awareness, seen So really the have that. our of in from really results standpoint, our good I Gen overall is but digital response. results X. advances only targets, usage we latest major in amongst amongst Gen consumer Z and attitude strength other our made and a in

vehicles. bit feel other marketing, we a so some having well, overall good on of our across And as able reach say audiences see to is being for I’d success those strength long-term we that more but

just higher of a been for fair tax of to a one to question. than housekeeping then number quite XX% that’s guided And rate has sort The XX% years. it bit it! for Got next, being

embedding knowing in some either potentially change of a is is or just credits that higher? kind the year driving or not geographic what could rate get or So and function mix you’re a that there that terms that’s you a like legislation tax of starting this of anything

Yes.

It’s year. to of at benefits those Olivia! Mandy. hi throughout in benefits In gotten XX% how related of any have the see to The discrete and the we’ll XX% tracks that is rate. we’ve our kind we so and tax So past baseline this years discrete stock-based not comp, point, just baked

Great! much! Thank so you

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

we you and love I out at also innovation had where Hi color here definitely in cosmetics cycle. it’s Mandy! and we’re a past. within balance some would know on What Cowen period and Tarang thoughts is the your seeing going that as are

parts of they doing are and how you do are and any with planning Second, sell-in on Targets that inventories Wal-Mart care – you your inventories are Thank great. personal there is and you. over yet guidance there beauty inventoried, still have how thoughts that know sell-out? impacted Are and

that terms Alright, cycle, same I of we are seeing so out feel going in definitely thing. the the

If Lip Glossy with is and for say innovation all how stain those about taking to and out we really back color-cosmetics being traveling, you we speaks a getting our would different resonating on generally. are remain so really social, things going And off you pleased there, now. is category to that right Stain of bullish our mask, lip that example, your events, think know I

all stage they been of things. this are have years where doing they a I and have summer of at Two put out, do unique we’re kinds think are this think are kind people away, I reopening. people traveling, coming we

that mean Target, a think in a are to I Target really be behavior. and growth no Wal-Mart beauty us. do recipient for of of And in be continues category continue positive for terms about will of them. planning change I terms beauty how they So inventory, how that talked to

Target, continued needs our about we’ve at so service to to as point. be during great ability our kind Wal-Mart as and we’re this able time, feeling know and both, well retailers You their this other to of fulfill

be intelligence Okay. and ahead, tool an on priorities, would look an you love important and as using your tools could engagement or update program, tool. And innovation that any data engagement as key loyalty artificial

so ahead thoughts. the topic the often, and Metaverse curve love of on NFTs, any also of would You’re

is This Oliver! Hi Tarang.

program loyalty feeding where So what our is essential, terms vast rest not also I’d for is tell absolutely make majority elfcosmetics.com only loyalty the you of the ecosystem. members our of up digital our our of sales, but in

we The absolutely of is membership grew digital loyalty all past first year from million for efforts which our party targeting, marketing a members, invaluable from we XX% data X.X our that this get standpoint.

continue loyalty and continue recruit to see you’ll to our So drives more that continue of rest program we as our emphasis and greater business. members on the greater Squad the Beauty enhance experience, to how

digitally we is the always territories. You of the know in ground in already forefront I’d blazing In and say team I’d many metaverse. at new are our terms respects say

you If year. on take as the at and of doing number more efforts and that both well look we’re in as what a in from our see platforms to continue Twitch us a throughout throughout gaming, our regard you’ll

some of forward to our initiatives there. sharing So look I

first a thinking priorities should whether this it zero marketing percentage Thank and on funnel, as across collection the you. data how what your here, you and/or your the are question, of about Final about think you top rate Okay. of the party be increase as sales, portfolio?

on that our our whether we programs, at in see say that’s lot billion over as in that’s got to whether overall brought even PR a how the into be marketing, of we talked there’s one it terms it collaboration continually X did a number into of already I’ve awareness money got look vehicles. holding had approach direct generated response, we in Even we be of learn a impressions, buzz, ROIs, building, press recent most on have and users. We I’d some of vehicles, TikTok, opportunity test well taking in as territories; a every influencer new and how the Twitch. new our So Dunkin’, good our with

we new We things keep high ROI top the approach of of brand good kind know in things and those that users. and have drive of really dollars bring that allocating mind between will a

feel we have really about that the I good So approach there.

Best regards! you! Thank

go next Please Your Securities. from Chappell with Truist ahead. question comes Bill

afternoon! Good thanks! Hey

afternoon! Good

Bill! Hey

unique a to happen. you’re higher other are positioning trading you your expectations that that to I’m have You consumers kind benefit elasticity cosmetics very that than so gone just a maybe higher trying on think and proposition, just you to that trade thinking think price down would which portfolio to not Do, I’m your color mean far. you you normally offset, going there’s opening elasticity. little comment I mass and more from point, benefit expecting as to with I probably Hey, price because products trying what that you’re priced viewing even we’re you? what where trade your understand understand and that. even within are down portfolio if a it’s sure just of for there’s more within mean much pleased are are of of but know your or doesn’t you price from cosmetics,

pricing trade that we to We pricing approach Bill. not we our was, just the XXXX our elasticities, on $X price in do items after of The we and more about down on. overall used given put up conservative some talking in. about we’re expect right, did, the modeled That’s did environment the within took we portfolio. we When magnitude this pricing inflationary the and assumptions we we’re time it talk the increase successful

took So specifically elasticities talk its we when on the about we elasticity, those items up.

less of of gains which encouraging. in We’re unit seeing is and unit on those some loss items, a highly sense

elasticity to that, but we by we’re continue time talking go sure about. we are as Mandy reflected, fully want the As that prices see said, to to that’s one, make more main just

and some prestige do the players second your part in terms taking the from from we’re we volume believe share of mass well but benefiting not as that both terms from gaining of actually we share as only as well, In have the other from particularly from of buyers type a gains, the strength believe of we well. are innovation beneficiary, question, prestige we given of the innovation, that as pulling brands, of

Is full year? range. Okay, EBITDA a that the of do you guess of a that’s the costs, have helpful. within pretty horizon I know in implication I year. thoughts a for pretty terms And for see kind of kind have tight impacting then year on the that, you good that to this Mandy, always currency and full you

Yes.

in don’t anticipate do have and pressures transportation, we detriment a year tight to FX that be EBITDA know From typically are always we nature. range, standpoint, of yes, and the cost really to the so team around be baked impact gross on an every narrative, to, this costs, will we in things So seeing the fiscal more that spoke for in some FX helping container I as you more that as to logistics, a work pricing. those that China we’re to savings that offset cost cost seeing. from we’re year, of pressures our we’ve The on margin continue the past, talked focused less in that

sneak then Got it! in. one just last to one And

sure national distribution On am Is distribution before? at seem WXLL like brands don’t the – gotten I there. know had talk was just does the that individual part Target, PEOPLE I’m about missed always of you it some meaningful I not as gains gains, but much, it has or there that

in potential and others Beauty remains two but brand, of potential an in beauty. WXLL in we’re anything clean to areas that one the disclosed I is Clean yet, our it’s key a customers, focus WXLL doors. to presence their PEOPLE lot gold be subset then on with We of can certainly, but as part at say had of I’d focus see the works. we interest of at Target a Ulta, have of for a lead addition PEOPLE, we’ve a beauty has of one Target, see those a clean ours. lot that don’t particularly We PEOPLE standard WXLL of WXLL plant-powered Target’s that that brands believe of Yes, front think PEOPLE good initiative.

Great! Thanks.

Please Our next question comes Parikh with ahead. from Rupesh Oppenhimer. go

question. Good afternoon! for my Thanks talking

financial two had I So questions.

line. quarterly more adjusted just terms any for year? as EBITDA there just about upcoming on Is the of the the you first, can think give it in cadence color So you

expecting color So, top growth on we some double-digit gave quarter. know line of you each

have what on expect adjusted on quarter. not EBITDA color an each any to from given We standpoint

standpoint, the kind a true and from just asking you’re butter if you that EBITDA modeling what rate as of it across think then in. quarters up come the that margin that take you of I could quarters can is, peanut kind just probably

Okay, year? there’s your out and chain in know inventory also second, year just heavy believe a in then there. challenges helpful just That’s year investment expectations to cash operating we you flows. supply of I this color some well. given investment as great. I cash fiscal the on the should inventory use within flows Any another this operating number for that whether be and upcoming expect on

up to environment. supply had expect talked this we buildup planned our build be Yes, stronger flows through the cash operating for navigate did a year. in have chain big a your It do we inventory. To point as several just we was Rupesh, quarters to

same to don’t on level behind we anticipate inventory year-over-year having that So basis. a of investment make

year. see this in should flows cash you operating some So improvement

you. Thank great. Okay,

Yeah.

Your Jon William next go from Please question Andersen ahead. comes with Blair.

were kind ones categories then, development. a some you the brand mass if the see about Keys desire like of for and critical through prepared I on looking, key to through before priority remarks and in executed PEOPLE another or you be kind know list, – brands in Hi! on I another you’ve everybody! out the of be technologies your this Can would And add add WXLL to, what have been kind internal would high Two guess. going portfolio, talk brands of let’s Soulcare additional acquisition achieve One, brand. ramp brand, me. this maybe getting and the quick to while and willingness around balancing about you comments from talking acquisitions actually to Good and afternoon, say,

Okay.

Skin e.l.f this tell mean lot of a is and current you, I see is our I’ll realizing Tarang. of potential So Keys and in our full channels. a portfolio. John, WXLL PEOPLE Skin, example. grew we first Soulcare. Cosmetics, really priority great e.l.f tracked the We brand is e.l.f growth

up year last I up relative X%. XX% consumption was category to the think our

and be campaign that pipeline Skin, to strong. support Skin, to about increased technology e.l.f e.l.f the see continues our first You’re on extremely on innovation and pipeline

say is companies, portfolio. of that’s focus where So their focus That’s current we high the our is. and so I’d brand have our on hopes most all where

I also about the we the PEOPLE M&A, of clean PEOPLE complement the brand growth our but that so taking we do we’re In we a almost Beauty. of in have its it. the capabilities existing see luxury get a off still SKUs current small within because us there. is brand acquired the of to for It including new e.l.f. that, WXLL disciplined other have or we think of get. was categories scale it, early strong us e.l.f and our getting open highly we beauty, being But a long a can it’s feel acquired days, to gave gave to portfolio, of good organic for dependent pretty on WXLL when big growth, it’s level go. We meanwhile, if portfolio, capabilities, they and kind distribution us in brand. there. but trajectory, there’s way have say still the was the of and Keys do be either capability other year well, what’s have Soulcare brand we capabilities We would standard, bring adjacent potentially subscale. to within bring Clean it role of leverage the confidence A we XXX PEOPLE last able terms In and driver WXLL reformulate us a into intentionally grow not a the to can

number different us a we’ve of right passed at valuation it. decided was things, on we looked for we’ve and the think that didn’t So

of disclose that. kind us seen of to You’ve the some costs related

stand, portfolio, there’s of given to our have heads being balance So brand in terms we we our do good whether particularly strength but time M&A, focus current where of even to the I to frame being open about main acquisition. feel in our potential gun no or sheet, an

that through Mandy. the price we perspective adjustments then I flattish makes mentioned, programs, anything outlook maybe in the or was quarterly think for Mandy the a ‘XX thinking margin you there that I for Is costs guess one higher. the And a that from certain should sense. Okay, be I’m of gross to just savings gross progression it’s cadence or of margin of aware question of? cost around benefit You the incurrence year. know slightly

Yes.

each modeling because the a high you recall. I probably it’s had would probably didn’t really quarter. Jon, some from second we across think a there. holiday say I to So the annual that safe have we QX there’s program margin assume half, gross that variance in just if gross standpoint margin Last

would some year-over-year a probably I standpoint, growth annual quarters, But as just then we’ll from everything, across beginning since we variance just go. the use of kind there. this would So year, update kind the and say of just resetting the and I the of we’re is

so Thanks Great! much.

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

how of from come been Yeah, what you for reconcile spending projecting the your helpful. what minds a be term? in there would thanks. I could second back, in One, Obviously, do this get average this two know potential prior of you slower of guess question so of basis everyone! those to year, sales data terms Good you you’ve And points just scanner growing, of reported would bit bit it of guess yet longer X,XXX some imply color the time untracked in that? gets than afternoon, results just much reinvested then, it even I think up perhaps are sort time, for where help doing. that with years. you’re more just a If drives kind you they form how questions. your over are obviously costs about on the of your that little and of are line kind over channels incurring spend peers on any that holistically directional add quick

Mark. the question for thanks Alright,

closures of what I between that reconciling of things at scanner scanner there of kind think has internationally Ulta have this kind versus and been prepared stimulus then sales but of base. you that of and In store in shipments kind lot terms on remarks, the how were from cycling, volatility data stimulus before were flowed, data, we’re results the mentioned basis, see given a our I in there our week-to-week a the just just

now. take net sign scanner as business parts necessarily our of that of a that strength a sales strength, say in I of I sign doesn’t would would our correlate for materialize would weakness in the right But way. I if data that So us certainly a to as not other

a like focused kind and really different things things on what sure making from right, inventory versus are can We have you around consumption shift see Those been levels at that. retailers of standpoint.

would as year, that’s we’ll to there. and So we expect it to take where of the see I kind from then our for guidance look things

if then channels but some non-track scanner and about look basis, And would you in noise you our in than I a on enterprise. took indicate so year good feel across that on an growing the growth tracked think fiscal you’re data faster obviously basis, basically we recent, in annual channels, more if the we are

Okay.

I’ve ’XX, approach strong, we even and And performance. invest in, adjusted from But marketing and the growth XX% I top then spending the are profit environment really I also drives there. of quite environment the seeing from question, cost In an second growth we’re do really to us proud, what EBITDA good what terms mentioned think on that’s fiscal there, and tension able I’m progression. healthy standpoint. believe your ROIs there’s in engagement top be phenomenal line we’re in our a a to faced be we in standpoint, growth. able that’s XX% line more, the to to think before, cost with

‘XX, we As look continue have we headwinds. FY cost these to at

definitely but we’re will if of want those we I’d the do able leverage bit abate, of a of very bit But carrying, line, saying, you outsized flow the of the it’s to profit. line. bottom So and I how both, we’ve little the costs a much hoping marketing long think business the the given potential more to there some we’re say to probably be see that versus we bottom always debate of within of a see more way a but little so been them

Our next Piper Korinne go Wolfmeyer with from comes ahead. Sandler. Please question

the Hi! questions. afternoon! for Good And taking thanks

first, around more on little of more a So trade mass. to commentary down prestige the push the just from you I bit want consumers to

brands So that are Keys as resiliency and be the are WXLL throughout these prestige down? brands recessionary PEOPLE thinking there you trading are Soulcare happening, that’s just if some times, the about how may consumers of the

Soulcare. overall and Yes, I think our strategy WXLL and company beauty Prestige PEOPLE includes as best on a that accessible is of made

than as brand quality some unit the its Keys the to $XX alternatives at Soulcare, sit Beauty, look with gold points it’s Prestige Clean of average value think WXLL to points Same If retail better of other you average plant-powered PEOPLE of – about a on a WXLL take the well. I compared relative we there. $XX quality I think price that the significantly brands, price they standard so a PEOPLE. where think of Its around

there’s days, Soulcare Now my see but we’ll in their I’d I’m economic the we kind given Keys growth Skin, have bullish Color, to see. e.l.f Prestige, are plenty of particularly and still regardless on WXLL say environment. versus particularly early e.l.f that given broader PEOPLE of on previous both commentaries mass of

growing the pretty of year and you well, the you. mix the WXLL can me how and out past any don’t is, Thank but sales us brands, Keys that to going mix go? and one PEOPLE over is said break is well for last you has various then is on obviously Helpful. of give doing I you’ve And color changed you where brands know think

Yes.

Keys of well, and mix feel brands four a distinct and And of the we the and and seen Cosmetics as behind channel brands term. break single a how you’re tracked in e.l.f longer heard the that and sets to the we Skin that portfolio out e.l.f the but don’t to are having our about commentary, great So, that feel I our brands you it brand, would cosmetics really contributors you’ve color for from see diversified right now WXLL strength strength Nielsen data. that you’ve really in about by that brand, up say Korinne, us to think brand speaks the I great that

Thank you.

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

fiscal August Well, and our to Thank forward you grateful be to upcoming thank out in delivering ‘XX. us. at you team an e.l.f., so I’m we’ll discuss at our outstanding again results. speaking We well. everyone close of look for joining for result with meetings incredible for seeing you our when quarter investor some first you, and

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

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