e.l.f. Beauty (ELF) 4 Aug 222023 Q1 Earnings call transcript

Thank you for joining us today to discuss e.l.f. Beauty’s, First Quarter Fiscal ‘23 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 outlook Thank discuss and I you, afternoon everyone. results the raised KC, of drivers our want recognizing QX for will our Beauty by good the ‘XX. team. e.l.f. to and start fiscal

XXth to results XXX net in XX%. sales consecutive year We’re strong sales adjusted our in growth. delivering We a grew up well new XX%, by expectations. QX of $XX margin net increase gross fiscal delivered million EBITDA our quarter off ahead by basis of start marked and points QX

Cosmetics We e.l.f. top margin, above was XX% QX pre-pandemic category market consumption share year innovation. QX Given our by above fastest and in our five occasions growing momentum, points. the even up first Color growth year-over-year basis stronger, cosmetic levels. brand and usage by X% QX wide an we’re rates. remain full increase were fueled was raising growing guidance. in up positive quarter category growth well of full our the trends a XXX by

to be environment Looking continues ahead, the dynamic.

particular better impact prestige behavior, to an self times. be it’s recessionary cosmetics expression. for difficult how continues has cosmetic than While we important believe recession performed forecast past or in consumer to in inflation category may Mass

to and our business gain More importantly, we’re share. model continue ability to in confident

our minutes the to take QX talk me of through Let performance. drivers a key few

best accessible of First, proposition. for every make and lip core value to beauty face. eye, our the We we’re known

market deliver and prestige at the bringing them products, from best holy the have ability taking to and We grail inspiration in products unique to extraordinary a value. our community

at Some $XX selling $XX. our grails Putty prestige holy best our include Poreless Primer of comparison versus a

$X $X Camo extraordinary unique $X CC cream legacy products. priced prestige concealers today our cosmetics We at is a higher we’ll strategy facing And the to time price at point reinforce proposition. Camo a these products, In our average a a focuses $XX. $XX The of see coming comparison over months, to as as Our value versus consumer current on at our versus promotions. compared little value comparison pricing backdrop for to of prestige $XX instead e.l.f. and value for nearly launch mass everyday broad another that highlights unlike based the campaign of brands. our

our innovation of is powerhouse. that driver performance second we’re The an

cruelty Our broad points on XXX% superpowers clean, accessible premium our deliver appeal. center free, at with products price ability beauty quality to

stronger. primers, engine innovation across segments e.l.f. has with innovation of proven our in believe segment one brushes, Our We five segments; gain each five all the been brows built cosmetic sales and core QX. has up concealers, or sponges make position leadership pipeline in in half never two share and number approximately

two We on grails focus one continue have to season. each bolder try bigger or new to fewer and innovation holy

We’re consumers. with newer pleased of to products four see our resonating

top a mascara, a foundation lip our share. Camo significant of unit stain primer, We four product the cosmetics Nielsen in were we’re of for glossy see With a in Look mood grip power success, and opportunity for at track number runway one brand brand of QX. data has share. our incremental see to The Our growth. channel number XX% share. with lot big QX, powder X.X% build drivers consumption five we five

with attract marketing. and to our know we disruptive first Third, engage how consumers digital

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

benchmarks. Our marketing above investment is working, multiples industry driving ROI

audiences, new and a reach us test frontiers. and help penetrate initiatives new marketing learn new platforms, Our

squad We’re launched intersection secret with at gift limited squad for significant incentivizing has see new pushing beauty July, enrollment consumers for growing Up product Up e.l.f. our cards strongly code million contains diverse nearly redeemed young, beauty. and bonus edition XX% We X the the year-over-year. over that a a a be community. more which loyalty of we squad gaming Game to In bring into sits further collection to Game the points, opportunity program. beauty and that with brand. gaming Each metaverse cosmetics resonates and and skincare our Beauty still signups now can members

unaided We’ve shows galvanized mass Z our consumer most gap millennials following double a Gen awareness build to a with study X. some digit awareness attitude particular Our the opportunity and to among a to strong see and compared in of legacy continue recent usage brands. and cosmetics Gen

WXLL We and these attract brands; to consumers performance; three of our are innovation drivers engine engage core value PEOPLE applying Skin. e.l.f. taking Soulcare, and proposition, key and ability them to other our our Keys and

We highlight top moments a doing a with last year. of QX brand e.l.f. $X.X in Let is first skincare Mass mid growing time me to digits the are few XX single how take year-over-year. became Skin. category we a skincare this billion for

was We X%. was continue QX to see consumption e.l.f. category strong In up XX% to results. that compared up a Skin

skin. can Cosmetics e.l.f. of We are win aware we reasons e.l.f. Skin. XX% consumers have purchasing open to to believe of in

X% lip our ability focus of to and accelerated streamlined assortment and eye, dermatologist leaning developed take our every it the now channels rankings elfcosmetics.com over on and cleaning e.l.f. portfolio. little our higher on address product ago e.l.f. innovation, into accessible. the skin ingredients fourth drives brand Amazon. and leaning face skin And our beauty XX% concerns. for launching positioning about and skincare Grail as architecture of we our We teens. on nearly skincare among in versus are consumption a year crystallized unique skincare brand our Nielsen A We Our We’ve a in of concern. to formulations Holy best spoke for consumption already top brand track make Skin, our

price at melting prestige skin Our $XX balm comparison e.l.f. holy at cleansing was a QX. hydration $XX top our versus selling in product makeup

effective education a and We our focus greater ingredients. also improved packaging on with

e.l.f. Skin. putting affordable. marketing out first In be campaign awareness. straightforward to setting show skincare is also and skincare muscle build We’re effective, launched consumer our we can ever our to consumers e.l.f. July Skin behind that

Before single percentage of price e.l.f. Mandy transportation in increase details two our increase want we touch to and outlook, likely mid I rising other results In to AUR. few March SK to of are briefly On across that response on digit brand a high use costs topics prices thirds our representing a mind. the on top increases.

expected broader of the or $X was reflected trended opportunity. customers remain price many our shelf opening is our Cosmetics, quarter. While in retail this continue and unchanged. round With space rounds, space expansion. previous of $X better points to we significant pricing Pricing now On elasticities e.l.f. of than see volume than all

great like for XXXX. to in restrictions expansion chain, space both COVID spring expanding pleased the about whitespace of announce has in risen We’re Superdrug with which the fall challenge. UK companies, XXXX We call, we’ve supply to China. team On in with navigate represents in as how many our CVS space about feel spoke our had XXXX our we’ve we major last subset a earned fall to we’re in shelf and doors. Internationally,

rates Our overall XX% in stock in approximately QX. at held

We’re holy few stocks grail products. actively working to a replenish out and of

quarter throughout expect consumption, our a little Given expected we recover to inventory the lighter ended than on but QX. stronger

Lastly tariffs. on

any margin. As tariffs pressure reminder, subject our a list Therefore and at our our And in in engage our of to the XXXX of gross about of level. in summary, engine relief consumers the tariffs XX% tariffs to drive gross We’ve over tailwind approximately are products our tariff outlook. carrying a and cost our core three will embedded to significant talked continues time. attract majority points We’ve be rollback innovation proposition, half any value that. nearly ability basis fuel performance. not margin In to

dynamic, the our well-positioned the and to continue to we’re guidance. reflected now and growth I’ll release in over I environment to remains share gains the top Mandy. in drive call lines as While both turn bottom believe

as outperforming our share raised as ‘XX. started category. first I quarter year highlights results the fiscal Tarang. you to for am We Thank fiscal our our pleased significantly of well the outlook

Our year-over-year and sales grew international retailers. first by our driven across strength base primarily national broad XX% quarter net

spoke than the Tarang recent from price increase elasticities we about, quarter. in our expected saw As better

units. consumption fact, our was growth and In in QX AUR in increases balanced both between

trends innovation. ongoing recent consumption both in balanced, Importantly, to be and continue supported strength our by core products well our

quarter the approximately of SG&A as a offset margin mix. margin of saw gross increases, elevated cost out basis of Gross These drove year. expected basis, impact and QX. digitally Our QX experienced We than in prior compared a year-over-year. year sales compared trends approximately of XX% transportation year. strategy total and we us in points QX due XXX was XX% consumption our digital for digital compared adjusted up well. Marketing to shift percentage price benefits creative of the a were flat from lower investment more into was led margin last margin to XX% On over to gross was to benefits savings was XX% continues and a consumption costs year in as of net XX% the sales up to ago. an XX% spend ago timing and channels than QX quarter. Digital a to XX% serve

QX XX year by marketing across improved to net margin net increase XX% a digital versus We sales share, The was XX% sales. EBITDA million EBITDA adjusted be a million, sales $X.XX diluted of growth, approximately XX continue ago. gross $X.XX income was in net was to XX or up for investments. and diluted last was and XX% adjusted shift timing profitability per XX% compared fiscal to expect our marketing share strong metrics to and in and per ‘XX. digital investment Adjusted or margin driven approximately of million year

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

balance from million million was $XX inventory down ending March. XX Our in

than our QX through As bit inventory ending strong rates. in a lighter Tarang our mentioned, given sell levels expected were

expect quarterly back as levels is our seasonality. to typical QX We with inventory build in

our Importantly, we remain consumer confident to in meet demand. ability

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

outlook for Now let’s turn our to ‘XX. fiscal raised

sales approximately prior versus growth expect year, we up previously. XX% of For net XX% full to year XX% to from now XX% the

million, million to We $XX.X million expect $XX.X between from previously. million to adjusted EBITDA $XX $XX up

and adjusted expect million $XX per million $X.XX to million of $X.XX previously. to And $X.XX previously. diluted EPS income $X.XX net million from up We share from up $XX.X between $XX.X $XX.X adjusted to

‘XX to XX% be XX% as to to fiscal expect tax rate approximately We previously. compared our adjusted XX% to XX%

expect we Lastly, approximately XX count to continue a diluted shares. share of fully million

for assumptions Tarang outperformance our planning Let me additional our the incremental provide in ‘XX. relative related top QX with you Starting to raised outlook pipeline discussed. with addition gains our in space the fiscal reflects on color line, to to expectations

growth to expect fiscal continue each double digit top line in ‘XX. quarter We of

Turning expectation for XXX our to year-over-year QX. margin we result gross to margin, a flat is to our previously. now expect our basis This as outperformance largely be points up up of to in approximately compared gross slightly

the price We elevated accretive offset to combination increases, of transportation savings expect margin mix costs. cost and

previously, to the adjusted in to to top Overall, approximately implies EBITDA, of ‘XX. in dynamic fiscal macro EBITDA XX% to position XX% growth adjusted this year. growth now XX% a now to raise companies, strong outlook weigh fiscal prior environment margin in year. of expect and year, on our are our versus to up XX% Like Turning adjusted from we cost approximately outlook X% do a be pressures pleased our quite early many EBITDA in this on we profitability

non perspective, balance the expect gross to logistics to cost seasonality. a continues to a with be fuel EBITDA in of our adjusted largely addition cadence teens, in normal From outbound higher and bake inbound costs therefore and margin. captured including mid year margins outlook to marketing transportation inflation the higher Our SG&A costs due in quarterly we

our with and marketing market due into than in spend fiscal for summary, ability of QX We are remain In the year. expect be lower that the grow QX shift the to to QX and outstanding we out our QX. confident balance in of share results pleased to

category questions. call open Our performance demonstrates absolute the both on relative you to that competitive operator, how results. advantages are may an driving basis our the to With and

Thank you.

question begin ahead. first We answer Dara with [Operator question Stanley. from comes the Please Mohsenian will Morgan Our now and go Instructions] session.

Obviously very strong results QX. fiscal in

as the for general what U.S. helpful. there out in in give and well bit environment as consumer the consumer can given will the color Just an state a your update of July, in you you’re for of us the be the update tenuous business? seeing mass variability, Thanks. category on An

bullish the QX the was category category. it’s full The quite pre-pandemic was above where Hi on the first levels. quarter were Dara Tarang. Overall,

We particularly well category. that are positioned within

have still built we July. rates points started, lighter the strong weeks, XXX We very think volatile quarter strong of we’re few I’d I say end of We market to month strong. share, very consumption. basis again. of month. now say seeing And saw it’s June, consumption beginning a

see the we going you even said quite prestige. category perform some prepared than I cosmetics bouncing mass color And overall, bullish So to while we’re as on might in think environments better forward. our remarks, tends in recessionary around

So the on so category, on we’re bullish pretty our especially still but prospects.

share of for space market just mentioned, have that the you then strong you A, you’ve a offers seen lot portfolio. of on update us as range. results and take your shelf environment increases view Great, got have And And competitors a your price Obviously, very that’s opportunities? in helpful. respects? could portfolio the value that two competitive been in $X B, you

So and center down. be you’d would trade I for think worried front retailers about

maybe versus space terms in opportunities in a but again, of offer. perspective Superdrug, CVS Thanks. talk shelf you’re of just you environment opportunity put space mentioned you’re couple So versus overall a Obviously, that, if specific pricing shelf the typical in just and seeing. about

retails. average have in how of with we for all, much have tease unit mix unit versus increase on we average items. seen pricing innovation that out your is increase. hard new first an It’s So of us definitely pricing, But seen question retails to

extremely As positioned you well. we’re say

Our retails proposition. isn’t of competitors. competitors relative $X value gives to many around average superior But only mass that around our value unit compared proposition $X to

We down are prestige. seeing from some trade

we top now of prestige is right primer, Power terms to example compares item We uniquely our price at have item what $XX. a do quality, can number our prestige in extraordinary points, Grip of bringing products, holy being grail at selling an $XX which

well we We decisions about and the make Superdrug talked from to gaining feel And well shelf as from the the think we’re then So looked currency as brand benefiting trading at terms of to that down which well-positioned. side. space in both as space we mass I opportunities, that extremely by the both we’re fall trade space the and spring are retailers this as in CVS well-positioned. we’re

our bring we stronger, and well pipeline. are the We most carry consumer been productive as It’s innovation Wal-Mart the brand Target as profile never in.

a up pretty space track So picking the would expect I to I of record think we’ve over had and that good years continue.

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

Great, to consumers a little thanks. improvement. results. initiative wanted has congratulations on your this some afternoon. at about premium And great for for driven Good end particularly your you, a more AUR great innovation Obviously you the bit I for but year. nice ask product some really plans value

consumer a benefiting little right volatile your environment to from bit bit So Prestige have product some understand are trade then a just frankly, this wanted more year down And to to for seems like volatile environment a you’re from quite extent as holiday going. some of seeing you your obviously the It we that view about initiatives momentum on keep side. now.

two on great. view your you. Thank just be those So would

On good pipeline. the our extremely I innovation about thing feel innovation.

hits as really this couple of recent mentioned you much products we serving launched better these to our ability most Halo values As priced liquid being of year. is holy which $XX. a think good have filter, to just is had I number at Prestige, We’ve ago, a are but well. a glow The that grail weeks compare

it item. the incredible on And price seen to $XX. product compares e.l.f. Prestige to response but So iconic higher that we’ve range,

those. the of getting we’re are more of shades and on stock currently stock fact, In out four

made our much really strategy to going process. terms really the skin we we going to year. to our as the items, feel very in strong And well about holiday, program the core holidays of year, year. the plans holy these against as have core container to holiday overall the Last pipeline, And picked in I as value a consumer product strategy We last our say imbalance, continue so is to choice and I demand have the of well. good have grails forward. then strategy similar we’re smaller as also That because margin And e.l.f. cosmetics e.l.f. us brands. The amongst items. great core continue prioritize really that focus served to well our saw this up continuing to consumption everyday meet would

base great have sense far existing as consumers now of much of sort sort customers Great, interesting more finding items your some a thanks. the trading able value as premium price to customer maybe is on a finding And you do point being opposed of your not digit there? value reach follow into Prestige products how then up really double your and up, in price the the just product some, points some product your of of as because and to trading some of

a Yes, combination of we have both.

prime on in to $XX. few franchise. the Immediately of the definitely seeing products. normally priced at perhaps of then our $X, broader point new consumer would entering attracted Prestige a the I We gives So on users to point prices are in a brought a a for brand side, prices from anyone trying on a consumers And we that. we the strategy, e.l.f. good of Halo up two e.l.f. lower our where unchanged enters the example our products. new it comparison equivalent into thirds transportation the so even opening costs, look SKU And assortment do they filter not think given entry quite $X users pricing elfcosmetics.com Prestige see items, once franchise, took at The kept we’re items, price in liquid the that made Glow a is into our being franchise. it

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

[Indiscernible] Skin. on e.l.f morning Thank you My you. Good question everybody. is for

talk a the a into Just the little brand graduating that about learnings new category. bit you’ve had

second I years? course packaging, changes you of couple skin merchandising help Thank on for of the QX? but opportunity into for my you set in fiscal question the Could what over amount mentioned to the for is in you. from you and some expense that that square the QX next of shifted Mandy, quarter. the just think you marketing up And envision us the

Sure.

So hi, huge Steph. e.l.f. skin, opportunity. a see we

you in know, consumption skin. bigger category that X%. As skincare track than is global and in versus the skin up color was In global we’re quarter in cosmetics, was XX% our up channels, a winning

In terms growth, seeing the down it two we’re to of really comes where sources.

is being But attracting consumers new cosmetics e.l.f. current our are in first skin, on consumers. XX% second baskets we’re e.l.f. built the really definitely to The is e.l.f. them of seeing trying interested skin. the franchise.

on grails color holy skin e.l.f. just on have e.l.f. cosmetics. like do We we

skincare retails one which hydration fact, top the for $XX our cleansing our for balm, selling item a holy was grails our of In of prestige equivalent holy quarter compares $XX. to

particularly the say see So of skin in model is working cosmetics. same level we difference I I’m excited about would had we color we’ve working is in very The do. education much can what the that

awareness on advertising We this skincare. time in formulations our ability on that for first put building have dermatologist to e.l.f. cleaned quarter the digital are developed

how the don’t that future. disclosed I then think a continual pipeline terms formula holy grails good big get, And it us with of for think along about in it’s excited I the future think I prospects can it for of that. the pretty we’ve has me

elfcosmetics.com about yet proxy X% we to is the channels at closer best our XX%. Amazon have in think is and skins online track of consumption I e.l.f.

runway we So lot CMO run that we still of have any a out a by before means.

question And on your that to answer marketing.

XX% little So lower from target we’re I Obviously to to the But year target guidance digital for range. that bit that XX%. to continue would the QX, I that perspective. year the XX% and than us range give we to in still the marketing would say a XX% on a

ahead. next question [Indiscernible] with comes go from Cowen. Our Please

promotional Thanks taking to execution strong within school to into and on speak my congrats your environment category? question quarter. my and retail strategy call for you question on the or the back going season. One the Could

competitors. is Sure, so many than our different our strategy quite of

in value are day, shelf. every We great on

on do. our not competitors we rely level that So of do the promotions of many

our fact, we have. of brand, that them not so like single them ask offer retail. have do at full And value great funds do In We trade day. when the even we even every promote many to we feel retailers

is model the fundamentally So different.

as through consecutive growth. of sales I quarters think XX well has it served net

back really presentation us to school, value I back haven’t promotion of said, matter of think years results and school. good But terms that store much like level a I we’re I back In this on that as for higher seen we promotion on seeing school. in our necessarily as to offer. everyday doesn’t to to

the for you additional thank Great, color.

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

at just in that you this? Just any you are that by momentum just all? Yes, are consumption hi affecting much inventory growth really that retailers, I not being Is I frankly. this But to your quite with know think on to what you question. the so reductions many we’re front? you’re check Target about hearing answer seeing issues having I want seeing Or this Wal-Mart, on

been consumption for has strong our Linda, long Hi, a time. very

have challenge we in biggest we’re making staying that the is stock. So sure

and what heard of sure haven’t stock. have much So the our terms strong into in that played given we as making in inventory momentum etc we reductions, much stay of just we’ve business

versus And from the different is some does in category, Also, color then in X% overall just for really your anomaly difference there XX%. Thanks. it’s categories versus stand of for the out that or consumption, brand? that not you’re case well. the skin your Is versus the the as store therefore, that the about percentage the when you talk the disparity, online, consumption,

map for versus know distribution But I data. not in for I have from where we we retail the category numbers, think We have retail full our don’t I’m anomaly with as when Yes skincare really overall familiar those we will standpoint, line. more as just are a And I stand it. it that’s us. that our migrating us, naturally as be would as have the much consumers online, the be to we available, in don’t assortment just of difference online. are having do

than you talk of when of finally, just those five I’m categories do that to would kind then your sixth about get XX% on more strategically, Thanks. you investment? wondering core are think sales, on is Or these And that your five have that that you core spending, with you list? strategies and a like in focusing the best return your

the really continued Well, many love with as is two products to grail innovation. have have of to one follow build that categories in. position in as these up would we’d then say the and segments, holy to we those possible the followed each number or I strategy

is on was we primers have was our item leadership in. innovation. So primer, $XX. We that incredible that that laurels market prestige years with the to up clear categories journey that of we compared could many one started additional that But such rested $X have our that we follow ago an with with Poreless, product.

continue build We Poreless our shear primers. Power Putty up and Poreless our Primer Putty Grip So Primers. Primer our with to followed

core concealers brushes, our had other innovation continual in in this brows, very categories. categories sponges. and This leadership was factor of same you’ve so those true And key

categories. bigger other prospecting are We

apply and still can categories, So to we we making but some our we’re making of progress top feel and share into is color moves a more cosmetics, that small, mascaras, same as position two bigger is within skincare. push there, doing we’re just foundations; our model other to recent categories the

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

this, Delta, multiple financial troubles methodical, if know over retail Target said at but at Clover, expanded core, it’s you’re space and or some I I or it quickly, of Thanks. certain large of I have of or up the of an not looking then or different kind be if mean, opens it’s you’re into expanding, when think Good next the if it push really afternoon. also I swaths year, retailers, bankruptcy didn’t the as it’s alternative you’re space starting retailers missed apologize if channels. more distribution but didn’t that know and kind more if, new players space Wal-Mart, traditional be you to expansion I

would of up Bill, I open that other often say, the financial for players troubles opportunities us. So

So about a particular I think opportunity. the extent an it of brand, retailers is worried certainly

On financially core perhaps get we’d like in the shining hand, but that is struggling every to welcome. our consumer better on in be is competitor, the of dependent through. better I’d it competitor good competitor or a which interests another in probably as well, extent more do our formula say other every, it to category the can We’d brings they the value us. space equation comes whether less been that’s we’re more not, And Historically, retailer. actually terms for what delivering because

opening space. of up space that where with in is our and the consumer it nature is right more for And year. the terms from profile so And strong door productivity, both now, each we varies stand that position, innovation in coming really then

we relatively particularly in now penetration Target, at much I excited right about and even particular, so Beauty that this Historically, were stronger think Ulta low a drug. had and Superdrug. CVS have I’m And going expansion stronger, on Wal-Mart, we within the

start an that well. us then door expanding the SoulCare within Keys the that’s for the with I gives better they think us, we opportunity to have. that opportunity drug other retailers as just So counts a extent number alternate massive given of And

subset we’re as And taking brand. and of to into we an Soulcare standard continue other about brand PEOPLE. a that similarly last of beauty Target feel that expand of retailers that distribution to expanding at was WXLL care We WXLL into making we that opening clean So PEOPLE progress, highest about quarter, expand that opportunity gives Canada we clean lot the also well. us talked Keys as want then beauty, talked with on there’s looked first Sephora, entry retailers our Ulta to brand, a and doors. within

on No, of but that’s your gross may if the of sorry, covered down just again, just relief any remind what I’m back one, tariffs and can helpful. us go kind the you’ve then if and road? and happen, this, And margin there’s you impact

I’ll take Sure, Bill, that.

of rest talked and it half XXXX that. gross our have The we about of carrying So margin, points basis and sits of tariffs about and is cost costs. transportation FX roughly headwinds in

that a happen And tailwind flow to But be would adjusted margin what’s it a margins, standpoint. we margin portion and there. back about as sort of to a we to EBITDA EBITDA for from tell of us would too going our so roll early through talked gross certainly

if hear We are waiting that’s or not. to to still going roll back

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

question. afternoon. for Good Thanks taking my

So margins. on first, gross first

I why margin more expectations. what you versus get versus some you’d know FX year. prior QX? Because also this margin would So decelerate gains But think sometime was your benefits in later curious saw gross gross just raise I you I the outlook

Yes.

So that freight still up we nature. have But we largest year really margin. were gross pleased pricing, outlook flat our costs, get transportation basis from to taken saw help up would the to gross for slightly did margin, we cost XXX to up. quarter, previously things points where In from pressure was say at we’re the the ocean versus I benefits of

pleased how we gross want approach we that year, margin, take given And see QX. the the shape wait prudent a see to really things to out the that year, it’s early for but and so our in this in performance had to

maybe then up one just question. follow And

at your was your quarters. in U.S. retailers, changes retailers you’ve different you’re recent if trends So seen versus seeing any as I you in curious just what at look

that have I Our a I reported quite on them. been bright be But in for beauty of some context retailers think know And the to strong. performance. even their overall continues spot consumption of has the

particularly them. well-positioned feel And within for bright So spot a we’re those each is retailers. beauty of I

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

Wanted Mandy everyone. last up to first a follow ask Afternoon, the quickly to question.

there to worse you’re are XQ? costs in So and that anticipating be fiscal XQ fiscal

the year, to the Yes, to felt call as we’re year. from forecast want how in we is expect quarter of be standpoint, those so facing, again, see of that’s those We year. come to for the year the to the is early continue to continue about transportation elevated that going margin projected gross materialize a which cost in. be think to pressures balance I prior why the to balance too for one to flat how we

we’ve why taken that’s So that approach.

would sequentially that you hurting if incremental June versus allocating and the of to more asking go be meaning is skincare the talking bit skincare the incremental constraints how just getting like in space a versus obviously the that’s space guess more makeup little quarter the versus curious to a but to sales had much I’m business some section. you’re an seasonality to skincare going secondly, December that in overall flat in be about skincare the you section are then that that up in not opportunity roughly dollars a quarter anticipated of skincare versus entire the about I data March broadly business potentially the And quarter.

So any sort of color there would be helpful.

Good.

quarters in some our the of as Mark some I look skincare consumption actually June typically a strong. isn’t as in if quarter-to-quarter So overall other skincare. big seasonality is trends take quite There at quarter

in We get about distributed. channels I conception X%. innovation mentioned, would versus more space constraint. the Certainly say So broadly feel skincare to would more has as a great I our been more a we like assortment on of category at our XX% of fact,

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

questions Thanks the Hi, afternoon. and quarter. for good the on congrats taking

more prestige be on like have Thank you to a further coming gains any provide from mentioning. the mass down market just coming helpful? here push people share can age on coming the trading you’ve that I’d on from it been And How certain people little brands? thoughts Do would Just where really bit you. any color other levels? is or much from just income So from is you any over coming are versus you these color category from? groups

Korean first in gains share all, tract Yes, mass so universe. of market Nielsen the are the

down think take mean, good share. to magnitude game Nielsen you terms in category But top in over the who’s can are it’s record you’ve other think I’m of the those are, pretty terms share So market years five, of And had it broad years. trade and And from. three track row I Nielsen. I that’s share our prestige. tracked array we gaining share mass of last in look three then aware gains that yourself of have. from share, share seen We’ve brands that any include that a losing we’re brand the taking of the only a competitors gaining I share in the not of The are at consistent a cosmetics what from in pretty the where pretty by would this with gains who’s

And bring certainly, that where see not they so we point trading before in the we’re Ulta few on to an franchise that then from in prestige, the prestige But mass. universe we both of into we’re has the you’re new and channel data. there’s can on Beauty, a part track from elfcosmetics.com. which players when were the And also channel going of quite see terms buying it and track in is consumers, what in not

in data, get terms there see we the as some of consumer well our retailers. insights from some as so we both And what of own

mass what value allow or share do equation both So mass someone I than from able our continue for us us can much the prestige up and from to be then prestige. the great to is side a think we’re the grails in holy pick get offer news in arenas plays proposition value and in better really to competitors,

of you. a know, Thank part story then small lastly, of business, the international, still That’s helpful. a I here. it’s part the on big And but growth fairly

in with part should O-U.S. So the saw geographic the Should going level the thinking over are between year? U.S. mix about of this last the year? And growth you. I’m just about expect and overseas, on years? then Thank International and similar be years, we to the business we how curious everything we coming macro environment, what you over thinking how the couple next in

XX%. and grew So been has QX, really business In our growth international strong our international.

I overall up been position of where now Canada, pick that two more mentioned, we’re countries And main on which our and backs has to above number we’re the space. primarily continuing brand growth So rates. seven the the UK,

both our QX So a within lot of International growth I last and That’s the see Canada in more sales. about year. UK, up XX% represented from primary in countries about two international. XX%

Europe markets. mainly of but up go. opportunity still our I in to main percentage, greater a picking the then have really open other are we And is Western deal way us long is retail think have So think we we approach approach digitally great think in to is Western UK. SilkAir, done I both Europe probably a disciplined presence right Sookie I we’ve to Europe. the just Western focus there same and our in countries with And more rollout combining to the with as partner do going strength first can be the being are finding you the many a Canada

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

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

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

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