e.l.f. Beauty (ELF) 1 Feb 222023 Q3 Earnings call transcript

Thank you for joining us today to discuss e.l.f. Beauty's third quarter fiscal '23 results. I'm KC Katten, Vice President of Corporate Development and 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

most reconciliations measure. GAAP contains release between earnings comparable the differences the directly non-GAAP Our of presentation and the

to let Tarang. webcast me that, With over turn the

our ahead of We and will you, sales increased delivered results KC, grew We afternoon, gross growth. up XX%, good in raised points the million for quarter basis and QX Thank EBITDA, expectations. of outlook adjusted XXX our everyone. Today, net our net discuss delivered $XX drivers we marked QX by XX%. of and fiscal margin sales QX by 'XX. consecutive results our well XXth

our momentum, we're our Given raising year full guidance.

the are by seeing the continued strength are we category. color across We cosmetics encouraged

Cosmetics year #X trends category channels. our QX, In XXX to XX% market the in increased rank ago. #X share compared category, basis We to e.l.f. grew significantly as brand tracked grew our by year versus a outperform the and growing points a ago. continued X% to

a be top to the We continue five wide brand fastest-growing by margin.

care, SKIN category a also In growing versus skin in e.l.f. QX channels. tracked trends significantly ago. category, year X% grew XX% outperformed the

key last our I marketing a company, for want disruptive drivers, into our growth has year, power e.l.f. engine. the diving been highlights. and Before brands to of In the share few celebrated

by Midsized Beauty in America's named continue annual humbled recognized In by we receive. the Womenswear Brand Companies. were Best on and the are of recognition Forbes' of we Year list Daily to We the mass category QX,

recognized beauty one values be our results to of is create to we as a continue driven. that both company, different and kind and purpose-led strive purpose We for

nearly to only our Board X,XXX Directors, public commitment companies Gal of we women least inclusion. of to of diversity two-thirds one-third one Board our out four proud and that's and to at underscoring With be the of with appointment Tate diverse, are a

of drivers a disruptive our to fuel our powerhouse fundamental engine. The continue value our innovation proposition, business and marketing results,

how explain of underpinned QX. me each our these in strength Let drivers

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

We take the inspiration mass. whether best in We often at and questions prices. high-quality from to holy from products our within our attributed deliver be community growth prestige from extraordinary prestige trade trade or can down get to grails

is creates see each, we point accessibility, While value our the fundamental of driving proposition benefits category more that expansion. we believe

where a the the have category. holy grail We who many examples innovation accessibility particular participate consumers of in expanded of our number significantly

I'll became few inspiration primer new years took unique Twist start a top and e.l.f. price launched with this format from point A $XX a introduced a a We prestige Primer. at that primer ago, quickly added prestige. in item, primers. brand own Putty our

Primer of Our the much price significantly into invited point $X expanding wider consumers range Putty the entire of a category. space,

Prestige primer to over have fact, year, and at both units nine item the a and pace. over the the In sold last continued times data of e.l.f. units looking double-digit Prestige the we've at grow

the also CamoConcealer ability of in accessible, $XX. our the compared of e.l.f.'s Prestige concealer beauty see of not at launch the expanded the we best to It's make comparison with of where just benefits category we $X, primers to the

double-digit double with year, the Camo sold of we've units at Prestige Prestige both nearly a and units pace. the last the product growing our the Concealers Over comparison

we best our the category the great of new category expanded e.l.f. both whole making consumers for looking who cases, beauty expanding category of bigger. making by and both attracting are accessible, the By value. high-quality a products share are the In at

are in of driver performance second that we our innovation is The an powerhouse.

time. over leadership has Our category innovation engine built

brushes, largest Cosmetics brows, collectively sales. setting shadow, make of half Our sprays, e.l.f. and eye up concealers segments over sponges primers,

continue gain position seven within or segments all each. the #X while #X maintaining share in to We

We how across know to build winning categories. franchises

Our of multiyear our growing share is key Camo our in segments. driving are Putty how leadership franchises innovation great Primer examples and

Grip launched a is more Our $XX, recent incredible franchise prestige an XXXX in our Power late primer Power $XX. value recent We example. of to the compared at at Grip item

and #X SKU Nielsen. market top group according the In XXXX, across to e.l.f.’s was entire across is according U.S. coupled to NPD cosmetics our cosmetics primers. in Power the entire multi-year the innovation SKU Power our market with face SKU selling primer the mass U.S. Grip prestige the Group, #X also

now in markets. primer both the the the mass e.l.f. face #X prestige in category holds position and

upon At the building Primer community's for niacinamide. delivers with this point, recent of X% with launch on are the Grip same skin our our with desire success benefits. product Power We price makeup hybrid care $XX our

be wear grips niacinamide has texture skin. franchise. highly Power Group expanding sticky further up out The helps brighten X% the while make to This item a for incremental, long-lasting in our proven even

We currently also are under-index share. areas in we on innovating where

with spring Our great roll lift a In nothing with for to Face a we and to lashes finish and comfortable for long-lasting separate a curling squalane a lash double-sided we eye-opening is hydrating Lipstick infused feel. esters launched super satiny mega jojoba next silicon lip, In our Mascara, that include a launched delivers and effect. examples. an brush creamy launches mascara a with unique XXXX O few mascara, Satin and bold and cursed color

care, our In of launched powerful Youth appearance Skin retinoid smooth Retinoid sunscreen face radiant primer and reduces a a SPF wrinkles Night doubles Whoa we finish. to our that glowing Advanced with Glow XX, launched lightweight skin leaves over Serum, the Boosting that also rejuvenated, lines makeup a and the time reveal Suntouchable fine skin. we skin Care, and

share the X% share As compared and we care. approximately in category, skin to X% the have we a mascara, cosmetics across lip have

is over a mass. mascara a care $XXX skin largest is $X the within billion within context, category billion category lip and color category For is million and segment $X.X nearly cosmetics,

beauty large We have to in conquest segments of innovation engine the them. significant white space and these

to informed with performance from of The first-of-its-kind a driver to marketing. with the attract third with across Radiance Liquid the weather kicked delivered an and e.l.f.ing our brought award-winning digital consumers storm, the ability report Grammy of of engage our Filter. a Trainer. channels and channel the our special insights glow by news restock holidays social sensation break off our Glow celebrating life Megan the to campaign Halo disruptive We viral is Megan

audience Weather and and the impressions, over Trainer five a wide e.l.f., of Channel trifecta year's by our last campaign The press help entertain campaign margin. reach holiday community. us The new billion generated Megan exceeding

giving ROI exceptional and sales completed recently from expect marketing Nielsen We profitable to mix three our the and our marketing analysis us demand net and X% that again initiatives past to years, continue increased confidence high further to we've marketing the XX% digital for delivering are marketing Over growth. our of range ourXX% driving annual near saw results, 'XX. end and fiscal brand investment of XX%

We of and expect our to innovation disruptive results. proposition, engine to these three our drivers fuel value marketing performance, continue our powerhouse

share. as Looking the we of e.l.f. unlocking category are we the brand. still runway beyond believe KPI, a #Xcosmetics we we the of 'XX, fiscal Nationally, for share lot Taking X% in the we're for potential early growth. with one see a see brand full innings

Target and and of with partner, number we're that other our The retailers. share ahead have time. national mirror continue share we we In Target national take entered XXXX, other that major brand. share. become Target, of XX% to to in is brand the our longest-standing at significance We years believe believe #X our a Target, at still retail retailers over even at #X position position opportunities our a of that target at could And we the

On we for discussed spring expansion the our Target QX space we've with call, earned XXXX.

a customers, opportunity footprint for and growth. expand we see As drive significant to we continue productivity our across

internationally. is also expanded Drug space see at Mart Superdrug and in room more there grow. space the We've and We to Shopper's considerable still white in UK. Canada recently

represented our QX, growing Beauty the in and behind strong disciplined e.l.f. expansion year-over-year. UK. nearly with XX% International strategy XX% our Canada seeing of the results business sales We're approximately in

#X out penetrate position We markets. in Canada #X to of team As recently International brand further we're in build that and GM a UK. international U.S., the hired compared to our brand in and new the the to plan the #X

over e.l.f., trade points with price to superpowers, overall foundation our Before for advantage. that discuss which the and at brand call appeal certified. consumers to want can fair With have free, I cruelty accessible Mandy, products clean I the broad premium competitive set turn are beauty quality vegan,

expanding While forms superpowers these, 'XX the in other moat and our and competitive any to beauty our one replicate brands combination win can try fuels ability unique of our we fiscal beyond. of to believe

now to the Mandy. I'll call turn over

you, Tarang. Thank

consumption the and well trends CVS broad-based pipeline international and net were grew in our sales as Liquid XX% XXXX commerce. sensation of Our quarter as Shipments digital exceeded as space spring results shipments across third Halo gains to Target, Shoppers Mart, quarter strength Glow due QX Drug as retailers, shipments national year-over-year, driven this for by our restock well viral Filter. to related Walmart, increased outstanding.

opportunity trends as us We our Squad our total XX% strategy year-over-year. a of further increase Beauty penetration, enhance digital up QX consumption drove able see digitally-led digital were to Our QX, channels ago. to continues as XX% to in serve over program. loyalty Digital XX% year well. compared consumption particularly we're to our

Beauty XX% million growing enrollment members Squad with has over X.X nearly now year-over-year.

rates order values, our of a are frequently, purchase drive rich and of data. higher Our stronger sales loyalty more first-party have almost have XX% retention members elfcosmetics.com average source on

mix Gross margin We the impact and margin implemented realized XXX accretive margin more margin up expansion adjustments to points, quarter. savings. space of benefits These associated inventory and last than the benefits with prior gross compared in saw year. price offset costs XX% cost the increases gross approximately of basis from March, was

compared a percentage top-line our year. adjusted expenses trends. non-marketing of last was SG&A leverage of result in as to sales SG&A an basis, as XX%, On XX% We our drove a better-than-expected

the of quarter digital XX% XX% approximately was sales, year. for last and to in Marketing investment compared QX as net

to to above expected range. We at our be investment digital XX% year QX high and with range full for XX% of the end expect continue well to that marketing the

up year versus XX% of $XX adjusted $XX share compared income net was was to net ago. was or QX a $X.XX sales. million, adjusted EBITDA margin diluted $XX or year share, and XX% $X.XX million last approximately Adjusted per per EBITDA diluted million

flow. the cash and balance to sheet Moving

with hand long-term ended of balance sheet $XX $XX quarter positions we Our a us plans. well to growth million our ago. cash balance We the cash in compared year a strong to million on and remains execute believe

million, was Our ending compared inventory year to ago. a $XX $XXmillion balance

over confident year-to-date XX% of Our we've were I'm approximately free cash customer to consumer seeing. we're ability generation meet seen flow strong also strong and demand rates the we remain pleased million. average with in in-stock QX our $XX the in

down quarter, of QX to outstanding $XX paid approximately rising As rate last we response million in our in we environment. the previewed interest debt

leverage Xx basis. than a less with quarter the net ended we debt on position, cash strong our Given

We expect year our supporting cash our priorities investing remain initiatives to behind on extensions. the growth and for strategic

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

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

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

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

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

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

our XX% you 'XX. our growth, strong we're QX, for our ongoing and provide the outlook QX consumption assumptions performance fiscal with seeing. additional reflects our momentum. trends approximately top net color raised outlook sales business strong reflecting Let XX% with planning In to on line, implies me Starting

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

margin for to we of In relative and than the with terms costs puts March cost takes margin mix and key the space offset improvement the savings higher year, price increases of accretive of year. expect gains and gross implemented impact the prior in to transportation from more year, associated last cost

EBITDA. adjusted to now Turning

top to XX% adjusted implies prior up XX% from and outlook to on approximately growth in of XX% growth previously fiscal'XX. of the XX% year, XX% strong approximately Our EBITDA versus

and our marketing expect ago. to year top the be up our XX% XX% to We XX% end digital spend at range, of from a

outlook in previously. combination improved the basis approximately SG&A our margin investment, expansion increased by approximately of supported basis points growth, non-marketing to is that with points strong sales year-over-year expenses. gross our compared EBITDA leverage adjusted leverage XXX as margin and The of XX implies outlook Even our

Overall, in profitability meaningfully to we environment. position to what a are to sales be be quite both outlook raise pleased and a in dynamic continues our

potential. results our QX long-term remain with outstanding and growth In our summary, upbeat we're on pleased

discussed, EBITDA support Tarang The across to further me ability expected to top-line care, cosmetics gives significant both cost adjusted in easing our confidence continue our we and our margins. As to and see environment growth. skin domestically continue white internationally expand to space

leverage our Finally, continue and flow solid cash our believe support we to balance drive can generation shareholder and sheet, overall low returns strong growth.

With questions. that, to the open call you may operator,

Instructions] [Operator

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

Good afternoon. guys. Hey

Good afternoon.

very clearly, is implied in growth fiscal very top-line normally sequentially with also you're guidance which forward robust, So strong and growth quarter, revenue your the even forward guidance. accelerated QX very conservative though

So, I can short you revenue the driving higher growth guess, on an much range us term? just in update give the what's confidence

particularly out And are maybe you the next you very through strong obviously, just there? on run Can then the are which you obviously or how share they look question, year results. longer very And sustainable focusing two, similar was term, market drivers key Thanks. in e-com, quarter? strong the what think as

All Sure. right.

with first on top-line start and question the gives strong what us your I'll So there. growth

an category better, have has we the performed with certainly, quarter as now consumers continues into and then innovation just we talked want momentum the really our to seeing. reflect for And our our call, gotten our year, of As engage last resonate to the consumers. giving the we're that ability the on to outlook

of share with retailers of ahead market get have number just talked did Glow the start about Megan a to white where us. – our target and the on and us gives to opportunities QX. combination a with with talked them and opportunity the we our that gave that about into And us what comparing we really today head Tarang confidence, we then broadly I'll the versus marketing our with confidence Halo that that We existing give that term as we example and activation longer that of we space level. innovation Trainer have

subcategories but about space there sales out e.l.f. And the in more as that the our then the potential across road mascara, We a is on much for that this road opportunity ahead. we talk we big big as we say, a about care being international SKIN also us. It white quarter, ahead. talked of XX% I would lips, opportunity was that on than skin called know

is the things there that give So ahead. us number on a confidence road of

now off. in relative year for XX% digital, our business. And digital Dara. We're I'd business and a real add of up XX% question to are It we've penetration your to last the seeing lot that, was on to digital over momentum definitely been XX% the our paying quarter, investments making in

now penetrating X.X Our e-commerce investment lot a of our Squad Program a as XX% in digital lot Beauty our Loyalty other have million over channels. drives really of investments results members with year-over-year

further. so strong with is a that strength business very retailer.com hope to continue to our Amazon. have see and penetration We drive digital even We real at

Great. Thanks.

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

Thanks. Great.

on great congrats First, outlook. a and quarter

You've late. obviously distribution of of had a number wins significant

that. help run the this have how you So you lead more that business my Does what to times? differently require To is extent around it question quarter? to support

you your have around If obviously, as could help shelf early of rates the growth, gap sales I around and us is ability one scanner. Maybe China production my And is on of any COVID insights to a the torrid be you just just production then in, later between challenge. keep since the based space in to seeing question your that if of more given sneak and up much somewhat we're pace and discussions incremental year. this have could bridge infection

stay what of so that much. ahead doing to Thanks So of you're well? sort as

Olivia, Hi, Tarang. Sure. it's

a up the space. is, more take at pretty been I being of look and over say of gains able pretty track a good pick years, consistent we've consistent. I'd space last If to record the had contribution what So few it's

to I'm more not highly of also space, that pick confident So our continue space. optimize to ability up only but

or us do not, really and able And first driver we're be how to have more I good business. to Our key on is our think that. space we focus somebody foremost gives whether being productivity terms in always of cadence the that of a the going

in customers few a quite up taking spring have reset. We space the

Those starting are just now.

are of our May a now. lot we'll team right those to CVS, a lot resets Shoppers, a have Walmart, we between that that. of confidence is better our in I've when Target, doing So view how But Drug, there have call. executing got our ability team's is execute

in will the about into I productivity record then have, terms We'll the achieve I think other good space our we're think time. our those them able over And feel highlight of I we profile, opportunities, to incremental future. brand, really the opportunities. there the be innovation But given consumer track again, as of

recent it the production terms of to optimize team. that and ability in proud particularly of that's your then question, one get our Particularly, we I'm years, space more as area in

operations the all Our the the If able lockdowns supply to consumer I meet back last China, demand quarter. done in seen has chain job. a the team been we've phenomenal go the in way strong disruptions, we've to pandemic, even all

I speaks growth meet levels XX%, in-stock to quarter, Our remained think demand. even a ability above which XX% our that to

so feel production good about I our capacity. really And overall and

Now stocks kind time even spent a Halo success sensations. we out every last of forecast on time there certain greater sales. up, Glow. lot like It be of of chasing will we some saw seemed took year viral the that this of We

the not the it's primer the talked but #X to our across about only Power Primer, entire SKU SKU, #X the important only category. in We prestige. but our also note, Grip #X primer mass, then in which #X is And not it's

I be we're that to chasing. item also an that's going So think

of we we're remain seeing. overall, the have looking they ability highly chase, that confident new periodic will items some be that meet terms in to but our to So demand we'll

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

exactly in able with described you're question, even what how Putty keep you My and past. Primer to and Halo you. Tarang, the Glow and is Power Grip just Thank Poreless up

just giving more bit little – So in ability of a to in-stocks have details us of and your on forward? terms like going perhaps, the execution how

to lot three out, the space, cadence set like the of up, and related can congrats that numbers. have that subcategories, if of go idea wondering And a so new we only as again pointed of an not then that, new shelf 'XX these and us white And on and carry you as Thank resets the you mascaras give shape? products? lip you those of how cadence you the will fiscal will into skin, most

I'd the terms able to the how one retailers on supply on a Again, say such more team Andrea. our in Thanks, in-stock each bit we of our national first with we penetration credit are levels. chains. of high detail it's maintain have to and

plan that a Our highlight going inventory ability kicking off then items position to stronger are feel those to with and we them be able take to be to on items.

inventory was some up ago levels we years a of of us did anticipation It couple imbalances the our and that strategy in take container that served of well.

when bit really We SKU store level, our credibility be us level what for the terms orders have a tell quite a them, place customers at carrying. they down to almost of of to with in they should

So our good I about that. to manage feel ability

to we be and given I As always But I overall, of the ability brand those. overall feel to items plans that viral about periods execute nature our good about have will production – great are feel upon continue there really this said, we chasing. where

of have to Lipstick at and a the space, in I mascara, value. Lip, great off each white say, is white terms mascara, Face in good our product start. would mentioned phenomenal In is those space in really of the great Satin lash which categories. We our innovation O this a feel about roll then I we And

those I are SKU also I against our And skin as out Suntouchables second our already only quite And bit look pipeline in the a care then best-selling of already care, Glow XX, is categories gate. just were months SPF Whoa segments, conquesting. leadership few a I think, skin but see in also our not forward,

leadership innovation only new hopes our drive very conquest segments to the high in about but categories. also So have, to be able continue we not these

recruiting Is have is we particular I those I super I your can because the you in – helpful of would explore consumers are I this can be some any in the really data say, if keeping engaged. from Squad not that metric listen, presentation. and Beauty glow, and understood there those only that understand XX% you And think,

many also these e.l.f. premium And you especially, recruit Kory people just even new in right? products, And times, recruiting who but I are the think that had said new immediately not customers, category.

can cohort you there us for is your help platform base? that even So, with inform new additional the or if is there the direct-to-consumer any on you're e-commerce customers understand Beauty a your that metric in Squad getting potential us

Sure.

on growth XX% and biggest we from to But So innovation see coming new Beauty have the about talked the we expand engine. attract obviously Squad combination the on our continue Squad. base in magnet consumers Beauty I probably, members, Beauty of to marketing new is Squad, consumers. that growth a we our and

I and consumers particularly, comparisons. talked Our just innovation, see the Liquid these just a about, that other we They viral Halo talked their see about, TikTok, franchise. significant new these core attract doing Grip, innovations new prices all think talking all to of this platforms prestige kind demonstrations own of buzz. I people like the I all Filter, with Glow, consumers about the And number those get Power and ones quality, of days great they

often also a in what XX%. more well. a percent it's source. our so, great consumers look Gen increasingly The but combination the users And is, than it's metric behind up there of new product Gen And of amongst we and at and each X Z, those then strength we been millennials composition pulling specifically as are amongst is

we the at our really more to think consumers ability are of our have I to prices quality them products even So attracting engage and the these franchise.

it pass on. I’ll you. Thank

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

progress Keys their just Hi, and thank their share brands, your talk how other maybe coming Can Alicia is you the areas? WXLL respective about and you. in PEOPLE,

PEOPLE and Keys both about good feel we so Linda, Soulcare. our WXLL progress Hi, on Sure.

Keys trial only a two in created relatively of the acquired PEOPLE, As we we a and years of main four portfolio. both building ago. new years is really awareness WXLL both little than ago. focus our brands. our these And they're Soulcare, less up reminder,

During stock. the in. actually chasing we're serum. We're it's pestide It's out great Soulcare – we get had hit to Keys with another stock already that more our a quarter, on multi-benefit of item

And is so the consistent the brands good focus about I these there. term building our for and long progress feel

Thanks. And we'll – just in then talk I just cadence little can few year-over-year. the how transportation are next ask you and to transportation a those hear see was when costs down Can up of flow I still roughly that surprised quarters about start kind of cost the year-over-year? to comparisons being the

Sure.

and see we transportation start did within I'm hoping that that. we're holds. really Linda, So quarter, the sure costs ease that with pleased to

for we some those capitalize the turn inventory. As the our takes lower inventory know, it to costs you freight since with through time

think margin. so, gross And as we a cost as be coming tailwind about as quarters, we us the we and for certainly should think about it

Okay. Thank much. very you

of Our question Anna Bank America. go Please ahead. Lizzul next comes with from

thank and you great results. Hi, congratulations on the

you space driven at the benefits share much e.l.f. the increases the added if major by given Just of could shelf wondering and how your price I retailers? was SKIN mix, with of product expansion by growth driven was

how millennial innovation older of much overall would consumer SKIN your are more Thanks. then your products? terms allocate seeing you're in in outside seeing, to Z purchasing just the in cohorts? in you the And demographics of increase you Gen the growth benefit And typical an of that and e.l.f.

Yes. Hi, Anna.

our that and benefit we increases price and have price the about on top-line March about high to the mix, took first, last impact. we overall single-digit had So, that, that's increases talked the is

role kind took. that how up some that's you size that that, is price $XX at we this We've launched role. right? that is Mix also or playing innovation year a playing a increases can is specific that of the So in $XX range

we for breakout in both, color gross QX. From see. commentary see up of very a about price/mix net the category, Skin volume – XX% up both cosmetics the mix sales consumption pretty healthy seeing the skin X%. pleased skin and say, you'll and care the up this I and volume the we talked standpoint, are XX% quarter, price Q on across versus would how in margin. to in which So, a and X% versus care on being care call us category up side, our

pleased So about as our a reset skin That is is that we and a an will focus Whoa part be that for go our as with shelf Tarang part certainly care of how expansion opportunity of very a Glow. in. just talked growth. on sure our and continued performing shelf skincare well making

pleased very we're with that. So

And contributor then healthy has growth is pretty a to years. think sales about innovation I overall, and innovation, if over our been several last consistent these

we So that We coming. innovation and care highlighted lip that's Mascara excited in the about great and feel skin about. we're really innovation in the

international and pleased balance standpoint, about digital. We've And so, about kind we it really as we think channel a the seeing well, core of with about products balance of growth, really talked as that innovation. seeing across across from we're all vectors and talked

Thanks much. very Great.

ahead. question Our Please from Anderson next Canaccord Genuity. go comes with Susan

quarter. the you sales And much Or marketing. any any in taking do going thoughts again? how is to think about have helped to also, drive base there my how question. level? about you curious give marketing bit accelerated the am you'll this color about little thoughts it if you're if increase can thanks a early the be for has XXXX thinking think for curious growth? new is then you around I you increase and just to the Hi, I on Great ask I'm if job or that marketing wanted

is, our been for there comfort comfortable us it gives back consumer is 'XX what ROI And year. with years. this we're yet to we analysis I've tell have we and this ready shows the in is, marketing FY ROI. exceptionally Nielsen high highly got annual the XX% recently marketing We're to XX Susan, you guidance space Tarang. what not give range XX% on would marketing, I but

Typically, when levels returns. you taken go seen up marketing had increase your have now marketing years levels, marketing up. and diminished we've consecutive actually we've you X the see where our case, a In our ROI

to to new but only speaks the engine The and that we not channel, Megan strength – the and and test it really audiences have it Trainer think platforms new I do allows which after the talked does about us support the on us. is we go we have. between we effective, weather And collaboration the by like marketing of things broaden

our feel profitable where definitely driving sales for great from and really marketing, I for gives us this year. analysis So it's and we're about confidence what us own

the are if ask looks Great. that guess the X%. year? And can I at It you we up then, be to just quarter? maybe inventory. would you And the how the as at lean thinking end replenishing of I expect about just end then pretty of the higher throughout about quarter, down go the

Yes, Susan.

quarter, would have service that So, feel our outperformance given than inventory about saw, we ability a our lighter to we for wanted we just great the bit but this little customers. probably

that So that that we to up seeing. with talked as the we're we we even levels inventory. support to seek about having over get we growth XX% as level expect inventory And towards do in-stock year-end, be go higher and

But also, items faster and have we're here take able about great get hand, have stocks innovation. now. we get right and onesie-twosie of out have the lead So, times point, may that are on really previously. products To to where Tarang's feeling behind we we off other on than on those improved,

great about feeling an are on inventory standpoint. again, So where we

sounds That good. color. the Thanks for Great.

Yes.

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

quarter. and Hi, the congrats good on afternoon, terrific everybody

you. Thank

margin am The to decline the the quarter be ones. a think, might drivers is Perhaps, the basis that? way? I sequential XXX what somewhat guidance, right in I fourth of quick points. – implies gross in of that And of about thinking that some Couple

Yes.

is pleased positioned margin our I So, gross with overall. am how really

XXX basis up cost environment, margin see. points fantastic gross rising which year-over-year to outlooking is a really are in We

of is into we observing gross QX you're to a QX, As lookout lower we what little seasonality see that bit of natural from a margin. QX

up as And QX then related we'll say, that costs on I there – gains space but little thing of to bit have We in really in that in other are through well. QX, layered flow related as QX will well. picked one-time some a would cost the

again, gross margin is higher where overall, above implied in margin, feel basis positioned. outlook is gross And also in QX, about what's Even so and our I year. on still impacting that the last XXX is points year but great

sense. am again, fiscal XXXX at thinking to from to know I upper for year-to-year, the I'm drivers and very brand past communicated color talk about but to ready long-term shot the innovation category think space shelf thoughts spending. together another maybe like 'XX of seems be very revenue you marketing of spring, it of kind above e.l.f. and high long-term It significant of of you're just and you And you've a a then helpful. makes that this kind the to what Any gains feels like algorithm the kind kind Very share guidance, but single-digit digital different robust new to the the of tailwinds triangulating going in That pipeline, strong Thanks, could back growth. Obviously, growth. year this. be mid- it relative I on Mandy. about algorithm take going all just that's algorithm? kind put to kind not and when

Yes.

fiscal guidance right, today. not So Jon. you're We're 'XX giving

for we stay for before that but lie of that's us. to about great tuned feel that, the opportunities space have still and You white ahead May us

we're them, but balanced a served level. with I've out growth would has to at I of see always but number so as now. have know. taken called us you continue where we're to that love pretty this feel and until well, May, feeling good like at But you'll wait right approach certainly, a You about guidance,

appreciate I it. Congrats, much. so Thanks again.

you. Thank

Our Helgans next from with Jefferies. ahead. comes Ashley go question Please

for Ashley. Hi, this on on the quarter. Congrats Sidney is

just kind or of seeing between more price first any are entry-level those customer who point difference the that in tier your you products. lower ask Are price products about shopping of to in point versus higher demographics higher I mix? the wanted So like price

cohorts. do But biggest Hi, into you you seeing I consumers trade We the Tarang. is Sidney, certainly within more are some some Gen X asked age is we say, strength seeing thing up millennials because from are question, often – our and would this Gen pick so mass. Z different I and this get difference. down, trade see do

As We're tier expand e.l.f. products. to these these our of grail think secret of holy prepared we products, talked is I the real higher-priced able remarks, some category. entire the sauce with in

By It Putty grown that had units Primer, more prestige So prestige Primer. Poreless I a – prestige on and $XX. still Putty we on I an the of item we've Poreless example introducing that gave was sell inspiration growing. think item Xx that item is

seen of same the business, the units doubled we've where We've more to prestige on a thing concealers. set than when iconic it concealer comes pretty our

our because is demographics. bigger a it and and just of a and when expand more what item, in but longer range that do ability really ages $XX. up think really definitely category consumers, afford that, will we no you entire anyone terms new $XX can I see But concept pick of you it's broader you a propels their few where to us So, saves bring who in accessible could to the

generation Gen next your point it term new helpful. of you on kind guys and and level color Gen kind next think always from a the high that's bit And innovation buzzy because like cosmetics rise they're is question long actually to with or you're of that skincare Yes, entry Alpha. about a seems then of and of upcoming Z, price like my great I more beginning trend, generation It brands. feels make and

in curious beginning have approach? consider So of to those if to of younger or if I just on was shoppers thoughts any kind you're them your marketing beginning you see any

things if early of platforms the Gen of look at appeal Z, with doing. is signs particularly they we're Gen frankly, lot different to marketing and we're the types definitely that There activities as resonance seeing absolutely, you So do Gen alpha as our just that that on we Sidney, alpha. a are to much of

on of to see these best be making that, but the the and continue beauty at you'll forefront and more some accessible. to – to of on it demographics So us them introducing there and come consumer new

more keeps dig great last marketing one, hear to that, ROI. Got then It's just that invest. one that little to on it. And bit in a just expanding, the you more

are seeing channels So that strong curious, I'm especially or any you're new on? there traction platforms

about channels. the our and vehicles That's ROIs. thing marketing see across We strength great

owned our to we earned across and our digital three of our And see So the our all then We're then certainly, paid influencer strong very them. off media. our also we charts. look ROIs see our advertising. on and tend work strength by media, seeing strong really on vehicle, ROIs We at PR is

almost test those learn the And our really to new every say, afraid about us I'd It's other not thing of is, platforms. and we're one buckets.

the and attract first of has was to early it TikTok. viral on almost the on goes to on ability one impact business be our our brands get see attribution on days, immediately able to beauty something were that. we TikTok, now hard In We So TikTok. can when it the

that that that that and So for you'll going and future definitely good balance things got a we've are between to great see the proven other there. things are continue have cadence testing we we

Thank great. you That’s so much.

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

afternoon. on for question and my taking a Good Thanks congrats quarter. also great

I guess ask on trends. the So wanted just to I

well trends quarter as provide then can the into and you some anything maybe of share during So in of the color January? cadence terms

trends business we what we the seeing to would closer we strengthen Cyber of saw strong e-commerce continuation strong great throughout had holiday Monday a Right really it year-over-year I channels was our a with acceleration track and really to really so the Yes, now, we're trends period, as growth. got that in say see. quarter. that

those end that we're really mid-February, is the you given the cycling in from that see about And continue some doesn't and think our of you're that numbers through our bullishness suppressed seeing so indices in have strong, base, to in omicron I the be December And there diminish right now now. tracked on that performance. our will really year and last base accelerated of what channels

end on demonstrates of right top how our quarter business guidance strongly can believe we perform our to really back you XX% the the for take now. I'll

Okay. this you to further the points. basis expand Great. expect XXX to do years? opportunities the year, What margins bigger coming forward then, in are going around And gross you expand see margins

Yes.

a if as tailwind those should transportation and talked about would head sustain little be for easing we we us a 'XX. cost into So bit fiscal – that

seen We as China, and well that majority standpoint. that we've thing is a could the from we're looking at source The on of other margin side. there, tailwind our from be as favorability products us for FX gross a a

from us comparison Great. next Maybe a know one is would year caution as perspective? look -- fiscal today, anything you're -- next you the and last providing guidance question, modeling at terms there of look just but much in to I not guys we for year

to 'XX for FY not now hard say it's guidance. providing mean I we're right us because

well, we're well again, the at any going balanced to big terms in and be red we'll don't consideration you've talk Mandy in view moment particularly flags takes so terms that. seen about, she bullishness veins this from think, that But see I in a very of call worried think it to better about us and but think the we're all on able balanced said factors. a taking it's this I always general I always business. be served I of

Great. Okay. Thank you.

ahead. go question Company. comes Cowen Chen Please with Oliver and next Our from

for those should pressure elasticity the have slowdown about you for How seen in thanks forward that the this going pricing. question increases call. year and we demand might Hi, price additionally, taking A where regard? my for in so demand be? think It's Tom and potential on on points Oliver. any And

Yes.

So on the I'll pricing. question take

major response a inflationary used then have touch portfolio. of years. pricing judiciously from we're in very in in all third the that March our have one our pricing portfolio really two-thirds operating environment and we pricing standpoint last we about to on took several last the where We of a related over where only to back increases: price about two We XXXX taken tariffs,

very to provide with quality seriously extraordinary Right now, pricing docket We not us again. take the an is our our and we'll to with consumers to take that. exceptional value for ability do on continue

it us. ahead. pass the go right Tarang. for question, pricing second I’ll docket And, not to on your now, So, On

the bullish mass yes. we've slowdown, of lot environments, on seen category. not What you on there's cosmetics, I'd long inflationary know in demand. or recessionary fared care really environments, mass skin there importantly, more but No, been recessionary the even On has a I is, but well – we've color concerns in out tell any historically, environment. slowdown

is the people suffer were a category behavior. from that when this pandemic And did during their really normal restricted

quarter, consumer demand masking that. up as we I've and compete, in our I stronger. we channels, in color lot which So X% growth a are cosmetics said, the for seeing up there's track much is felt even overall was the we care for pent-up long mean is mass and of categories very X%

the So seeing again, slowdown to go we we're category shapes consumer any feel, an how very bullish demand, I not of acceleration up and as terms forward. in of continue

Can of skin taking on the on where and just there a might share? quick the follow-up Thanks recent and success be care. drivers you color Great. you main add some

skin mean still in care. small we're I Yes.

think drivers taking we less very similar and fundamental share the business. drivers drivers to I color and about the where fundamental are on fundamental about we're more So have the the

proposition, accessible prestige an have quality incredible at price We points. value

have We meaningful the consumer. resonating that's with innovation

we've a our hydration dedicated will engage Halo, attract there. I look of our and launch It first good and quarters put holy returns care support only on at couple ago I our to from skin at recent how that If and seen look we was franchise, we've consumers. know

and a formula more with dedicated there. going focus a category in So similar to follow different education we're more

we there momentum of the is like quarters a and number we I have feel in now here sustained like a have momentum huge there. and for I But that opportunity

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

thinking model and sales thanks broad international with back you the Yeah, everyone. back-away question, data. of the away how more just the a are line about directionally if In follow-up one One top-line, scanner afternoon, question. – digital, to sort in

what international So, the in strong obviously, and of a digital is what lot referenced then not you seeing terms we're growth. of

over of standpoint, fared thinking terms positives as not should and we about, quarter or quarter, obviously here fourth has thinking Anything anything last couple business that modeling about we both the quarters there given negatives model? us there from how we that of in be just you've the be should but because a

just I been and has Mark. channels strong digital our it, on untracked mean hit international our in year. growth You very and growth this

the standpoint, think and then you what right of seeing take an in you're out if so, kind And place what from seeing get track view. to untrack from modeling channel I you're it you that probably forward parse a

Got it.

the and keep the bridge XQ basically, how – bridge of trend in that's gap. So we sort

then and beauty the XXXX related think you about broad category comment more cycle, you have and the your coming thoughts category last pandemic. the on but any performance if your how on more following Okay. thoughts just train out And not trends, even question, specific to talking guidance, somewhat just on of

longer-term category cycle? had year time a all cycle Are kind particular, How make it the two in of think, last in a of we beauty that? up, thinking The lasted, years. plus I are about five you

hopeful what mean be the importantly, I that good the always both here, I am I consumers – going balanced. themselves. to really the we're to we're more start broader economy Yes. in made comments cycle on of a wanting express

for And then actually to more larger been the I've things I global because to category well long wish value do it's turn interest through the they a the is good e.l.f. in bring good that either through. shining proposition competitors believer we're standpoint. really category, competitive also a for really from or seeing because comes think which our for own investment good I levels, their innovation our

the but bullish was on So bullish maybe when I I for category, then. have times been been I've bullish shouldn't

am I category bullish the how certainly gain terms to in So of now continues momentum.

in Thanks performance and of about longer term thoughts nearer the any category? kind term versus

seeing XX,XX and over obviously mass consistent looking I think mid-single QX. growth years, that if in now look of outsized of term, mean, digits. this the look side the it at category long kind was call longer I right you We're a category low arcs a to is grower this Well, in when this I last

higher to it QX in a am little outsized for we related compares see will to ranges, Omicron But growth, year. expect I of suppressed volume be to saw the if part coming there. to back would and not lease hopeful in historical the I bit the

you. Thank Okay.

Please James. ahead. is from Our a next Olivia Tong Raymond question follow-up with go

question my much. Thank so you been has answered. Apologies,

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

for us you thank today. joining Well,

delivering our quarter since so We upcoming look and e.l.f. you we'll speaking incredible forward another As can for our with for at FY'XX. yet guidance outstanding you seeing at May to and our of Beauty meetings some you well. I'm team tell, when you of Thank proud in results. investor fourth quarter discuss of be

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

may disconnect. You now