e.l.f. Beauty (ELF) 24 May 232023 Q4 Earnings call transcript

Thank you for joining us today to discuss e.l.f. Beauty’s Fourth Quarter and Fiscal ‘23 results. I am 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. that remarks release forward-looking the these and you find our to please SEC forward-looking of results will earnings actual our reports factors statements. many today materially statements, contain refer where to Since differ cause from could filed with

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

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

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

of by drivers exceptional Thank ‘XX. we e.l.f. and will performance you, outlook fiscal Beauty good Today, and the KC ‘XX everyone. I afternoon discuss want recognizing team. our for fiscal to start the

so much have fiscal of in ‘XX. We be to proud

Our our proposition, continue innovation engine marketing to performance. value fuel and powerhouse disruptive

Our results speak themselves. for

adjusted hitting XX%, expectations EBITDA time. net in In our our original for milestones above major sales EBITDA million first by net sales $XXX fiscal grew and XX% ‘XX, we million and well adjusted growth. the reaching net XXth of by over sales $XXX in consecutive quarter marked over and QX by

net we and points margin gross approximately by in QX, XX%, increased sales basis In $XX EBITDA, up XXX million adjusted XX%. delivered by grew

three by encouraged the cosmetics grew strength In we rank the are color in continue category the year seeing XX% outperform QX, channels. across for the our ago. a XXX number a from We category, the the continued category. brand versus increasing e.l.f. are significantly We tracked XX% points, five to number growing ago grew by our share first basis market year time. to

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

brands was above growth celebrated disruptive last e.l.f. marketing year versus strong, also tracked rates. In company, were power channels, ago. engine. and been well trends XX% category category QX care. in skin has the e.l.f. our consumption SKIN XX% to of a the for year, up Looking up

humbled Companies. QX, Top annual Company are Most us XX Innovative World’s we In continue receive. Fast the to to by recognition We named their

list, the changers e.l.f. Microsoft putting company as NASA, the OpenAI. are on and such game with We beauty only well-recognized

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

We at a women X,XXX diverse, to companies, two-thirds one public and of that’s underscoring with Board of only diversity that proud four least our are one-third we inclusion. out and nearly commitment are

continues ago the e.l.f. the be number a In share cosmetics number points all e.l.f. Piper semiannual row. held brands one grew our survey, to basis amongst remained a Gen and favorite latest again the for groups. favorite. one by Z teams time XXX a rank year teen across in We versus third Sandler’s income

Elfcosmetics.com favorite XX SKIN among and one for into major again e.l.f. shopping the of brands single top XX first brand moved the destination for time. was retailers. care only top sites teens skin the a

we X provided that years, past growth the how Over on proof executed I is driven. our points imperatives have five strategic have the and

explain how each in imperatives fiscal underpinned me our Let strategic ‘XX. of these strength

build first brand imperative to is Our strategic demand.

disruptive built social digital-first engine strength multiple marketing across platforms. Our has

garnering nearly company brand We first major on now and We a billion last the billionaire first challenge branded Twitch XX on TikTok our are are beauty X-time a BeReal. beauty with TikTok hashtag views. launch pioneer channel the were and a on to

featured at top-selling grip ability cosmetics new audiences. entertainment Primer, SKU SKU Group As number ‘XX one our TV the strategy our and in community value for and of makeup praised stickiness. debuted mass its entire continue part Grip building across of to is fiscal by its the and awareness Power ever our U.S. the game. the our commercial Power big our reach that first February spot marked The category.

e.l.f. the Jennifer icon grippy We power speed, worked this sticky of initial Power spot going cultural with teamed during at from We to award-winning aired weeks. delivery to in X Grip. only game, the up Coolidge actress and dramatize concept and big

[Video Presentation]

community our phenomenal. from has response The been

Our impressions. billion XX an campaign astonishing earned

keep the across among weeks in TV all XXnd with at the our following, a ranked up Grip our sales, consumer In big lift the #X in ad consideration XXX in Our and a and spot to going. we continue the game. ads Power purchase we Coolidge. social buzz featuring content and sentiment XX% networks, national We aired increase saw channels exclusive additional lit XX Jennifer

[Video Presentation]

doing Disrupting of our DNA. is unexpected part norms the and

billion partnerships Two X Chipotle billion brand-on-brand with We X makeup continue collaboration years our our moments Last generated through to buzz-worthy disruptors. generated ago, community collaboration year’s Dunkin’ generate for earned with with impressions. our like-minded impressions. media

March once broke X billion American over impressions. collaboration with Eagle with our We again in records that generated

gap internal the our XX% of than in show awareness mass some today, awareness that studies double-digit a to relative legacy less cosmetics unaided Our brands. is

leaning initiatives including our are disruptive to on audiences, and We X. and awareness our Gen new build marketing Millennials reach

benchmarks. mix that shows to above industry Nielsen investment Our marketing deliver, latest multiples analysis our the marketing ROI driving continues

line we marketing, top our given in trends. During further QX, better-than-expected invested

XX% result, a of with above our the we ended at XX% and year XX% digital sales, of As end outlook. to marketing investment net high the full

up is our penetration, power brand, XX% see drove fiscal further X only our of the particularly site. is cosmetics to Our XX%. direct-to-consumer top opportunity digital imperative channels Founded as we Squad over Program. remains strategic to consumption total mass ‘XX, increase digital. year our to Digital with compared a In brand e.l.f. Beauty enhance as Loyalty We second XX% native ago. our digital consumption a a digitally was

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

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

lead innovation. imperative third Our is to strategic

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

now segments these sales. these the in built fiscal We segments two number XX cosmetics the over the Our time. across each strongest up innovation XX% sales of Cosmetics share ‘XX. of e.l.f. has leadership and segments in color one has category. delivered gains number category e.l.f. position over of or Collectively, make growth

Our innovation product franchises is growing one-and-done and to launches. instead approach build sustaining of

have grown year-after-year. Glow all largest Camo, Power X and Our franchises, Putty, Grip, Halo

within each we franchise, not We is year competitive launch are a on anniversary we new this source As launches. entire franchise proliferating of prior believe grows. dependent SKUs advantage the as innovation to

item of our of quickly provide built with XXXX, Halo Glow been Beauty franchise. an price value Glow the Halo example incredible year, one we our at of me best that Glow on $XX, products. in sensation Wands Beauty with In one a our Let XXXX, In launched Ones, launch launches each In highlight Halo with of at we Glow which viral of trio, we Halo success powder. have contour, an compared to Glow launched liquid the Halo Prestige and filter, best-selling X blush a April this ever. setting $X, became

with popular are over we sellers most sold Glow hit launched the Halo triple-digit including X-years Glow a best glow lift out the nearly viral Setting to we Powder to launched Beauty Since more Halo providing rest in Halo shades seen community. that multiple elfcosmetics.com. XX all sales importantly, of visitors Beauty top we the Our times in have Wands, Glow franchise, are a Wands Halo are And on drove and ago. record our our of numbers elfcosmetics.com, franchise. products the lift sales Halo with Glow across our

proven on and the shine a year-after-year. growth and has our new existing using our engine of strategy to products within franchise marketing light fueled successful products Our

business X Ulta partners. Our to our with space is to basis grew another its In retail Target over fiscal gains. sales of in retail without Walmart, productivity our additional space fiscal fourth is Beauty largest and great both drive focus example our ‘XX productivity. with productivity per helping a ‘XX, by foot us on strategic increased XX% productivity imperative Ulta This is with our our e.l.f. on partners. We best-in-class incremental linear earn customers.

space resets as As a Shoppers in spring Mart. our year, part reminder, Target, this Drug CVS earlier and expanded Walmart, of we

which XX our increased average Walmart. have at space about store X national in brands, cosmetics at today can average Ulta of we Beauty retailers. have in trail Looking this XX and Target, feet with feet our Even legacy largest feet in still customers, these we in footprint, X feet on footprint

significant expand end, see in that our space earned Walgreens We Beauty, that fall ‘XX. have we drive and footprint a additional To Ulta growth. across pleased CVS for productivity continue are in and runway to we customers; we

Our fiscal delivered and adjusted in leverage sales gross fifth to formula growth, combination ROI high strategic We expansion, imperative ‘XX. and The expansion expenses. our our margin have winning basis year-after-year a initiatives, is supported profitable growth. strongly are continued investments by points fueling margin non-marketing growth. infrastructure EBITDA to in We people had invested our and we our and make digital behind SG&A our in of strong the deliver over marketing of XXX

One unique our reflects Dream investment One people approach. Our Team,

to beauty our are of basis public an strongly single every our grants interest team aligning long-term employee, only equity on We the that with shareholders. in company the annual

we basis. as outperforming grown Even to over companies on Xx a continues our strong the public XX% past headcount roughly and have productivity, sales per by world-class other by team Xx drive to X-years, beauty profit our employee

is engaged. Our highly also team

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

year, make we to and infrastructure. SAP core our our have implementation optimize to have This continue processes. to we we grown, will in investments begin As continued operations of

in still continue our investments has we this progress and are planning increase five to capacity Even expect adjusted with and to in infrastructure profitable we support We margin our each. to team ongoing we believe expansion strategic growth. our to distribution drive ongoing The on been fiscal to ‘XX. early make these terrific, We us our with well continue are innings imperatives believe the also investments to growth. in EBITDA position deliver to investment,

we Mandy, skin for key turn see runway the and call cosmetics, to internationally. care areas Before where underscore over in the to want three significant I growth additional I

believe in U.S. $X in a cosmetics is we billion share core can First, category category. we our mass This grow the

the at our could at Target, longest-standing We a we that share. with X.X% mirror already We other that #X retailers with partner, Target brand national major brand today are retail the believe are share. XX% position At time. our an over #X

a care. space U.S. is we see in and Second, This white category significant the billion $X skin

XX% #XX are elfcosmetics.com brand. have XX we nearly today a our strength Skin with share. the It already a our We We on where top the care track believe in X% full we X% over brand of our are channels. of consumers of right-to-win Nielsen represents business Amongst drives in assortment. skin. little see consumption teams, the

care like and new fold segments consumers focus into bringing as we go is care Our the after makeup sun removal, in skin anti-aging.

Our best innovation latest of marketing SKIN. disruptive our in our were engine elfskin.com on strategy and e.l.f. sellers value Similar lean our cosmetics, to to we in to top these innovations for accelerate powerhouse on some plan in three QX areas. proposition, awareness

Beauty e.l.f. of Third, in with see XX% over sales we white represented space XX% internationally. International growing year-over-year. business fiscal considerable ‘XX, approximately the

strong seeing behind our results UK. expansion in disciplined are We the strategy Canada and

#X in the our We compared these team the and the expanding and our while a Canada both into further past see excited #X our We countries, new began lot position top international to both the existing out growing of ahead. As UK. to fastest XX focus are this in markets recently enhancing brand brand runway building about of still we the year, in and UK. penetrate in were U.S., are ones.

‘XX to we unlocking We summary, strategic on potential win continue focus the believe imperatives our the beyond. will as fiscal to are innings relentless we ahead, ability X in of brands. our of in look In early still our fuel we believe and our full

I to turn over call will now Mandy. the

Thank you, Tarang.

with grew quarter, results strong early year-over-year, commerce. and quarter results unit outstanding. saw products. supported from digital points fourth international approximately across spring adding robust contributed growth. mix and approximately as percentage to driven to by and our much sales broad-based national the both pricing volume consumer QX We better-than-expected innovation XX strength sales as points response XX% well by growth, net velocities to Higher core in XX unit our resets net and Our spring were retailers percentage

of step-up as result as March costs, prior a an was benefits significant XXX trends. QX to our in year. digital basis, a XX% price cost investment. saw lower SG&A points implemented We margin to a the SG&A up in approximately line drove to basis QX gross On gross expenses, compared percentage savings. of largely XX% in was marketing non-marketing last compared leverage margin margin XXXX, increases We and of from accretive of mix better-than-expected and adjusted sales transportation in primarily top year, due XX%

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

top our As Tarang the our opportunistically discussed, investment better-than-expected given we stepped during line quarter, up trends. marketing

marketing with XX% the ended XX% outlooked. a to of range digital we net the end had year we As of above result, and sales, investment full our at XX% high

EBITDA per year as XX% in Adjusted increase discrete net a QX a to and adjusted million per $X $X.XX approximately or $XX quarter million or pretax versus in million, adjusted was increase margin ago. adjusted income share in significant share, as diluted last was The to benefits $X.XX EBITDA sales. was well tax to year, compared was attributable XX% $XX income compensation. the net stock-based income net of up related diluted

Let’s now turn year short, our exceptional. were our In full ‘XX results. fiscal to results

our expansion, gross basis the For the SG&A over by sales by XX%. and margin behind by of supported and non-marketing high invested combination leverage sales expansion year, strong in growth, XXX digital net EBITDA of and delivered our marketing our grew margin XX% adjusted we We initiatives EBITDA ROI expenses. and adjusted points

cash Moving sheet to and balance flow. the

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

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

inventory than Given lighter expected. our was our QX, stronger-than-expected in consumption ending

to holy our recover build and launches grail and fiscal inventory through expect franchises. We support to core ‘XX QX in

cash I’m also strong flow ‘XX. generated pleased in free with fiscal approximately of $XXX million the we

million to with cash leverage total fall, position, a approximately fiscal of Xx less early of terms $XX and than cash ‘XX and position outstanding last in our EBITDA. debt Given net we debt repayment of adjusted the our ended

in fiscal our continue expect ‘XX. generation to cash flow free We

priorities. cash our at Looking

First foremost, growth. to people continue our to plan to in invest fuel and our we and infrastructure

ERP increasing to our As this continue year, the behind our capacity. Tarang plan support demand see, capital distribution invest working SAP, discussed, we to to transition we to and strong

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

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

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

Let well support additional strong right consumption We are on and for year our me to XX% momentum ahead year expect the the with our our you sales in we QX, the XX% the Starting place to our fiscal in come with top ahead. fiscal the of ended growth, planning provide with ‘XX. color significant strategy net we annual line. assumptions believe In we growth seeing. to reflecting ongoing growth in trends have

year, out share. our bullish look cosmetics and we remain As we mindful to recessionary XX we’ve been potential the remainder time, of to gain these growth. and macroeconomic uncertainty our At navigated same environment the serving risks. dynamic on has are We balances a net approach of appropriately of ability category as quarters the the consistent, we deliver outlook our to and elements, us consecutive well operating believe sales

basis points Turning approximately XXX In to to margin our expect year-over-year. ‘XX, up gross be we margin. gross fiscal

transportation retailer expect savings costs lower accretive to margin space offset activity mix favorable cost expansion. rates, related and FX We gross from to margin costs, and benefits

now Turning EBITDA. to adjusted

implies approximately XX% on top Our year, EBITDA growth of delivered XX% ‘XX. the in versus XX% adjusted fiscal growth strong outlook to of we prior

XX% of of in compared With XX% digital momentum XX% investment the to strong ROI, our as to fiscal to fiscal top and to we’re increase in approximately ‘XX sales combination and marketing net ‘XX. marketing line planning

increased investing fuel marketing our position investments and will from a of believe growth. to We’re strength these continue

summary, strong long-term results implies This growth EBITDA and our potential. gross the of XX expansion optimistic fiscal margin points supported margin about and expansion. sales growth outstanding margin remain outlook combination ‘XX pleased leverage with approximately our Our adjusted basis In we’re is of by our year-over-year.

and As cosmetics discussed, space significant see both and white skin across domestically care, we internationally. Tarang

to of flywheel drive in Our margins me while ability confidence drive in to approach investing marketing profitable gives line adjusted EBITDA growth. top expanding our

our believe balance Difficulty]. we [Technical Finally, low solid sheet,

first you. Instructions] with The ahead. Thank Please from [Operator comes Raymond question Tong go Olivia James.

pretty a congrats afternoon. And good Thanks, and year. Great. on remarkable

Thank you.

looking more My in question coming sort still of how something very, understanding thinking you’re for but of about XX% is clearly And and growth guide top decelerating then dramatically, very around just relatively first speaking. pretty QX. it, line the strong, off

could you’re just how of little half some us helpful. shelf launches that blocks, help that I half? in And the terms bit, give of incremental follow-up. if the space little a us be of a would Thank you’re phasing getting, and you. the understand And then versus of So second a building that have bit first thinking about you sort maybe of sort

Hi, thank you much Olivia, the so for question.

top overall, on delivered, is we our intact. drivers that tremendous. net guidance, out, our just the as growth I sales fundamental XX% feel of XX% So look we XX% growth we And to remain the great of net sales think, about business

and our And as remains ahead to, intact. our to Our white opportunity, value marketing of space community with our still proposition, spoke our fact, innovation the in engine ability engage also Tarang us. is

on a look driven growth just AUR seeing road and or innovation say with forward. healthy the breaking blocks our AUR. I So lot I about business, We a as in down being would have by say units building goodness ahead. XX it that we by of units volume if about we the think of and both points unit between would of mix of XX% the driven talked I the QX,

and our guidance. I that think implied unit that type healthy split of be growth quite continue will will in

we around productivity. put, Tarang that really, our of we’re and innovation with. Productivity continues community marketing then if of shelf, to sound our that consumers also I the And the that that’s growth. And the that launching our that with be on key call, to driver spoke about and resonating at think really the surround reflective that’s

quarter, very that also make of that consumption the given expect last we QX, cognizant great our just XX% been see to over about sure we the XX% have are that want as we come in momentum balanced And levels these talked macro about has to this we’re we seeing. ahead any We feel approach in we’re to things And quarters. XX my that So going outlook. but on. of

And so we the remain that with outlook balanced we’re providing.

great I know, a And standpoint. from what it about you quarter we one consumption take we’re So time. seeing will at as a feel

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

Hey, good afternoon, guys.

afternoon. Good

question. two-part So

years. business versus rate at First, number of obviously, accelerated growth top if this really But or at CAGR growth revenue look for the quarter. really grown it has strong the pre-COVID level, you a the your a year-over-year line

So pretty lot What basis. But a And the on that sustainable drove you that? obviously question little give can us – more curious Obviously, mentioned is can a behind you us looks ramp year-over-year on the that? QX? a robust level. QX? do think you just you year, drivers up data more fiscal in of How if on the then it’s at like give full detail sequential a on on a little continuing detail Olivia’s guess I scanner pace just

So months pace, X full quarter? would I conceptually, of any QX just in we’re the above fiscal put year how understand about it Thanks. but into be maybe there and extra QX, maybe given help you think relative sort helpful. the to context

first Mandy. the the Dara, part take second I’ll question and Hi, give the of to

saw I’d in of Halo we QX resonance drivers build our Wands. of the the particular our launch innovation of a continuation within business and an A particularly about, through you’re We our So these right, continue franchises. point acceleration incredible Glow couple to. with in in is marketing. talked QX. we fundamental Beauty innovation And this new QX strategy One that it’s I value year, had really of franchises to proposition, terms the say would growth, the we

of quite stocks sensation. stock. few that strength have viral innovation upon had We in given we’ve that them keep out a a of just actually We couldn’t the We’re builds the itself.

big is Most up to but introduce enter up took and our our to TV to the all in. in aired that, marketing spend of opportunistically and our a also in fueled QX. was driven, first opportunity It e.l.f spot saw digitally did awareness, terrific that given saw that we an results. our creating aperture. opportunity TV from went broaden game, typical We levels also it results And that We time. ended for opportunity build We we our the on fashion.

but our So really as real remain pretty the business always that. balanced let we we Mandy a drivers have said but Mandy take feeling intact. momentum. Fundamental talk of great look, bullish earlier, we’re And I’ll feel about about business,

now. Yes. And your we on to answer to are scanner data seeing close question right QX, growth XX%

And color, so think scanner we’re out quarterly of that as where right of assume to we just now, you untracked for just quarter side I the the I XX% seeing data in well. it’s to overall – business that give give be guidance, . seeing better, what right the don’t safe you’re given some comes but or QX could on QX the now think

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

Hi, thanks. Good afternoon.

Good afternoon.

on A of out remarkable, was overseas. months finish. trying some products a if little takes of stocks. more the go kind to all lot X start chain not noted, the that with decouple a supply thought your bit I come of quarter this we’ve from that acceleration of to to of your as extraordinary. It mean And

we significant out other fair are so see you of this coming, than some kind of stores – was stock. Target And of and in or to have had extent, And stocks. some of amount that out Ulta, some there know a to

or done, So well it the stocks retailer X-month this we fully been planning well of do too and coming terms of so But a that have continue kind big at maybe And on was much into to summer? not how what understand you could in it. as inventory you when just to understand you it’s levels chain all. think I’m where did making table your that saw you of have out trying left how are supply process? will can Maybe the maybe having so issue a move of

Sure.

it’s combination industry. that’s in strength highly of and for we’ve pandemic speed the resilient. great supply feel chain. a real terms able our way container name company to the of about I in over it, been a the I how terms cost, all in And go area our Bill, of we’ve XX% back our the stock. of supply customer If So quality been maintain you lockdowns, in disruptions pandemic, to navigated It’s imbalances,

and a do. terrific it’s team to they testament job operations the So real our overall

planning In the in think in we weeks about getting place typically orders. terms goods we horizons, average terms of terms of in XX time that from on those of

it’s So upon virally. and periods in the X-month terms horizon. long number not have other will a so we be where There off of build of things each that take

our demand Beauty Wands. All time that I filters mentioned our Glow been throughout that think up, even I liquid – last phenomenal we So forecast has Halo e.l.f. the we a higher. innovation goes take year, every

And one the cosmetics number primer, our entire the across again, SKU, SKU one Power not only number mass Grip but category.

almost Glow Halo build So liquid innovations of even original launched triple-digit Halo filter, on ago. we Halo setting tend upon years indices the our the Wands, those to I we’ve seen example Glow. themselves, launched Glow gave these X we Beauty When powders

we’re So seeing strength upon strength. built

in I’m long-term of concerned not issues. any terms

We have of plenty capacity.

our suppliers have them share where partnerships they with plans and against. that our with We can are incredible we what work key outlook future

to investment couple also the that tremendous of serve growth think inventory stocks. our building temporary a out can the – So call continue kind back I of talked the making months, we see to of on levels, have. continue up such that we is this next elevated I we of But

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

little infrastructure could I a you about SAP little if wondering that I’m that with more causes a implementation, give – Hi, so disruption. investments nervous some all Yes. think we’re your bit color sometimes

added retailer a you can yourself? and you give Are distribution color that what maybe us little of for lumpiness you terms exactly distribution, you’re that And DC? anticipation of that side? in more in the if expect adding implementation? then any planning building you Is a how are secondly, the color? can on So you. Thank one give in you Or like ordering

Linda. Hi,

of pass Tarang. then can I’ll I’ll the part that I it and first question, to take over – So

been So through. about strategy To as excited invest we’ve plan I we’ve and along. we’ve something to to behind ERP continued can say really And SAP, that’s our transition of that every base part this we’re our it’s people to had and gone all infrastructure, continue optimize a year.

we’re house So at we putting and in with really, sure that us. make road is as ahead on we want scale SAP, that growth is of the to ready able have as look for the that place to we back the

we so line time And have out. our built

in implementation We’re the just implement not – yet.

that We’re year another not out. expecting for

just We’re now. right building

as phases will so And we we have go we’re testing. several where through,

to We’re with phased be will that. But or any It this like going anything orders that. put of we’re in building very not jeopardy approach a towards along lots year, testing the way.

we So risk for plan fiscal to because ‘XX, don’t project I until all into to don’t related any see at the implement we get fiscal ‘XX.

the we business Yes. And have in well. platform that serves I just good NetSuite think to that, adding a

we that And on platform. operate to will continue so

of test allows implement SAP. processes it sequentially fully the before So, to us we each different

a the So, able said, continuation that outside we Mandy we the team And have build-out brought consistent plan, feel distribution do be seen. on that. really have as implementation then given the in, And year-after-year. a experts good capacity, we the we the of second been initiatives about what’s pretty that to your have growth couple distribution on a on built of we have key to

out fulfillment. It quite get we a West The use while e-commerce they packages. fast shipping from take Ohio. terms could expectations a to Prior, basically of to warehouse Coast your Columbus, if distributed package in our automated we are of consumer more model that our had first on their with the e-commerce you how fulfill is get moving one to

to moving that. a of multi-node first network phase So, distribution the is

going been that well. far, has So

We their nodes get really are and good time already feel that’s also improvement to about of and about packages. up the the consumers seeing and an takes it first how couple in going running

to second looking The main add really growth the adding out further, is just to our in distribution even distribution to network. and more distribution California that Ontario, capacity hub, warehouse capacity business, the in had continue have given we

and projects they continue And to so how the are business. again, support about those feel able be to both progressing and good

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

Hi. Thank I gross about the much ask question. margin. you so for wanted to

several a expansion shipping price fourth as in then as what a and And from you benefiting the benefit? from about costs margin follow-up. savings. percent are accretive talked shipping Could You cost much bit contributed to costs quarter, And of how of that lower mix have gross I sales? factors increases of margin a XXXX, about talk March Thanks.

the get your gross we we did so year. with pricing benefits progress are last pleased point, implemented really Anna, QX. margin, we we from To that in overall Hi the that saw

So, implemented year, we March benefit year. that of have last from in that to all continue was

We have cost savings.

And that We two savings just really course QX. factors play of started mix so expected. across, has of had to came on got those savings parts cost introduce that One, the quarter long part see some this better rebates those our that in around end been through bit we of a then, so as all And point better that perspective, on than innovation then have And our that that it. towards to role. and margin. our sweetens margin that, go the helped activity into in retailer some a transportation, as did we of gross gross we play savings that got also a And the we your we to innovation transportation it. strategy that of margins then flow the cost a our also cost with suppliers. so to from We mix had the from resets savings

did of haven’t percentage We favorable an rates year where we as margin total they that And a gross or percentage be those continue to of it a sales, impact. to as see were do our quantified have but ago. a

XXX as our we ‘XX is we baked the guidance, about transportation in well. portion so have think points basis that a that for And fiscal as of

The next JPMorgan. go Instructions] Please [Operator comes from with ahead. Andrea question Teixeira

very to are curious this any related and perhaps frame I was are as of first you you deceleration – on you in on spoke And see how your embedded that Hi. of again conservative door, assuming you as additional Good congrats about you guidance. that, probably being us question probably back afternoon go have a if quarter. not these why change embedding per how given in all space? results. is in you I am And I increase assuming shelf starting to were pricing. going assuming Mandy you I the that pace that helps pricing, to kind to of kind strong am a velocity

XX% most correct? on XX%, is that growth XX% to is line So, mostly that on distribution in based XX% of units gains, to top

from Andrea. Hi you. to hear Nice

So, take I shelf and on guidance versus we space productivity. think question how will the about

productivity is call, has the we on results. primary driver As the driver of been the and our primary said

a picked road remember, And have space productivity up so along to while shelf in on the doors. have shelf to space subset of ahead. have we the strong really, a to you that it’s And way, unlock continue

standpoint. standpoint, innovation way but see some plans, So, we we innovation, the to our baked any combination our say and from AUR. productivity introduced to pricing AUR into Because not strong. AUR higher-priced you the have innovation, paved we that From I towards that of have around mix that really the some pricing higher innovation may an for put a have marketing will has be continue

So, have of little will driven bit but a priced some there. driven XXX% see the units, by by you that higher innovation that of I wouldn’t out expansion AUR say we

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

taking it top strong Thanks of in acceleration Good like wondering on during question, on nice for was looks quarter some on job really really my COVID. quarter. Digital results the there I evening. was back the segment, the Hi.

accelerated it’s online? the curious, or are different new you doing that Beauty So, more am anything Squad consumers are year. is all like driving I to that increased the there or marketing program, of kind you shop Is think that it there looks

Hi Susan, is this Tarang.

So, we we are acceleration really pleased with in the digital. seen have

I of and a support in think XX% that ago that marketing overall our we growth One I up it. well. to there digital three levels as versus are XX% the would is over say XX% penetration are is now year doing. driving are the factors quarter

strong elfcosmetics.com, consumers digital digital year-over-year, Beauty I had XX% that members. We of we well, digital lot our is as this that Digital members. and does They benefits X.X of over now second support up increased the sales. Squad onto XX% from account We loyalty are were they particularly channels marketing given ROIs bring have would and it very say the approach On of have definitely on have first. business. our the a our support. consistent focus on for million they biggest driver that’s

not digital as I is only Amazon And So, but we is as itself. upon our rates each we see really we we well strong on as strength channels great think dot-coms work the to the at seeing elfcosmetics.com, continue to building about third, make are that doing we program, are enhancements with them, our benefit. of and think growth further retailer really that as

terms in of prospects have digitally, major digital. on I opportunity in growth we national else do customers, terms our see not strong bullish only can of quite of what but am I retail So, do our we

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

these you year. Hey. a I to are for planning budget with the taking ROI brand you more little that Thank the marketing really next talk we seem how exploratory on on Good you on forward, some marketing? marketing little with touch like kind year. the of investments reinvesting do? making and months. question would be necessary we think really the the think And makes that, kind are versus I laid kind as have congrats are versus seeing afternoon. what for run in of of about then benefit efforts, past top And about in of a for you. we Thanks to bit this line a those more fiscal you the great new mean keeping little rate tracking to of bit kind couple type you what you spending increased just awareness the a Can of marketing some are more initiatives bit out investments? – going of that’s

the marketing the why across our our invested digital see. advertising, our we more we Nielsen core we the starting can strong did results seeing Korinne, that, of on of with one down TV behind first use our regression marketing our think our work with public in have relations. multivariate we the marketing them. I And a the we it’s marketing one hi time we get mix, vehicles. influencers, ROIs to feel great strong ad, investment. And seen that Even strength reasons vehicle every So, we of we measure spend. are It’s based about level And that terms do against of we how each

really value increased different think to to this expansion going in be support, from even an at test highlight do the our marketing awareness continue put more about as also core of disruptive to strategy that awareness to our levels platforms, I as that we terrific innovation, had, and continue it’s an and have So, then we standpoint look continue the our and campaigns vehicles. we new

to we see have will to terms some are from entertain that the a continue and And build about massive you year engaged still standpoint, with community, an opportunity great So, really in of we engage then marketing. as the other but of awareness partnerships to unfolds our awareness. feel

than XX%. of core It’s legacy unaided almost what awareness couple Our less a half brands of are. the is

more bring So, we consumers. opportunity in to see the

Z. We among the great have had our Gen leadership expanded success in past year. We

XXX consumers in but have I points and Hispanic we well months, think basis few last in six Gen Millennial consumers. also quite as just of up Z, we as a more gotten have picked Gen the terms X

we of So, the the working. see strategy we know core is each across groups, opportunity demographic and

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

our for from ask share quarter. coming expectations little color are and We bit Hey. on and wanted just your taking going they congrats a Any gains. the Thanks. about Thanks your forward? on where to question market

great gains. Hi Ashley, we share market feel about our

our have we e.l.f. share. the in look at you If market last X doubled years,

spot nationally. year puts think in now us share are were X.X% we number three I ago. five relative the just a at to, number We a That

So, we both spot. Revlon CoverGirl surpassed have for three that and number

brands we market as will pretty the as from, of share of broad-based, it’s terms where test In a brands are other different with. getting legacy retailers well that number that

thing our the else prepared was ahead absolute gain. past think pretty was But are became We the XXX one most, share that terms of the number I in And me across Target. points seeing said this also at remarks, multiples our what and the encourages basis strength the in we growth brand board. of of is year, anybody much we

head have national over other head had the Target start an double reason at share. over everyone almost X-year X-year national Target, a in And why share else, start We a our that’s almost XX% retailers. is significant to

what us time. more give give been Target as over us So, achieve the into we lean able more e.l.f., feel other retailers support, like mirror has can space, others to

color just that have the and X we opportunity an clear the So, last over share to market over years, next versus the over hope brand. our market gives as years a me leadership that share we take double again have any few of that cosmetics doubled

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

some and/or clearly opportunities the at your how Walmart and With respect of at where have the in unaided year. you XX that, remarks, space, your XX is Tarang worked. about do you to number and see Tarang. approach What to on ahead, broadening spectacular statistics see Target well. alluring there? quarter different X do the because really really awareness compared opportunities you most And Broadening aperture Hi aspects executing you the Mandy, great has quite think we in prepared gave are to you shelf then as so your and the the

all we So, now? just they you understand what why should can’t like right Thanks. give XX

Yes.

Oliver. So – thanks well,

We our consumers our so overall franchise. to I we to it are attract results. standpoint really more consumer, pleased have think with If marketing and from about a many

Z, strong with continue Gen continue be there. we pick to to share up So,

we innovations both well of They an and the up on try one Gen one we well. in the is picking the teens standpoint. anecdotally our some now focused as that But of We moms as see. well a lot may times as get, Alpha biggest interest are as are from grail data are up increasingly their also picking we differences holy of of we

of Gen Millennials, more bring more am Hispanics, a even of efforts many X. up our initiatives picking I in. we excited Hispanics. them among are over-index over-deliver, We have number against particularly We to different about and

on that our then we a standpoint, so stick our Target, on you brand brands that space not from are to developed approach consumer And of in of the gets broad-based massive retailer, of the bringing pick brand and pretty terms much biggest and up. bullish have very continuing national a consumers we opportunity. a shelf a products they from see Even you prices, are more we number space. a the when on still So, most are have with and that a There e.l.f. sees standpoint. because hands their find right, the quality

continue key But So, the pick space we up way will important. see to retailers. with pick I think each I up, is that think, over our national more of time, us you

foremost, and us always first on focus, awarding more results in space. retailers Our productivity,

One additional we year of my favorite examples XX% any from is our space. Ulta without business, this past over grew Beauty

to it speaks is talked which so fall level of with have go. productivity, we Ulta room see plenty CVS to more Walgreens, the space of And as more rewarding you when in and that us the

some growth, to natural most been productivity of of Andrea’s velocity up we our actually But I it’s have. assumptions, in a linear we even in earlier us little over build dollar driving velocity And more very sequential feet past your the just strong to for for shelf are on carry. And more To the bit that space. question, prefer say sets. do part retailers we think don’t our able assume lower giving. and of a innovation a that give instead space. prepared wins. we would in And get items consumer have just foot and we we up Walmart been in long talking as per that you are pick We on on talked a as formula focused I we why outcome great to us XX given about color all stay the up cosmetics, are So, productivity, just will continue pick we always But as last longer It’s It profile feet then productivity you they to just these overnight? and respects, than question remarks, our brand higher smaller time, year, Target we yet basis. productive increased that this velocity that. takes

improve great navigation for shop. on for And space we shelf So, a that our see which model consumers measure, consistent that to assortment, future our improve productivity is really in again, focuses innovation, that we one our Project signs our the ability through visual on increases particularly Unicorn, gains. the of to merchandising, have best pretty

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

taking the and question, also great congrats quarter. thanks evening a for on Good

I So, on just is a the quarterly cadence EBITDA margin then guide additional for can the from year, well. had you share perspective? anything And there follow-up one as

other talked As curious the at have I we and you what just tariffs guys see benefit opportunities that know look operating could this margin as year? about you opportunities margins, still beyond but bigger margins,

Hi Rupesh.

year. standpoint, think the be in assume, from for we I them versus margins QX that your pegged in So, margin growth expect outside it’s where have an QX EBITDA could EBITDA that fair to given stronger we the sales

about I for as opportunity we bit So, on it. margin opportunity remains ‘XX And saw just an spoke margin that we to, color use overall, terms and a how as gross of would think in as to in us. little fiscal of

We in costs to We non-marketing non-marketing continuing have that that standpoint, transportation things did nature line. of related have or ‘XX. some of cost should And fiscal carried exchange our headwinds also time. of and talked that particularly to foreign SG&A that and seek we about the a from out over then SG&A come that way leverage

things see Our we could perform we be margin current expect, certainly over the does But that as a better well. if that. year than driver necessarily outlook not have

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

Thanks afternoon everybody. question. for the Good taking Hey.

a to talked freight. and you gross mix quick savings one Rupesh’s. and costs, margin, benefits ocean one, then have cost about Just of the particularly of On bit a follow-up the transportation

I be fourth posted below think rate did what the fourth a the for in the XXXX the quarter. your margin might implies gross of you You year in rate And strongest somewhat just year full that quarter. guidance

there puts that year. as and baked numbers conservatism to whether our are So, given I there just are if accurate. Thank is the of just some assumptions well, then very the you. some the and we in early want And takes understand in there

Jon. Hi

think down. QX drive call is one we question of that things to from a the off us that gross gross go we our things on lot So And I would a margin yes, of about comes way. to that good standpoint, have getting on talked is margin the so what your of

We to basis point, have in things also plus basis expansion that is quarter space certain nature, to transportation positive. like the that our the we have your of moving costs and gross expansion we of are certainly also costs the the first of a that points ‘XX to XXX out on But call we margin and that that And with. called positive. and top to out-looking margin that there XXX balance just related points fiscal is it delivered things

have I said at as it about it’s taking positioned. one quarter how So, good feeling a time, earlier, but

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

first seeing joining today. incredible you fiscal for Beauty us out of forward to quarter at meetings upcoming I proud you our team you discuss outstanding thank well. and delivering results the some August you close results. ‘XX. in so our look investor Thank of Well, with speaking and we to again be at when will e.l.f. for am We

The participation. conference has your now concluded. Thank you for

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