e.l.f. Beauty Announces First Quarter Fiscal 2025 Results

Rhea-AI Summary

e.l.f. Beauty (NYSE: ELF) reported strong Q1 fiscal 2025 results, with 50% net sales growth to $324.5 million and a 260 basis point market share gain. The company's gross margin increased by 80 basis points to 71%, while adjusted EBITDA rose 4% to $77.4 million. Net income reached $47.6 million, with adjusted diluted earnings per share of $1.10.

Based on these results, e.l.f. Beauty has raised its fiscal 2025 outlook, projecting net sales of $1,280-1,300 million (up from $1,230-1,250 million) and adjusted EBITDA of $297-301 million. The company's strong performance was driven by growth in both retailer and e-commerce channels, marking its 22nd consecutive quarter of net sales growth and market share gains.

Positive

• 50% year-over-year net sales growth to $324.5 million
• 260 basis points market share gain in Q1
• Gross margin increased by 80 basis points to 71%
• Adjusted EBITDA up 4% to $77.4 million (24% of net sales)
• Raised fiscal 2025 outlook with projected 25-27% year-over-year net sales increase

Negative

• SG&A expenses increased by $88.6 million to $180.6 million (56% of net sales)
• Long-term debt and finance lease obligations increased to $159.2 million from $59.6 million year-over-year

Insights

Financial Analyst

e.l.f. Beauty's Q1 fiscal 2025 results are impressively strong. Net sales surged by 50% to $324.5 million, marking the 22nd consecutive quarter of growth. The company's market share in cosmetics increased by 260 basis points, showcasing its competitive edge. Gross margin improved by 80 basis points to 71%, reflecting operational efficiencies.

The adjusted EBITDA of $77.4 million (24% of net sales) and adjusted diluted EPS of $1.10 indicate strong profitability. The raised fiscal 2025 outlook, projecting 25-27% year-over-year net sales growth, signals management's confidence in sustained momentum. However, investors should note the increase in SG&A expenses to 56% of net sales, which could impact future margins if not managed effectively.

Market Research Analyst

e.l.f. Beauty's performance is remarkable in the competitive beauty industry. The 260 basis points market share gain in Q1 indicates strong consumer preference and effective marketing strategies. The company's success across color cosmetics, skincare and international markets suggests a well-diversified growth strategy.

The 50% sales growth, significantly outpacing the industry average, points to e.l.f.'s ability to capture market trends and consumer demands. The strong performance in both retail and e-commerce channels demonstrates an effective omnichannel approach. However, the substantial increase in marketing and digital spend, while driving growth, should be monitored for its long-term ROI to ensure sustainable profitability.

Tech Expert

e.l.f. Beauty's robust e-commerce performance suggests strong digital capabilities. The company's ability to drive significant growth through online channels indicates effective use of digital marketing, user-friendly platforms and possibly AI-driven personalization. The increased investment in digital spend, part of the $88.6 million SG&A increase, likely contributes to this success.

However, the rising SG&A expenses, particularly in digital areas, warrant attention. While necessary for growth, these investments need to translate into continued market share gains and sales growth to justify the spend. The company's tech strategy appears sound, but investors should watch for metrics on customer acquisition costs and lifetime value to gauge long-term digital efficiency.

– Delivered 50% Net Sales Growth –

– e.l.f. Cosmetics Gained 260 Basis Points of Market Share –

– Raises Fiscal 2025 Outlook –

OAKLAND, Calif.--(BUSINESS WIRE)-- e.l.f. Beauty (NYSE: ELF) today announced results for the three months ended June 30, 2024.

“We are off to a strong start this fiscal year, delivering 50% net sales growth and 260 basis points of market share gains in Q1,” said Tarang Amin, e.l.f. Beauty’s Chairman and Chief Executive Officer. “This marked our 22nd consecutive quarter of both net sales growth and market share gains--putting e.l.f. Beauty in a rarified group of high growth consumer companies. We continue to make progress across color cosmetics, skin care and international and believe our unique areas of advantage will fuel our ability to win in fiscal 2025 and beyond.”

Three Months Ended June 30, 2024 Results

For the three months ended June 30, 2024, compared to the three months ended June 30, 2023:

• Net sales increased 50% to $324.5 million, primarily driven by strength in both retailer and e-commerce channels.

• Gross margin increased approximately 80 basis points to 71%, primarily driven by favorable foreign exchange impacts, lower transportation costs, price increases in our international markets, cost savings and mix, partially offset by inventory adjustments.

• Selling, general and administrative (“SG&A”) expenses increased $88.6 million to $180.6 million, or 56% of net sales. Adjusted SG&A (SG&A excluding the items identified in the reconciliation table below) increased $80.0 million to $164.4 million, or 51% of net sales. The increase in SG&A dollars was primarily due to an increase in marketing and digital spend, compensation and benefits, operations costs, retail fixturing and visual merchandising costs, professional fees, and depreciation and amortization.

• Net income was $47.6 million on a GAAP basis. Adjusted net income (net income excluding the items identified in the reconciliation table below) was $64.3 million.

• Diluted earnings per share were $0.81 on a GAAP basis. Adjusted diluted earnings per share (diluted earnings per share calculated with adjusted net income excluding the items identified in the reconciliation table below) were $1.10.

• Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) was $77.4 million, or 24% of net sales, up 4% year over year.

Liquidity

As of June 30, 2024, the Company had $109.0 million in cash and cash equivalents and $159.2 million of long-term debt and finance lease obligations, as compared to $142.5 million in cash and cash equivalents and $59.6 million of long-term debt and finance lease obligations as of June 30, 2023.

Updated Fiscal 2025 Outlook

The Company is providing the following updated outlook for fiscal 2025. The updated outlook for fiscal 2025 reflects an expected 25-27% year-over-year increase in net sales, as compared to an expected 20-22% increase previously.

	Updated Fiscal 2025 Outlook		Previous Fiscal 2025 Outlook
Net sales	$1,280-1,300 million		$1,230-1,250 million
Adjusted EBITDA	$297-301 million		$285-289 million
Adjusted effective tax rate	20-21%		20-21%
Adjusted net income	$198-201 million		$187-191 million
Adjusted diluted earnings per share	$3.36-3.41		$3.20-3.25
Fiscal year ending diluted shares outstanding	59 million		59 million

Webcast Details

The Company will hold a webcast to discuss the results from its first quarter fiscal 2025 today, August 8, 2024, at 4:30 p.m. Eastern Time. The webcast will be broadcast live at https://investor.elfbeauty.com/news-and-events/events-and-presentations. For those unable to listen to the live broadcast, an archived version will be available at the same location.

About e.l.f. Beauty

e.l.f. Beauty (NYSE: ELF) is fueled by a vision to be a different kind of company that disrupts norms, shapes culture and connects communities through positivity, inclusivity and accessibility. Our mission is to make the best of beauty accessible to every eye, lip, face and skin concern, through our brands e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People and Naturium. We are committed to our superpowers of delivering premium-quality products at accessible prices with universal appeal that are clean, vegan, cruelty free and Fair Trade certified.

Learn more at https://www.elfbeauty.com/

Note Regarding non-GAAP Financial Measures

This press release includes references to non-GAAP measures, including adjusted EBITDA, adjusted SG&A, adjusted net income and adjusted diluted earnings per share. The Company presents these non-GAAP measures because its management uses them as supplemental measures in assessing its operating performance, and believes they are helpful to investors, securities analysts and other interested parties in evaluating the Company’s performance. The non-GAAP measures included in this press release are not measurements of financial performance under GAAP and they should not be considered as alternatives to or substitutes for measures of performance derived in accordance with GAAP. In addition, these non-GAAP measures should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. These non-GAAP measures have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing the Company’s results as reported under GAAP. The Company’s definitions and calculations of these non-GAAP measures are not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation.

Adjusted EBITDA excludes expense or income related to stock-based compensation, impairment of equity investment, and other non-cash and non-recurring items. Such other non-cash or non-recurring items include amortization of internal-use software costs related to cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

Adjusted SG&A excludes expense related to stock-based compensation and other non-recurring items. Such other non-recurring items includes other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

Adjusted effective tax rate is the tax rate when excluding the pre-tax impact of expense or income related to stock-based compensation, other non-cash and non-recurring items, impairment of equity investment, amortization of acquired intangible assets, as well as the related tax impact for these items, calculated utilizing the statutory rate for where the impact was incurred.

Adjusted net income excludes expense related to stock-based compensation, other non-recurring items, impairment of equity investment, amortization of acquired intangible assets and the tax impact of the foregoing adjustments. Such other non-recurring items include other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

With respect to the Company’s expectations under “Updated Fiscal 2025 Outlook” above, the Company is not able to provide a quantitative reconciliation of the adjusted EBITDA, adjusted net income and adjusted diluted earnings per share guidance non-GAAP measures to the corresponding net income and diluted earnings per share GAAP measures without unreasonable efforts. The Company cannot provide meaningful estimates of the non-recurring charges and credits excluded from these non-GAAP measures due to the forward-looking nature of these estimates and their inherent variability and uncertainty. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including those statements relating to the Company's outlook for fiscal 2025 under “Updated Fiscal 2025 Outlook” above and those statements that we believe our unique areas of advantage will fuel our ability to win in fiscal 2025 and beyond. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, actual results and the timing of selected events may differ materially from those expectations. Factors that could cause actual results to differ materially from those in the forward looking statements include, among other things, the risks and uncertainties that are described in the Company's most recent Annual Report on Form 10-K, as updated from time to time in the Company's SEC filings, as well as the Company’s ability to effectively compete with other beauty companies; the Company’s ability to successfully introduce new products; the Company’s ability to attract new retail customers and/or expand business with its existing retail customers; the Company’s ability to optimize shelf space at its key retail customers; the loss of any of the Company’s key retail customers or if the general business performance of its key retail customers declines; and the Company’s ability to effectively manage its SG&A and other expenses. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date hereof. Except as required by law, the Company assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

e.l.f. Beauty, Inc. and subsidiaries Condensed consolidated statements of operations (unaudited) (in thousands, except share and per share data)
		Three months ended June 30,
			2024				2023
Net sales		$	324,477			$	216,339
Cost of sales			93,194				63,767
Gross profit			231,283				152,572
Selling, general and administrative expenses			180,575				91,939
Operating income			50,708				60,633
Other income, net			187				399
Impairment of equity investment			—				(1,720	)
Interest (expense) income, net			(3,665	)			341
Income before provision for income taxes			47,230				59,653
Income tax benefit (provision)			325				(6,676	)
Net income		$	47,555			$	52,977
Net income per share:
Basic		$	0.85			$	0.98
Diluted		$	0.81			$	0.93
Weighted average shares outstanding:
Basic			55,973,914				53,938,136
Diluted			58,551,423				57,175,870

e.l.f. Beauty, Inc. and subsidiaries Condensed consolidated balance sheets (unaudited) (in thousands, except share and per share data)
		June 30, 2024				March 31, 2024				June 30, 2023
Assets
Current assets:
Cash and cash equivalents		$	109,034			$	108,183			$	142,549
Accounts receivable, net			155,701				123,797				90,531
Inventory, net			199,563				191,489				98,053
Prepaid expenses and other current assets			66,162				53,608				39,276
Total current assets			530,460				477,077				370,409
Property and equipment, net			14,040				13,974				7,581
Intangible assets, net			220,745				225,094				76,013
Goodwill			340,600				340,600				171,620
Other assets			98,987				72,502				32,258
Total assets		$	1,204,832			$	1,129,247			$	657,881
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt and capital lease obligations		$	102,938			$	100,307			$	5,431
Accounts payable			79,989				81,075				53,237
Accrued expenses and other current liabilities			116,878				117,733				51,037
Total current liabilities			299,805				299,115				109,705
Long-term debt and finance lease obligations			159,234				161,819				59,612
Deferred tax liabilities			7,910				3,666				5,855
Long-term operating lease obligations			33,637				21,459				10,137
Other long-term liabilities			656				616				870
Total liabilities			501,242				486,675				186,179
Stockholders' equity:
Common stock, par value of $0.01 per share; 250,000,000 shares authorized as of June 30, 2024, March 31, 2024 and June 30, 2023; 56,387,461, 55,583,660 and 54,417,579 shares issued and outstanding as of June 30, 2024, March 31, 2024 and June 30, 2023, respectively			563				555				543
Additional paid-in capital			949,817				936,403				840,181
Accumulated other comprehensive loss			(9	)			(50	)			—
Accumulated deficit			(246,781	)			(294,336	)			(369,022	)
Total stockholders' equity			703,590				642,572				471,702
Total liabilities and stockholders' equity		$	1,204,832			$	1,129,247			$	657,881

e.l.f. Beauty, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) (in thousands)
		Three months ended June 30,
			2024				2023
Cash flows from operating activities:
Net income		$	47,555			$	52,977
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and non-cash lease expense			11,134				5,637
Stock-based compensation expense			12,964				7,200
Amortization of debt issuance costs and discount on debt			138				75
Deferred income taxes			5,108				2,113
Impairment of equity investment			—				1,720
Other, net			(127	)			71
Changes in operating assets and liabilities:
Accounts receivable			(31,815	)			(22,615	)
Inventory			(8,074	)			(16,729	)
Prepaid expenses and other assets			(30,500	)			(8,094	)
Accounts payable and accrued expenses			(3,107	)			2,014
Other liabilities			(1,995	)			(1,015	)
Net cash provided by operating activities			1,281				23,354
Cash flows from investing activities:
Purchase of property and equipment			(786	)			(616	)
Other, net			(93	)			—
Net cash used in investing activities			(879	)			(616	)
Cash flows from financing activities:
Repayment of long-term debt			—				(1,250	)
Cash received from issuance of common stock			464				485
Other, net			(56	)			(202	)
Net cash provided by (used in) financing activities			408				(967	)
Effect of exchange rate changes on cash and cash equivalents			41				—
Net increase in cash and cash equivalents			851				21,771
Cash and cash equivalents - beginning of period			108,183				120,778
Cash and cash equivalents - end of period		$	109,034			$	142,549

e.l.f. Beauty, Inc. and subsidiaries Reconciliation of GAAP net income to non-GAAP adjusted EBITDA (unaudited) (in thousands)
		Three months ended June 30,
			2024				2023
Net income		$	47,555			$	52,977
Interest expense (income), net			3,665				(341	)
Income tax (benefit) provision			(325	)			6,676
Depreciation and amortization			9,058				4,587
EBITDA		$	59,953			$	63,899
Stock-based compensation			12,964				7,200
Impairment of equity investment (a)			—				1,720
Other non-cash and non-recurring items (b)			4,517				1,481
Adjusted EBITDA		$	77,434			$	74,300

(a)		Represents an impairment of equity investment recorded during the three months ended June 30, 2023.
(b)		Represents other non-cash or non-recurring items, which include amortization of internal-use software costs related to cloud applications, costs related to the acquisition of Naturium, and cloud computing ERP implementation costs.

e.l.f. Beauty, Inc. and subsidiaries Reconciliation of GAAP SG&A to non-GAAP adjusted SG&A (unaudited) (in thousands)
		Three months ended June 30,
			2024				2023
Selling, general and administrative expenses		$	180,575			$	91,939
Stock-based compensation			(12,958	)			(7,223	)
Other non-recurring items (a)			(3,204	)			(352	)
Adjusted selling, general and administrative expenses		$	164,413			$	84,364

(a)

Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.

e.l.f. Beauty, Inc. and subsidiaries Reconciliation of GAAP net income to non-GAAP adjusted net income (unaudited) (in thousands, except share and per share data)
		Three months ended June 30,
			2024				2023
Net income		$	47,555			$	52,977
Stock-based compensation			12,964				7,200
Other non-recurring items (a)			3,204				352
Impairment of equity investment (b)			—				1,720
Amortization of acquired intangible assets (c)			4,349				2,028
Tax Impact (d)			(3,754	)			(1,396	)
Adjusted net income		$	64,318			$	62,881
Weighted average number of shares outstanding – diluted			58,551,423				57,175,870
Adjusted diluted earnings per share		$	1.10			$	1.10

(a)		Represents other non-recurring cloud computing ERP implementation costs and costs related to the acquisition of Naturium.
(b)		Represents an impairment of equity investment recorded during the three months ended June 30, 2023.
(c)		Represents amortization expense of acquired intangible assets consisting of customer relationships and trademarks.
(d)		Represents the tax impact of the above adjustments.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808433013/en/

Investors:

KC Katten

VP, Corporate Development & Investor Relations, e.l.f. Beauty

kkatten@elfbeauty.com

Media:

Melinda Fried

Head of Corporate Communications, e.l.f. Beauty

mfried@elfbeauty.com

Source: e.l.f. Beauty

FAQ

What was e.l.f. Beauty's net sales growth in Q1 fiscal 2025?

e.l.f. Beauty reported a 50% net sales growth in Q1 fiscal 2025, reaching $324.5 million.

How much market share did e.l.f. Cosmetics gain in Q1 fiscal 2025?

e.l.f. Cosmetics gained 260 basis points of market share in Q1 fiscal 2025.

What is e.l.f. Beauty's updated net sales outlook for fiscal 2025?

e.l.f. Beauty raised its fiscal 2025 net sales outlook to $1,280-1,300 million, representing a 25-27% year-over-year increase.

What was e.l.f. Beauty's adjusted diluted earnings per share for Q1 fiscal 2025?

e.l.f. Beauty reported adjusted diluted earnings per share of $1.10 for Q1 fiscal 2025.