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

Rhea-AI Summary

e.l.f. Beauty (NYSE: ELF) reported strong Q2 fiscal 2025 results with 40% net sales growth to $301.1 million. The company achieved a 195 basis points gain in U.S. market share and 91% international sales growth. Gross margin increased 40 basis points to 71%. Net income was $19.0 million with adjusted diluted EPS of $0.77. The company raised its fiscal 2025 outlook, now expecting 28-30% year-over-year net sales growth to $1,315-1,335 million, up from the previous guidance of 25-27%. This marks the 23rd consecutive quarter of both net sales growth and market share gains.

Positive

• 40% net sales growth to $301.1 million in Q2
• 195 basis points gain in U.S. market share
• 91% international sales growth
• Gross margin increased 40 basis points to 71%
• Raised fiscal 2025 outlook to 28-30% net sales growth
• 23 consecutive quarters of sales growth and market share gains

Negative

• SG&A expenses increased significantly to 62% of net sales
• Long-term debt increased to $156.6M from $57.7M YoY
• Cash position decreased to $96.8M from $167.8M YoY

Insights

Financial Analyst

e.l.f. Beauty delivered exceptional Q2 results with 40% net sales growth to $301.1M. Key highlights include 71% gross margin and strong international expansion with 91% growth. The company's market share gains of 195 basis points in the U.S. demonstrate continued momentum in both retail and e-commerce channels.

The raised FY2025 guidance shows management's confidence, projecting net sales of $1.315-1.335B, up from previous $1.28-1.3B. Adjusted EBITDA margin at 23% reflects operational efficiency despite increased SG&A spend. The balance sheet remains healthy with $96.8M cash, though debt increased year-over-year to support growth initiatives.

This marks the 23rd consecutive quarter of growth, indicating sustainable business momentum and effective execution of their expansion strategy. The improved outlook and consistent performance metrics suggest strong fundamental strength in their business model.

Market Research Analyst

The beauty sector's competitive landscape shows e.l.f.'s remarkable outperformance, with their 195 basis point market share gain particularly noteworthy. Their success in international markets with 91% growth demonstrates effective market penetration strategies and brand resonance across borders.

The company's ability to implement price increases in international markets while maintaining growth suggests strong brand equity and pricing power. Their continued investment in marketing, digital presence and retail fixtures indicates a strategic focus on omnichannel presence and consumer engagement. The sustained growth trajectory across both traditional retail and e-commerce channels points to successful adaptation to evolving consumer preferences and shopping behaviors.

– Delivered 40% Net Sales Growth –

– e.l.f. Cosmetics Gained 195 Basis Points of U.S. Market Share –

– Raises Fiscal 2025 Outlook –

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

“Q2 marked another quarter of consistent, category-leading growth. In Q2, we delivered 40% net sales growth, fueled by 195 basis points of market share gains in the U.S. and 91% net sales growth internationally,” said Tarang Amin, e.l.f. Beauty’s Chairman and Chief Executive Officer. “This was our 23rd consecutive quarter of both net sales growth and market share gains. 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 September 30, 2024 Results

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

• Net sales increased 40% to $301.1 million, primarily driven by strength in both our retailer and e-commerce channels, in the U.S. and internationally.
• Gross margin increased approximately 40 basis points to 71%, primarily driven by cost savings, favorable foreign exchange impacts, and price increases in our international markets, partially offset by mix and higher transportation costs.
• Selling, general and administrative (“SG&A”) expenses increased $74.0 million to $186.1 million, or 62% of net sales. Adjusted SG&A (SG&A excluding the items identified in the reconciliation table below) increased $62.5 million to $160.3 million, or 53% 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, depreciation and amortization, and professional fees.
• Net income was $19.0 million on a GAAP basis. Adjusted net income (net income excluding the items identified in the reconciliation table below) was $45.0 million.
• Diluted earnings per share were $0.33 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 $0.77.
• Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) was $69.3 million, or 23% of net sales, up 15% year over year.

Six Months Ended September 30, 2024 Results

For the six months ended September 30, 2024, compared to the six months ended September 30, 2023:

• Net sales increased 45% to $625.6 million, primarily driven by strength in both retailer and e-commerce channels, in the U.S. and internationally.
• Gross margin increased approximately 60 basis points to 71%, primarily driven by cost savings, favorable foreign exchange impacts, and price increases in our international markets, partially offset by mix and inventory adjustments.
• SG&A increased $162.6 million to $366.7 million, or 59% of net sales. Adjusted SG&A increased $142.5 million to $324.7 million, or 52% 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, depreciation and amortization, and professional fees.
• Net income was $66.6 million on a GAAP basis. Adjusted net income was $109.3 million.
• Diluted earnings per share were $1.14 on a GAAP basis. Adjusted diluted earnings per share were $1.87.
• Adjusted EBITDA was $146.8 million, or 23% of net sales, up 9% year over year.

Liquidity

As of September 30, 2024, the Company had $96.8 million in cash and cash equivalents and $156.6 million of long-term debt and finance lease obligations, as compared to $167.8 million in cash and cash equivalents and $57.7 million of long-term debt and finance lease obligations as of September 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 28-30% year-over-year increase in net sales, as compared to an expected 25-27% increase previously.

	Updated Fiscal 2025 Outlook		Previous Fiscal 2025 Outlook
Net sales	$1,315-1,335 million		$1,280-1,300 million
Adjusted EBITDA	$304-308 million		$297-301 million
Adjusted effective tax rate	19-20%		20-21%
Adjusted net income	$205-208 million		$198-201 million
Adjusted diluted earnings per share	$3.47-3.53		$3.36-3.41
Fiscal year ending diluted shares outstanding	59 million		59 million

Webcast Details

The Company will hold a webcast to discuss the results from its second quarter fiscal 2025 today, November 6, 2024, at 4:30 p.m. Eastern Time. The webcast will be broadcast live at https://investor.elfbeauty.com/stock-and-financial/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 belief that anything is e.l.f.ing possible. e.l.f. is a different kind of company that disrupts norms, shapes culture and connects communities, through positivity, inclusivity and accessibility. The mission is clear: to make the best of beauty accessible to every eye, lip and face. e.l.f. Beauty and its brands, e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People and NATURIUM, are led by purpose, driven by results and elevated by superpowers. e.l.f. Beauty offers e.l.f. clean and vegan products, all double-certified by PETA and Leaping Bunny as cruelty free, and proudly stands as the first beauty company with Fair Trade Certified™ facilities. With a kind heart at the center of e.l.f.’s ethos, the company donates 2% of net profits to organizations that make positive impacts.

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 include 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 September 30,								Six months ended September 30,
		2024				2023				2024				2023
Net sales		$	301,075			$	215,507			$	625,552			$	431,846
Cost of sales			87,016				63,142				180,210				126,909
Gross profit			214,059				152,365				445,342				304,937
Selling, general and administrative expenses			186,141				112,186				366,716				204,125
Operating income			27,918				40,179				78,626				100,812
Other income (expense), net			3,791				(1,062	)			3,978				(663	)
Impairment of equity investment			—				—				—				(1,720	)
Interest (expense) income, net			(3,761	)			623				(7,426	)			964
Income before provision for income taxes			27,948				39,740				75,178				99,393
Income tax provision			(8,928	)			(6,469	)			(8,603	)			(13,145	)
Net income		$	19,020			$	33,271			$	66,575			$	86,248
Net income per share:
Basic		$	0.34			$	0.61			$	1.19			$	1.59
Diluted		$	0.33			$	0.58			$	1.14			$	1.50
Weighted average shares outstanding:
Basic			56,345,648				54,425,384				56,160,796				54,183,091
Diluted			58,482,530				57,438,152				58,517,993				57,308,342

e.l.f. Beauty, Inc. and subsidiaries Condensed consolidated balance sheets (unaudited) (in thousands, except share and per share data)
		September 30, 2024				March 31, 2024				September 30, 2023
Assets
Current assets:
Cash and cash equivalents		$	96,768			$	108,183			$	167,763
Accounts receivable, net			146,559				123,797				86,683
Inventory, net			238,798				191,489				147,228
Prepaid expenses and other current assets			71,914				53,608				33,772
Total current assets			554,039				477,077				435,446
Property and equipment, net			15,563				13,974				7,624
Intangible assets, net			216,396				225,094				73,986
Goodwill			340,582				340,600				171,620
Other assets			110,435				72,502				58,260
Total assets		$	1,237,015			$	1,129,247			$	746,936
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt		$	100,250			$	100,307			$	5,228
Accounts payable			93,617				81,075				63,736
Accrued expenses and other current liabilities			117,030				117,733				83,407
Total current liabilities			310,897				299,115				152,371
Long-term debt			156,648				161,819				57,735
Deferred tax liabilities			4,833				3,666				4,901
Long-term operating lease obligations			36,176				21,459				14,559
Other long-term liabilities			766				616				942
Total liabilities			509,320				486,675				230,508
Stockholders' equity:
Common stock, par value of $0.01 per share; 250,000,000 shares authorized as of September 30, 2024, March 31, 2024 and September 30, 2023; 56,331,038, 55,583,660 and 54,621,561 shares issued and outstanding as of September 30, 2024, March 31, 2024 and September 30, 2023, respectively			562				555				545
Additional paid-in capital			954,455				936,403				851,634
Accumulated other comprehensive income (loss)			439				(50	)			—
Accumulated deficit			(227,761	)			(294,336	)			(335,751	)
Total stockholders' equity			727,695				642,572				516,428
Total liabilities and stockholders' equity		$	1,237,015			$	1,129,247			$	746,936

e.l.f. Beauty, Inc. and subsidiaries Condensed consolidated statements of cash flows (unaudited) (in thousands)
		Six months ended September 30,
		2024				2023
Cash flows from operating activities:
Net income		$	66,575			$	86,248
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and non-cash lease expense			23,803				12,311
Stock-based compensation expense			34,612				18,417
Amortization of debt issuance costs and discount on debt			276				149
Deferred income taxes			1,324				1,159
Impairment of equity investment			—				1,720
Other, net			18				221
Changes in operating assets and liabilities:
Accounts receivable			(21,221	)			(18,812	)
Inventory			(45,071	)			(65,904	)
Prepaid expenses and other assets			(48,863	)			(27,090	)
Accounts payable and accrued expenses			5,188				45,112
Other liabilities			(4,192	)			(2,261	)
Net cash provided by operating activities			12,449				51,270
Cash flows from investing activities:
Purchase of property and equipment			(2,409	)			(1,465	)
Other, net			(93	)			—
Net cash used in investing activities			(2,502	)			(1,465	)
Cash flows from financing activities:
Repayment of long-term debt			(5,375	)			(2,500	)
Debt issuance costs paid			—				(665	)
Repurchase of common stock			(17,076	)			—
Proceeds from exercise of stock options			533				750
Other, net			(58	)			(405	)
Net cash used in financing activities			(21,976	)			(2,820	)
Effect of exchange rate changes on cash and cash equivalents			614				—
Net (decrease) increase in cash and cash equivalents			(11,415	)			46,985
Cash and cash equivalents - beginning of period			108,183				120,778
Cash and cash equivalents - end of period		$	96,768			$	167,763

e.l.f. Beauty, Inc. and subsidiaries Reconciliation of GAAP net income to non-GAAP adjusted EBITDA (unaudited) (in thousands)
		Three months ended September 30,								Six months ended September 30,
		2024				2023				2024				2023
Net income		$	19,020			$	33,271			$	66,575			$	86,248
Interest expense (income), net			3,761				(623	)			7,426				(964	)
Income tax provision			8,928				6,469				8,603				13,145
Depreciation and amortization			10,242				5,586				19,300				10,173
EBITDA		$	41,951			$	44,703			$	101,904			$	108,602
Stock-based compensation			21,648				11,217				34,612				18,417
Impairment of equity investment (a)			—				—				—				1,720
Other non-cash and non-recurring items (b)			5,730				4,498				10,247				5,979
Adjusted EBITDA		$	69,329			$	60,418			$	146,763			$	134,718

(a)		Represents an impairment of equity investment recorded during the six months ended September 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 September 30,								Six months ended September 30,
	2024				2023				2024				2023
Selling, general and administrative expenses	$	186,141			$	112,186			$	366,716			$	204,125
Stock-based compensation		(21,644	)			(11,190	)			(34,602	)			(18,413	)
Other non-recurring items (a)		(4,226	)			(3,189	)			(7,430	)			(3,541	)
Adjusted selling, general and administrative expenses	$	160,271			$	97,807			$	324,684			$	182,171

(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 September 30,								Six months ended September 30,
		2024				2023				2024				2023
Net income		$	19,020			$	33,271			$	66,575			$	86,248
Stock-based compensation			21,648				11,217				34,612				18,417
Other non-recurring items (a)			4,226				3,189				7,430				3,541
Impairment of equity investment (b)			—				—				—				1,720
Amortization of acquired intangible assets (c)			4,349				2,027				8,698				4,055
Tax Impact (d)			(4,248	)			(2,559	)			(8,002	)			(3,955	)
Adjusted net income		$	44,995			$	47,145			$	109,313			$	110,026
Weighted average number of shares outstanding – diluted			58,482,530				57,438,152				58,517,993				57,308,342
Adjusted diluted earnings per share		$	0.77			$	0.82			$	1.87			$	1.92

(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 six months ended September 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/20241106452075/en/

Investors:

KC Katten

VP, Corporate Development & Investor Relations

kkatten@elfbeauty.com

Media:

Sam Critchell

VP, Corporate Communications

scritchell@elfbeauty.com

Source: e.l.f. Beauty

FAQ

What was e.l.f. Beauty's (ELF) Q2 2025 revenue growth?

e.l.f. Beauty reported 40% net sales growth to $301.1 million in Q2 fiscal 2025.

How much market share did e.l.f. Beauty (ELF) gain in Q2 2025?

e.l.f. Beauty gained 195 basis points of market share in the U.S. during Q2 fiscal 2025.

What is e.l.f. Beauty's (ELF) updated fiscal 2025 revenue guidance?

e.l.f. Beauty raised its fiscal 2025 net sales guidance to $1,315-1,335 million, representing 28-30% year-over-year growth.

What was e.l.f. Beauty's (ELF) international sales growth in Q2 2025?

e.l.f. Beauty achieved 91% net sales growth internationally in Q2 fiscal 2025.