e.l.f. Beauty, Inc. Reports Strong Q3 Growth

e.l.f. Beauty, Inc. ((ELF)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call of e.l.f. Beauty, Inc. painted an optimistic picture of the company’s ongoing growth, despite facing certain challenges. The sentiment throughout the call was largely positive, with noteworthy growth in net sales, market share, and digital channels. However, the company acknowledged a softer start to 2025, slower-than-expected new product launches, and foreign currency losses affecting financial performance. Nonetheless, e.l.f. Beauty, Inc. expressed confidence in its strategic growth plans and market position.

Consistent Growth in Net Sales

The earnings call revealed a remarkable 31% increase in net sales for the third quarter, marking the 24th consecutive quarter of net sales growth and market share gains for e.l.f. Beauty, Inc. Year-to-date, the company reported an impressive 40% growth in net sales, underscoring its consistent upward trajectory.

Market Share Expansion

e.l.f. Beauty, Inc. achieved significant market share expansion, with a 220 basis points increase in the US market. The company became the number one unit brand at Target, commanding over 20% of the market share, a testament to its strong market presence.

Strong International Performance

International markets proved to be a strong growth driver for e.l.f. Beauty, Inc., with a 66% increase in international net sales in the third quarter. International sales now account for 20% of the company’s total net sales, up from 15% the previous year, highlighting successful global expansion efforts.

Growth in Digital Channels

Digital channels played a pivotal role in e.l.f. Beauty, Inc.’s consumption trends, with a nearly 30% year-over-year increase in digital consumption. Digital channels drove 24% of total consumption in the third quarter, reflecting the company’s strategic focus on online growth.

Skincare Category Performance

e.l.f. Skin continued to outperform, establishing itself as a top ten skincare brand. The acquisition of Naturium significantly boosted skincare penetration to 18% of retail sales, showcasing the company’s commitment to expanding its skincare offerings.

Soft Start to Calendar 2025

The company reported a softer than expected start to calendar 2025, citing factors such as a declining category, reduced social conversations around beauty, and external events like LA wildfires and TikTok uncertainties impacting consumption trends.

New Product Launch Challenges

Initial reads for new product launches in Spring 2025 were slower than anticipated, affecting sales projections. This highlights the challenges the company faces in maintaining momentum with new offerings.

Adjusted Sales Outlook

In light of the aforementioned challenges, e.l.f. Beauty, Inc. adjusted its net sales outlook for the final quarter of the fiscal year to a range between minus 1% and plus 2%, reflecting a more cautious approach.

Foreign Currency Loss

The company’s financials were impacted by an unforeseen foreign currency loss of approximately $7 million, which affected adjusted EBITDA and net income, adding to the fiscal challenges.

Forward-Looking Guidance

Despite a softer start to the year, e.l.f. Beauty, Inc. remains optimistic about its future prospects. The company expects net sales growth of 14% to 16% in the second half of the fiscal year. It plans to continue focusing on digital, color cosmetics, skincare, and international growth as key areas of opportunity.

In summary, e.l.f. Beauty, Inc.’s earnings call conveyed a sentiment of cautious optimism amidst challenges. The company’s strong net sales growth, market share expansion, and digital channel performance were standout highlights. While facing some headwinds, e.l.f. Beauty, Inc. is poised to leverage its strategic initiatives for continued growth and market leadership.