e.l.f. Beauty, Inc.

Thank you for joining us today to discuss e.l.f. Beauty's second quarter fiscal 2021 results. I'm Casey Katton, Vice President of 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 on the content we're presenting, which you can access on our website at investor.elfcosmetics.com. Please note after the presentation there is a separate dial-in for the Q&A session also noted in the press release. Since many of our remarks today contain forward-looking statements, please refer to our earnings release and reports filed with the SEC where you'll find factors that could cause actual results to differ materially from these forward-looking statements. In addition, the company's presentation today includes information presented on a non-GAAP basis. we refer you to today's press release for a reconciliation of the differences between the non-GAAP presentation and the most directly comparable GAAP measure. With that, let me turn the webcast over to Terang.

Thank you, Casey, and good afternoon, everyone. I hope that you're staying safe and well. Today, I will talk about the fundamental drivers behind our second quarter results, our growth opportunities, and the overall strategic framework for our company. I am so proud of our Elf Beauty team for delivering strong results in the second quarter as we continue to navigate major category headwinds as a result of COVID-19. This is our seventh consecutive quarter of net sales growth with Q2 net sales of $72 million up 7% versus a year ago. We expanded gross margin to 65% up approximately 100 basis points versus last year and delivered adjusted EBITDA of $14 million while increasing our investment in marketing and digital. We continue to grow share in the quarter with 5.5% of the color cosmetics market, up 100 basis points versus a year ago. We also took important next steps in our transformation to a multi-brand portfolio with the unveiling of Keys Soul Care, our groundbreaking new lifestyle beauty brand with Alicia Keys, and the launch of our recharged Well People plant-powered clean beauty brand. Before Mandy goes into more detail on our results, I want to share the key pillars underpinning our performance and talk about why I'm optimistic about the future of our brand portfolio. Our strategy is working. We came into this volatile period from a position of strength. Our superpowers that center on our ability to deliver 100% cruelty-free, premium quality beauty products at accessible price points with universal appeal are more important than ever before. The focus work behind our five strategic imperatives has continued to drive our outperformance relative to the category trends. We believe the strength of our platform gives us the ability to drive even greater value through strategic extensions like our key soul care and well people brands. Let me provide a few highlights from the quarter. Our first strategic imperative is to drive brand demand. We're driving greater brand relevance and expanding our consumer reach. Our press impressions soared over 160% versus prior year. In August, e.l.f. was named one of beauty's most powerful brands in 2020 by Women's Wear Daily. We also increased our rank in Piper Sandler's 40th semiannual teen survey from fourth favorite cosmetics brand amongst teens last year to second this year, reflecting strong appeal with Gen Z. e.l.f.' 's social audience continues to grow double digits, reaching over 9 million followers to date across our digital ecosystem. We're expanding our existing footprint with deeper engagement on key platforms like TikTok, Instagram, YouTube, Snapchat, and Pinterest, while continuing to test and learn on new frontiers. TikTok continues to be a great way for us to galvanize Gen Z and build awareness among other growing cohorts on the platform. The record-breaking viral success of our Eyes Up Face hashtag challenge, coupled with our Elf Magic Act hashtag challenge heroing our $8 poreless putty primer, collectively garnered nearly 10 billion views and 6 million user-generated videos. TikTok is taking note how e.l.f. is changing the game. And we're continuing to make history with the release of Eyes of Famous, the first-ever TikTok reality show. Alongside other innovative activations, the engagement on our e.l.f. channel continues to outpace top beauty brands, and our products continue to go viral organically on their platform, resulting in sales surges. Looking across our digital ecosystem, we recently hosted our fifth annual and first ever fully virtual Beautyscape. This event helps foster ongoing relationships with the influencer community and empowers beauty's rising stars with the opportunity to build a cosmetics and skincare collection that will be sold through a national retailer. This year's event, called Beautyscape the Remix, infused the power of makeup and music, featuring three musical artists, including Grammy-nominated global superstar Tove Loeb.

Even the new virtual format, we saw participation grow over 90% year over year.