e.l.f. Beauty, Inc.

Thank you for joining us today to discuss Elf Beauty's presentation today includes information presented on a non-GAAP basis. Our earnings release contains reconciliations 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. Today, we will discuss the drivers of our Q2 results and our raised outlook for Fiscal 23. We delivered another quarter well ahead of our expectations. We grew net sales by 33%, increased gross margin by 190 basis points, and delivered $27 million in adjusted EBITDA, up 47%. Q2 marked our 15th consecutive quarter of net sales growth. Given our momentum, we're raising our full year guidance. We're encouraged by the growth we're seeing across the color cosmetics category. In Q2, category trends grew 5% versus a year ago and were above pre-pandemic levels. e.l.f. Cosmetics consumption was even stronger, up 27% in tracked channels. Our market share grew by 115 basis points, overtaking Revlon for the number four position for the first time. We were the fastest growing top five brand by a wide margin. Looking to skincare, Q2 category trends were also strong, up 15% versus a year ago. e.l.f. skin consumption was up 44% in track channels, well above category growth rates. Before diving into our growth drivers, I want to share a few Q2 highlights. In September, we launched our first ever impact report to highlight how the company is making a positive impact on people, the planet, and our furry friends. The report showcases how we are creating a different kind of beauty company by building brands designed to disrupt industry norms, shape culture, and connect communities through positivity, inclusivity, and accessibility. Our commitment to our culture and people was recently spotlighted by Newsweek, who named e.l.f. Beauty to its annual list of top 100 most loved workplaces. e.l.f. is a Gen Z favorite. In Piper Sandler's semiannual teen survey, e.l.f. remained the number one favorite cosmetics brand among teens. We grew our share by 500 basis points versus a year ago and attained the number one rank across all income groups. Elfcosmetics.com became a top 10 shopping destination for teens for the first time, the only single brand site among major retailers. Our value proposition, innovation engine, and ability to attract and engage consumers are driving strong results with teens and across our entire business. Let me take a few minutes to talk through how each of these drivers enabled our results in Q2. First, we are known for our value proposition. We make the best of beauty accessible to every eye, lip, face, and skin concern. We take inspiration from our community and the best products in prestige and deliver high quality, holy grail products at extraordinary prices. We see evidence of consumers looking for value, both in absolute price point and relative to prestige. We believe we're benefiting from trade down as consumers choose our holy grails and the value they provide versus the prestige comparison. And trade within mass as evidenced by our strong share gains. The average price point for e.l.f. is a little over $5 today as compared to around $9 for legacy mass cosmetics brands and over $22 for prestige brands. Unlike many of these higher priced brands, our pricing strategy focuses on everyday value instead of broad-based promotions. The second driver of our performance is that we're an innovation powerhouse. Our innovation engine has built leadership over time across multiple segments. Our seven largest segments, brushes, primers, setting sprays, eyeshadows, concealers, brows, sponges, collectively make up over half of e.l.f. Cosmetics sales. We have the number one or two position in all seven segments and saw share gains in each in Q2. Our innovation continues to receive industry recognition. In the highly coveted Allure Best of Beauty Awards, three of our products garnered Best of Awards, marking the 10th consecutive year e.l.f. Beauty has won this honor. Our new products are resonating with our community. PowerGrip Primer builds upon our strength in the Primer category and its jaw-dropping value at $10 versus a prestige equivalent at $34. PowerGrip was our top-selling SKU in Q2. We're seeing viral success with our recently launched Halo Glow Liquid Filter. Its incredible value of $14 versus the prestige equivalent at $46 propelled it to be the number one selling product on elfcosmetics.com in Q2.

They were putting the Charlotte Tilbury Flawless Filter up against the Elf Halo Glow Liquid Filter, which is a dupe, but in my opinion, I think it's better.