e.l.f. Beauty, Inc.

I'm Elfink Famous. I slip famous.

Thank you for joining us today to discuss Elf Beauty's first quarter fiscal 24 results. I'm Casey Katten, Vice President of Corporate Development and 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, which you can access on our website at investor.elfbeauty.com. 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. 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 Turing.

Thank you, Casey, and good afternoon, everyone. Today, we will discuss the drivers of our Q1 results and our raised outlook for fiscal 24. I want to start by recognizing the Elf Beauty team. We're off to an incredibly strong start this fiscal year, delivering Q1 results well ahead of expectations. Q1 marked our 18th consecutive quarter of net sales growth, putting Elf Beauty in a select group of consistent, high-growth consumer companies. We are one of only five public consumer companies out of 274 total that has grown for 18 straight quarters and averaged at least 20% sales growth per quarter. In Q1, we grew net sales by 76%, increased gross margin by 280 basis points, and delivered $74 million in adjusted EBITDA up 135%. Last quarter, we spoke about the three areas with significant runway for growth in color cosmetics, skincare, and internationally. Let me update you on our progress in Q1. In color cosmetics, we continue to outperform category trends. In Q1, e.l.f. grew 48% in tracked channels, well above category growth of 6%. We increased our market share by 260 basis points. Out of nearly 800 cosmetics brands tracked by Nielsen, e.l.f. is the only brand to gain share for 18 consecutive quarters. As great as the share growth has been, we see an opportunity to double our market share over the next few years. Nationally, e.l.f. is the number three brand today with approximately 9.5% share. In Target, our longest standing national retail customer, we are already the number one brand with nearly 18% share. We're focused on replicating our success at Target across other key retailers. In skincare, we also continue to outperform the category. In Q1, e.l.f. Skin grew 127% in tracked channels, well above category growth of 10%, and was the fastest growing among the top 20 skincare brands. We grew our market share by 75 basis points. e.l.f. Skin is the number 14 brand today with a 1.5% share and has significant runway with the number one brand holding over 15% share. Looking outside the US, we grew our international net sales 79% in Q1, fueled by strength in both the UK and Canada. ELF up-paced category growth by nearly 10X in the UK and by over 3X in Canada, fueling market share gains in each. ELF is the number six brand in each of these markets with about a 5% share as compared to the number one brand, which has over 17% share. We continue to build our international team as we aim to expand our brands globally. Across categories and geographies, the three fundamental drivers of our business remain the same. Our value proposition, powerhouse innovation, and disruptive marketing engine. Let me walk through how each underpinned our strength in Q1. First, we're known for our value proposition. We make the best of beauty accessible to every eye, lip, face, and skin concern. We have a unique ability to deliver holy grail products, taking inspiration from our community and the best products in prestige and bring them to market, delivering high quality at an extraordinary value. The average price point for e.l.f. is a little over $6 today as compared to over $9 for the legacy mass cosmetics brands and over $20 for prestige brands. Unlike these higher priced brands, our pricing strategy focuses on everyday value instead of broad-based promotions. We believe our value proposition creates accessibility in the category, allowing more consumers to enjoy the best of beauty. The second driver of our performance is our powerhouse innovation. e.l.f. has a number one or two position across 16 segments of color cosmetics, which collectively make up over 75% of e.l.f. cosmetic sales. We deliver the strongest sales growth and share gains in these segments in Q1. Our innovation approach is to build growing product franchises instead of one and done launches. Our four largest franchises, Camel, Putty, HaloGo, and PowerGrip, have grown year after year. As we launch new innovation within each, the entire franchise has grown. In Q1, we continue to fuel the Putty franchise with the launch of our Liquid Poreless Putty Primer, priced at an incredible value of $10 compared to a prestige item at $54.