e.l.f. Beauty, Inc.

Thank you for joining us today to discuss Elf Beauty's second quarter fiscal 24 results. I'm Casey Katton, 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 Tareng.

Thank you, Casey, and good afternoon, everyone. Today, we will discuss the drivers of our Q2 results and our raised outlook for fiscal 24. I want to start by recognizing the Elf Beauty team for delivering another phenomenal quarter. In Q2, we grew net sales by 76%, increased gross margin by 570 basis points, and delivered $60 million in adjusted EBITDA, up 122% versus prior year. Q2 marked our 19th consecutive quarter of net sales growth, putting Elf Beauty in a select group of consistent high growth consumer companies. We're one of only five public consumer companies out of 274 that has grown for 19 straight quarters and average at least 20% sales growth per quarter. We've continued to highlight three areas with significant runway for growth in color cosmetics, skincare, and international. Let me update you on our progress in Q2. In color cosmetics, we continue to significantly outperform category trends. In Q2, e.l.f. Cosmetics grew 51% in tracked channels, nearly 17 times category growth of 3%. We increased our share by 330 basis points. Out of nearly 800 cosmetics brands tracked by Nielsen, e.l.f. is the only brand to gain share for 19 consecutive quarters. We have more than doubled our market share since 2019 from about 4.5% to 10%. We are building strength upon strength with our 330 basis points of share gains in Q2 on top of our share gains last year and the year before. Given our momentum, we see an opportunity to double our share over the next few years. In Q2, e.l.f. was the number three brand nationally with approximately 10% share. In Target, our longest standing national retail customer. We're the number one brand with approximately 19% share, nearly double the level of share we had in Target just two years ago. We're focused on replicating our partnership and success at Target across other key retailers and are making great progress towards that ambition. In skincare, we continue to outperform the category. In Q2, e.l.f. Skin grew 129% in tracked channels, about 13 times category growth of 10%, and was the fastest growing among the top 20 skincare brands. We grew our share by 80 basis points, increasing our rank to the number 14 brand as compared to the number 19 brand a year ago. e.l.f. Skin today holds a 1.6% share and a significant runway with the number one brand holding nearly 15% share. e.l.f. remains a Gen Z favorite, helping drive the share growth we've seen these last 19 quarters. In Piper Sandler's recent Taking Stock with Teens Fall survey, e.l.f. Cosmetics remained the number one teen favorite cosmetics brand for the fourth consecutive season. We grew our share by 13 percentage points versus a year ago to 29%. We believe this is a great indicator of brand strength. For perspective, no other cosmetics brand has surpassed even 20% in the past five years. e.l.f. Skin ranked in the top 10 favorite skincare brands for the second time. e.l.fcosmetics.com was a top 10 beauty shopping destination for teens for the third consecutive survey and was the only brand site on the list. Looking outside the US, we grew our international net sales 157% in Q2. fueled by strength in Canada and the UK. e.l.f. outpaced category growth by more than 10 times in Canada and more than seven times in the UK, fueling share gains in each. e.l.f. today is the number four brand in Canada with a 7% share and the number six brand in the UK with 5% share. We see significant runway to expand our brands globally. Our relentless focus on our five strategic imperatives continues to drive results across our brand portfolio. Let me walk through how each of these strategic imperatives underpinned our strength in Q2. Our first strategic imperative is to build brand demand. Our disruptive marketing engine continues to redefine what's possible in beauty. In Q2, we continue to break boundaries in gaming, entertaining short-form content, and record-setting collaborations. We leaned into gaming with the launch of a limited edition makeup collaboration in August with Luzerfruit, also known as Lufu, one of the world's top female gamers. We dove further into entertainment and short-form digital content with Georgia Shore icon Snooki, leaning into the nostalgia of the moment to underscore the importance of SPF and our sun-touchable franchise.

I'm Snooki, and I have an important message. The sun's a two-faced... I know you look back and think, but Snooki, you had a really healthy natural glow. Well, I got news for you, . I tanned irresponsibly. Luckily, change is possible. The new sun-touchable sunscreens from Elf Skin can help protect you from the sun's drama, like the sunburns, early aging, and other messed up stuff. So please tan responsibly. No one likes a burnt meatball.