ELF Q3 FY24 Earnings

Looks E.L.F. had a nice quarter, stock up 2% AH

  • Revenue of $270.9M (+84.9% Y/Y) beats by $31.99M.
    *Q3 Non-GAAP EPS of $0.74 beats by $0.18.
  • Gross margin increased approximately 350 basis points to 71%
  • Net income was $26.9 million on a GAAP basis. Adjusted net income (net income excluding the items identified in the reconciliation table below) was $42.9 million.
  • Diluted earnings per share were $0.46 on a GAAP basis.
  • Adjusted EBITDA (EBITDA excluding the items identified in the reconciliation table below) was $59.1 million, or 22% of net sales, up 61% year over year.

“Our vision is to create a different kind of beauty company and you can see that in the exceptional, consistent, category-leading growth we’ve delivered,” said Tarang Amin, e.l.f. Beauty’s Chairman and Chief Executive Officer. “In Q3, we grew net sales by 85% and market share by 305 basis points, marking our 20th consecutive quarter of growth in each. I’m extremely proud of our team and the progress we continue to make across color cosmetics, skin care and internationally.”

**They also raised Guidance - The updated outlook for fiscal 2024 reflects an expected 69-71% year-over-year increase in net sales, as compared to an expected 55-57% increase previously. **

FY2024 Sales Forecast increased from $896-906 million to $980-990 million.

Full Press Release:

e.l.f. Beauty Announces Third Quarter Fiscal 2024 Results – (elfbeauty.com)


It was a nice report but Gross Margins were basically flat sequentially.

SG&A was up due to market and digital spend.

Debt is now at $264.8 million up from $57.7 million sequentially, I am not sure why hopefully the earnings call will explain it but I think most likely it is because of the Natiurium acquisition.

FCF was negative this quarter due to acquisition expenses, Much higher inventory, account receivables. I think this is skewed because of the acquisition. It’s going to be hard to parse all of it out and could take a few quarters to see how it is working out.

Over all a very nice quarter and Sales per share is now at $15.34 up $2.00 from last quarter.



Yup. It seems ELF used cash and a credit facility for part of the Naturium acquisition. That affected cash flows as well. Profit margins should be down again next quarter but will remain positive and are already accounted for in the guides.

The highlight, of course, is growth once again accelerated along with another huge raise to the FY guide. And while gross margins stayed basically flat, it is fair to point out they did squeak up to a record 70.8%.

Agree. In my opinion, way more good than things to be worried about in this report. Congrats to all holders.


Hi Andy,
Boy you had to look hard for something negative to start off your summary with. This is a company that manufactures and sells things, not a SaaS company. A 71% gross margin is beyond great for a company like this (in my opinion).

And don’t forget that they are getting these margins while still undercutting everyone else on price. It’s amazing if you think about it.



Hi Saul just keeping it real. Foolish Jeff already gave a nice recap I just thought it would be good to fill it in.



I Couldn’t resist posting this slide from their slide deck. It refers to the color cosmetics category.


Some Conference Call excerpts

Conference Call

In color cosmetics, we continue to significantly outperform the category. In Q3, e.l.f. Cosmetics grew 46% in tracked channels, 23 times category growth of 2%.

In Target, our longest-standing national retail customer, we’re the number one brand with about a 19% share, nearly double the share we had in Target just a few years ago.

In skincare, we also continue to outperform the category. In Q3, e.l.f. SKIN grew 89% in tracked channels, 10 times category growth of 9%. We grew our share by 60 basis points [from 0.8% to 1.4%, not bad!] and gained six rank positions, increasing our rank to the number 14 brand as compared to the number 20 brand a year ago, e.l.f. SKIN today holds a 1.4% share and a significant runway with the number one brand holding 14% share.

We’re also making progress with Naturium, the skincare brand we acquired in October. Naturium has doubled our skincare penetration to 18% of retail sales and gives us a fast growing complementary brand to further our aspirations in the category. Naturium has seen exceptional growth with net sales growing at an 80% CAGR over the last two years. We’re pleased by the strong growth that Naturium continued to deliver in Q3.

Turning to international, our net sales grew 119% in Q3 and drove 15% of our business as compared to 13% a year ago. We saw terrific growth in the U.K. and Canada, our largest global markets. As compared to our number three position in the U.S., e.l.f. is the number four cosmetics brand in Canada and the number six brand in the U.K.

In Italy, where we just launched this fall, e.l.f. is already the number one brand in Douglas across both mass and prestige. We see significant runway to expand our brands globally.

[ Douglas is the leading premium beauty and health platform in Europe. Offering around 200,000 beauty, lifestyle and health products in online shops, the beauty marketplace and around 2,000 stores…]

First, we’re known for our value proposition. Our mission is to make the best of beauty accessible to every eye, lip, face and skin concern. We have a unique ability to deliver high quality holy grails at an extraordinary value, created with inspiration from our community, the best products in prestige, and our distinctive e.l.f. Twist. The average price point for e.l.f. is a little over $6 today as compared to over $9 for legacy mass cosmetics brands and over $20 for prestige brands. [Hard for competitors to undersell them, except at a loss, while Elf maintains a 71% gross margin].

Our ending inventory balance was $205 million in-line with our expectations and up from $81 million a year ago. The difference is primarily a combination of three things.

First, as we said last quarter, we continued to build back our inventory levels through fiscal ‘24 to support strong consumer demand.

Second, approximately 28 million of the increase is the result of taking ownership of inventory from China when it ships versus when it enters our distribution center here in the U.S. [avoiding import tarifs?]

Lastly, our consolidated results include Naturium for the first time, which added approximately $25 million of inventory. We believe we have the appropriate levels of inventory across the business to service our customers and support the demand we’re seeing.

Question : Maybe you can help us understand the outperformance in the quarter. And I understand you have a solid track record of conservative expectations or forecasts. But I mean, this seems to be upstanding in terms of the beat and all across the board. So, what drove or was there any couple of factors that drove the upside, especially as I think we were all looking at kind of tougher comps as we entered December, but you seem to kind of surpass that and keep on moving even as we see the scanner data today. So, is anything changed? Anything stepped up? Was there something different or were you just really conservative on your guidance?

Answer : Well, I would say, Bill, When we talk about exceptional, consistent category leading growth, that’s exactly what you’ve seen for us for 20 quarters in a row. We cite the stat of we’re one of only five public consumer companies out of 274 that have grown 20 consecutive quarters at over 20%. So, I think it’s more consistent than not.

In terms of the quarter, the quarter did come in better than we were expecting. And it really is, all three of our key drivers working in concert. So, if I look at our value equation, our powerhouse innovation, and our marketing engine, we continue to see great strength and great fundamentals in each of them.

[These are just a few excerpts. There’s lots more]

Saul (for disclosure, Elf is my largest position).


Is anyone aware of news that would cause ELF to be down almost 7% today after such a great report? I’m considering adding, but I want to ensure I’m not missing something.


Market was hoping for more (probably on the bottom line…I was too). But I think this quarter was fine…just not a blowout vs what was expected.

Also, at $170, ELF is up 84% from where it was just over 3 months ago on October 31.

I don’t see anything to worry about, but (for me at least) this isn’t a back-up-the-truck moment either.

still long ELF, but I did take the opportunity to trim some (esp in the 180s)


I couldn’t find anything and loaded it up around -5.8%. It’s around -2% now.
The same happened last night. It went down hard right after the bell, then went up as the after hours went on. I assume it’s because the different interpretation of the cash depletion.


Well, I have to strongly disagree with Bear on this one. As Stocknovice said in his writeup on the results, this can only be seen as “a blow-out on both the top and bottom lines”.

When all the analysts on the call are congratulating the company, you know that price goals will be going up too.

I’m with rodatl on this one.



I fully agree it’s not a “back-up-the-truck” situation. My allocation was lower than I wanted it to be (4%). I took the opportunity to bring it up. It’s 6.5% now.
It was/is a good opportunity, if the level of long-term confidence increased (like it did for me).


I forgot to add that the money for increasing ELF came from trimming CRWD, ZS, and DDOG, which have been in a good run for a while (YTD 25%, 10%, and 8%, respectively).


This is great, obviously a very disruptive company. How are they able to maintain such a high gross margin while having the cheapest products and based on popularity seem to have good quality as well? What’s their secret sauce?


Good discussion so far, some key take aways from me,

Guides/Actuals (revised full year guidance),
Full year 55-57% sales growth, revised up, 69-71%
Adj EBITDA 197-200M, revised up, 218-220M
Adj net income 144-146M, revised up, 164-166M
Adj EPS 2.47 - 2.50, revised up, 2.84 - 2.87

The year over year growth of revenue for the last number of quarters goes like, 13% → 26% → 33% → 49% → 78% → 76% → 76% → 85%.

Those same quarters in actual dollars terms are, 105M → 122M → 122M → 146M → 187M → 216M → 215M → 271M.

This is a company that has been in business over 20 years, and the growth is actually ramping up even more.

They are spending massively on advertising and sales. Entertainment they introduced this quarter,

Cosmetics Criminals - https://www.youtube.com/watch?v=bxGKZ6lfJ7A - a true crime comedy skit about stolen makeup

Song by Manuel Turizo, ojos. labios. cara. - Latin singer title is Spanish for eyes, lips, face. Had a lot of views, probably paid promotion for in part by ELF. https://www.youtube.com/watch?v=uwkuHHmmjPg

Roblox game - e.l.f. UP! - I went into Roblox myself and played this game. A bit disappointed to be honest, because of the focus on in game purchases. Not all Roblox are this aggressive in paid content. Looking on youtube there is only a single video of one person playing this game.This game looks like a bust to me with heavy paid spend to buy the likes. Even within the game, it said I could not access certain parts of levels until I clicked like and upvoted the game.

I am trying to understand the implications of this company being an entertainment company as well. Their expertise doesn’t lie in film making and PC gaming. The CEO does say "I’ve been in the consumer space for over 30 years. It’s the first brand of seeing where you take up your marketing levels and actually get better ROIs.

International expansion seems to be going great. The elf brand is number one already at the store Douglas in Italy. That seems like a huge market to me with Italy having a population of ~60M, and considering the rest of Europe looks to Italy for fashion. I could see the trend for affordable makeup going into the rest of Europe very easily. Just selling into Europe alone could probably double or triple their market. They also “saw terrific growth into the UK”.

The company seems to have reasonable explanations for the inventory balance, basically they are scaling up and have some inventory from the acquisition. I’m fine with them taking a little debt to go heavy into sales. If we take the CEO at his word, the advertising is driving a ROI like he has never seen before in 30 years of industry.

My guess for the market reaction is the guide for next quarter is 48-53% (276-286M) growth which is a lot lower than the current quarter of 85%. While significantly lower I believe there is some seasonality here with Christmas/Q4 being a big sale week. They openly admit on the call they are conservative with their guidance. Seems like they are already hinting they are going to easily beat the guide again.


I wonder how much this guidance takes into consideration that this will be likely be the most watched Superbowl in history, driven by the Swiftie Factor driving millions of new viewers (particularly young women). To add to that, ELF’s commercial will feature the cast from Suits, which was the most widely streamed show in the US last year.

I have a hard time seeing this go poorly; but who knows? Perhaps it will erode margins more than drive incremental sales…

PS: looks like Crowdstrike will feature a commercial too.



Edit: I amended my numbers and conclusion after wsm007 corrected me on the Naturium acquisition date. In an earlier version, I had ELF’s Q4 organic revenue growth at 28%.

All things considered, I wasn’t super excited with their earnings report.

  1. SG&A had increased significantly, resulting much lower operating margins. This quarter (Q3 2024), NG OPM was 15.8% compared to last year’s 20.8%. It was also half of Q1 2024’s 31.4%.

The company attributed the increased SG&A to higher marketing and digital spend: “On an adjusted basis, SG&A as a percentage of sales was 54% in Q3 compared to 47% last year. The increase was primarily due to higher marketing and digital spend.”

“We continue to expect marketing and digital investment in the 22% to 24% range for the full year fiscal’24”.

22-24% is the average spend for the entire fiscal year. With lighter marketing and digital investment spend in the earlier part of 2024, we can expect this same line item to be larger in the upcoming Q4 than the average 22-24% they have guided for the entire year.

  1. Potentially weaker Q4 revenue growth.

If we take away Naturium numbers ($24m in Q3 and $24m in Q4), we are looking at a guide of slower organic growth 40% in Q4 vs. past 4 quarters of 78%, 76%, 76% and 69% YoY growth.

They also had commentary about Nielsen track channels to similar effect:

“So why don’t I start with the Nielsen question. So last quarter we had talked about seeing track channels range from 20% growth up to 50% growth. And we said for Q3, it was going to be closer to that higher end of the range, which is what we saw as we exited Q3, closer to that 50% range. As we get into Q4, we do expect that we’ll be closer towards the lower part of that range, closer to the 20% out of track channel, but I will remind you that track channel only represents about half of our business, that we are continuing to see great momentum in other parts of our business,”

So while I don’t know how significant track channels are to the final revenue number, a decline from 50% to 20% seems significant to me.

To be sure, slower growth is to be expected after its breakneck pace of the last few quarters. In addition, I have no doubt they will outperform their guide. However, the combination of higher marketing and digital spend(i.e. lower OPM) with slower growth does temper my enthusiasm for the company.



Hi Ced

I have to disagree with your argument and your numbers.

I think you have the organic numbers wrong because you are attributing the full $48m from Naturium to the upcoming Q4, but the acquisition closed on 4 October, so basically roughly half of that $48m should be in Q3 and half in Q4. So reducing this current Qs revenue by $24m and reducing the full year $990m guide by $48m yields organic revenue, qoq and yoy growth of:

Q3 actual: $246.9m qoq: 15% / yoy 69%
Q4 guide: $263.3m qoq: 7% / yoy 41%

I certainly wouldn’t call 41% yoy guided growth extremely weak…and bear in mind that if they had not acquired Naturum, they would have had better margins, they would have had more cash, they would have done things differently.

Also, you take issue with margins coming down due to marketing. But this is in line with what they told us they were going to do and in line with their pretty smart strategy imo.

ELF is a company is hypergrowth, with extremely good ROI on its marketing investments (demonstrated - not hypothesised, and also expressly stated as the best the CEO has seen in his 30 years in the industry). And it has been GAAP (i.e. after SBC, after tax, after everything you can deduct) net profit positive for the last 15 quarters (that I tracked). And it has just clocked in with a NET profit margin of 11% in a quarter in which they expressly stated previously that they were going to step on the gas in order to grab market share (which they undeniably did).

So margins coming down as per their plan is a non-issue in my book: if you can generate this type of revenue growth and profits, it is folly not to invest heavily behind the opportunity.

And lastly, in the last 16 quarters they have only missed earnings consensus once (by a smidgen, in December 2021 - and we can all recall what happened back then) and they have not missed revenue consensus once in that time period.

Over the last 4 quarters, vs consensus analyst estimates, the % surprise was 20%, 17%, 9% and 13%.


(long ELF ±13%)


Hey wsm, thanks for pointing out the acquisition date for Naturium. From reading the call notes, I had mistakenly thought the acquisition would close in Q4.

I’m a shareholder and I have no doubt they are doing well on their marketing investments. And yes, I do find it concerning that margins have to come down that much to achieve (slowing) growth. Whether they had told us beforehand doesn’t make that much difference to me.

What’s important to me is whether op margins will be less than 15% going forward or will they go back to 20% (or 30%) levels. My thesis for the company will not change because of that but my valuation will.


I love these discussions as they force me to think critically about my assumptions and dig to see if I was perhaps mistaken.

So the CEO said that he sees incredible ROI’s in terms of incremental revenue generated from incremental marketing investments. So I thought to try to calculate that. They give us the annual S&M spend as a % of revenue per year for the past years, and they are guiding for 24% of revenue for this year. If I assume a 10% beat on revenue from what they guided (maybe that’s too much, but it’s not far off historical beats) for Q4, then I can calculate full year marketing spend, incremental marketing spend incremental revenue and ROI on that marketing spend as a percentage, for the last years.

So let’s assume Q4 revenue of $316m for a total of $1,019m for the year. Also, I’m including the incremental marketing and incremental revenue from the acquisition implicitly. Here is what I came up with:

S&M % of revs S&M $ Incr S&M Incr Rev ROI %
2021 16% 50.9
2022 16% 62.6 11.7 12.4 106%
2023 22% 127.3 64.7 82.3 127%
2024 24% 244.5 117.2 128.6 110%

That looks great to me. Like what Tarang is saying is backed up by the numbers: pretty amazing ROI. The margin decrease is planned and is generating the goods as planned. Doesn’t look like we need to be concerned at all.