Was there any explanation from management why sequential revenue was mostly flat? I couldn’t find anything explaining this in the transcript.
The CFO said results were,
- “outstanding”
- “super proud of the 50% net sales growth that we just delivered really incredible”
- “expect Q2 results to be better than our annual outlook, which we feel great about”
- “50%, we do believe was a pretty tremendous quarter”
On the Q2 results they say the growth will be better than the annual outlook. The annual outlook is for 25-27% growth and the comp against last year’s Q2 is against 216M. Twenty seven percent growth on 216M is 274M. The CFO assuring they are going to get at least 274M revenue next quarter is definitely not inspiring confidence.
Again this conference call is the analysts trying to parse the CFO’s guides comments which imply sequential decelerations. I was okay when ELF was delivering way above expected results and the guides were obvious sandbags, but now with delivering a sequentially flat quarter we got little explanation, and still low ball guides.
One more concern I have is adj SG&A has gone year over year from 39% of revenue to 51% of revenue. They included the reasons as marketing and digital spend, comp + benefits, operations costs, and retail costs. The company is still just over 500 employees so it doesn’t seem like employee costs is the driver but marketing is. They’ve mentioned they have been driving up marketing, but this quarter it doesn’t seem to have added revenue as you would expect from that level of marketing spend.