e.l.f. Beauty Q4 2025 Earnings Report

e.l.f. Beauty EPS Results

• Actual EPS: $0.78
• Consensus EPS: $0.72
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: $0.53

e.l.f. Beauty Revenue Results

• Actual Revenue: $332.65 million
• Expected Revenue: $327.45 million
• Beat/Miss: Beat by +$5.19 million
• YoY Revenue Growth: +3.60%

e.l.f. Beauty Announcement Details

• Quarter: Q4 2025
• Date: 5/28/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 28, 2025
• Conference Call Time: 4:30PM ET

e.l.f. Beauty (NYSE:ELF), Inc. is a globally recognized cosmetics and skincare company headquartered in Oakland, California. The company operates under multiple brand names, including e.l.f. Cosmetics, e.l.f. Skin, Well People, and Keys Soulcare cater to a diverse customer base worldwide. e.l.f. Beauty, Inc. has gained prominence in the beauty industry by offering high-quality products at affordable prices, making luxurious beauty accessible to all. The company's mission is to provide innovative and inclusive beauty solutions that resonate with millennial and Gen Z consumers, who seek authenticity and affordability in their beauty routines.

At the helm of e.l.f. Beauty, Inc. is an accomplished and experienced management team. Tarang P. Amin is the Chairman, Chief Executive Officer, and President, leading the company's overall strategic direction and growth initiatives. Amin's industry expertise and vision have been instrumental in shaping the company's success. Mandy J. Fields, the Senior Vice President and Chief Financial Officer, contributes to e.l.f. Beauty, Inc.'s financial stability and growth through strategic financial planning and execution. 

e.l.f. Beauty, Inc. has achieved impressive financial performance in recent years, reflecting its strong market position. The company reported a revenue increase yearly, showcasing a substantial year-over-year growth of over 40%. This growth can be attributed to the company's successful product offerings and expanding customer base. Moreover, e.l.f. Beauty, Inc. demonstrated remarkable profitability with an impressive net income, marking a significant year-over-year increase of over 150%. The company's ability to effectively manage costs and drive revenue growth has contributed to its impressive net profit margin of over 10%.

From a valuation perspective, e.l.f. Beauty, Inc. commands a premium position in the market. The trailing price-to-earnings ratio indicates that investors are willing to pay a premium for the company's earnings. This reflects the market's confidence in e.l.f. Beauty, Inc.'s ability to generate sustainable returns and maintain its competitive edge.

Analyzing the company's stock performance, e.l.f. Beauty, Inc. has exhibited strong growth potential. The stock's day range fluctuations showcase its stability and consistent demand. 

In the broader industry landscape, e.l.f. Beauty, Inc. operates in the highly competitive cosmetics and skincare market. Dynamic trends and shifting consumer preferences characterize the industry. However, e.l.f. Beauty, Inc. has successfully positioned itself by focusing on inclusivity and affordability. The company's ability to offer high-quality products at accessible prices has resonated with its target market, placing it favorably against competitors. Moreover, e.l.f. Beauty, Inc. has leveraged digital marketing strategies to engage with consumers, staying ahead of evolving beauty trends and building brand loyalty.

Looking ahead, e.l.f. Beauty, Inc. has identified several growth opportunities to drive its future success. These opportunities include new product launches, potential acquisitions, and expansions into untapped markets by capitalizing on its existing brand equity and customer loyalty, e.l.f. Beauty, Inc. aims to expand its global footprint further and strengthen its market presence.

However, e.l.f. Beauty, Inc. faces certain risks and challenges like any company. Changing consumer preferences and market dynamics pose potential threats to the company's growth trajectory. Increased competition, regulatory changes, and economic uncertainties can impact the company's market position and profitability. e.l.f. Beauty, Inc. recognizes these risks and has implemented robust risk management strategies to mitigate potential negative impacts.

e.l.f. Beauty Q4 2025 Earnings Call Transcript

Key Takeaways

• In fiscal 2025, e.l.f. Beauty delivered 28% net sales growth and 26% adjusted EBITDA growth, marking its 25th consecutive quarter of both sales increases and market share gains.
• International net sales jumped 60% in fiscal 2025 to represent nearly 20% of total sales, as the company expanded into new markets like Poland, Belgium and Italy.
• New U.S. tariffs on China-made products could raise annual COGS by approximately $50 million at current rates, prompting e.l.f. to withhold fiscal 2026 guidance until tariff outcomes are clearer.
• Effective August 1, e.l.f. will implement a $1 global price increase across its entire product range to partially offset tariff headwinds while preserving its value positioning.
• e.l.f. Beauty agreed to acquire Rhoads for up to $1 billion (including a $200 million earn‐out), aiming to diversify its portfolio, accelerate retail distribution and leverage combined digital marketing strengths.

Presentation

[Executive]

chairman and chief executive officer, and Mandy Fields, senior vice president and chief financial officer.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Of beauty team and partners for delivering another year of industry leading results. In fiscal twenty five, we grew net sales 28% and adjusted EBITDA by 26%. We gained share globally across our largest geographies, including 190 basis points of share in The U. S, One Hundred And Seventy basis points of share in Canada and two seventy basis points of share in The UK. Q4 marked our 20 consecutive quarter of both net sales growth and market share gains, putting e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Beauty in a rarefied group of high growth companies. We're one of only six public consumer companies out of five forty six that has grown for twenty five straight quarters and average at least 20 sales growth per quarter. E. F.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Is the only brand of the nearly 1,000 cosmetics brands tracked by Nielsen to gain share for twenty five consecutive quarters. The combination of our value proposition, powerhouse innovation and disruptive marketing engine continue to fuel our market share gains and deepen the connection we have with our community. In Piper Sandler's latest Taking Stock with Teens survey, e. F. Cosmetics is ranked the number one teen favorite brand for the seventh consecutive season.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Our 35% mindshare is now 3.5 times the number two brand. E. F. Skin increased its ranking to the number six favorite teen brand, up two spots relative to last year. And we continue to grow our audience beyond Gen Z.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Recent surveys show e. F. Ranks number one in purchases amongst millennials and Gen Alpha. E. L.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Today is purchased by more than one of every three households in The U. S. With our household penetration growing almost 400 basis points relative to last year. Our marketing is working, delivering ROIs multiples above industry benchmarks and expanding our unaided brand awareness from 13% in 2020 to 33% in 2024.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

For context, the leading U. S. Mass cosmetics brand has 55% unaided awareness, which gives us confidence in our runway for growth. In fiscal twenty five, we made further progress in our key areas of white space, color cosmetics, skincare, and international. In cosmetics, e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Is the number one brand in The U. S. By unit share and number two by dollar share and is the fastest growing among the top 20 brands this year by a wide margin. We expanded our number one rank in Target with 21% of their entire cosmetics category.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

We also increased from the number four brand to the number two brand in Walmart. In skincare, we now hold two of the fastest growing mass skincare brands with e. F. Skin and Naturium. We expanded Naturium to Ulta Beauty this year, seeing strong results and already achieving the number one rank in body wash.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Internationally, we grew share in our largest existing markets, The UK and Canada, executed our biggest international launch to date with Rossmann in Germany and achieved a top three brand ranking in new retailers in The Netherlands, Italy and Mexico. We continue to see global demand for our brands. Let me spend a few minutes taking you through the topics that are likely top of mind: the impact of tariffs, our mitigation efforts, and the actions we're taking to deliver continued category leading growth and market share gains, starting with tariffs and our mitigation efforts. To set the foundation, about 75% of our global production today comes from China. As of May 14, product imports of The U.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

S. Are now subject to tariffs at the 55% level, 25% that was put in place in 2019 plus an incremental 30% that's now in place through mid August. While we're hopeful of having some long term resolution, the timing of a more permanent rate is not known and the range of outcomes is broad. If tariffs were to remain at this incremental 30% level, we estimate the gross impact to our cost of goods sold to be approximately $50,000,000 on an annualized basis. If tariffs were to go back up to the 145% level that was in place earlier this year, the impact would be much higher.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Given the broad range of outcomes on tariffs, we're not providing a fiscal twenty twenty six outlook at this time. Our tariff mitigation plans are underway through three key vectors: pricing, supply chain optimization and business diversification. First, pricing. To partially mitigate the impact from tariffs, we plan to take a dollar increase on our entire products assortment globally, effective August 1. We were intentional in not going beyond that $1 and fulfill our mission to make the best of beauty accessible to every eye, lip and face.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

This is only the third price increase we've taken in our twenty one year history, unlike many of our competitors who regularly take price increases. Historically, consumers have been able to accept a dollar increase. We are transparent with our community on our pricing actions and hope to see long term tariff relief so we don't have to take further pricing action. Next, supply chain optimization. We believe our unique China based supply chain is an area of competitive advantage we've been honing for the past twenty one years.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

It underpins our value proposition, delivering the best combination of quality, cost and speed in our industry. We're the only fair trade certified beauty company and are committed to our China team and suppliers. Given our growing global business, we've been diversifying our supply chain over the years, well ahead of recent tariff news. Recall, back in 2019, nearly 100% of our product was sourced from China. Today, about 75% comes from China, and we expect this will come down further by the end of fiscal twenty six as we continue to work with our key suppliers to set up additional operations outside the country.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Additionally, we are pursuing cost savings and supplier concessions. Lastly, on business diversification. Our international sales, which are not currently subject to tariffs, continue to be the fastest growing part of our business. We grew our international net sales 60% in fiscal twenty twenty five. '6 years ago, we sold $28,000,000 internationally or about 10% of our sales.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Today, we sell $250,000,000 internationally, representing nearly 20% of our sales. We expect that mix to continue to grow as we aim to gain share in existing markets and expand into new markets. To that end, we're excited to launch e. F. This month in over 1,200 stores with CrowdValp, the number one beauty retailer in The Netherlands and Belgium, further expanding our presence in these countries.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Over the coming months, we'll also be launching e. F. Into a thousand stores with Rossmann in Poland, our first entry into that country. This builds upon our successful partnership with Rossmann in Germany. We're continuing to lean into our value proposition, powerhouse innovation and disruptive marketing engine to drive category leading growth and market share gains.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Looking to our value proposition, the average price point for e. F. Is about $6.5 today as compared to nearly $9.5 for legacy mass cosmetics brands and over $20 for prestige brands. As we look ahead, we expect many brands to take pricing in response to tariffs and macro environmental pressures, further accentuating our core value proposition. From an innovation standpoint, we're excited about our latest product launch, our Glow Reviver Melting Lip Balms priced at an incredible value of $9 compared to a prestige item at $24 Based on requests from our community, we accelerated this launch to April from the fall and are pleased with the response we're seeing.

[Executive]

E. F. Has new lip balms and I have a lot of thoughts. Is giving inclusivity. Did we need one more lip balm situation in the market?

[Executive]

Probably not. But when e. L. F. Gives you a $9 lip butter balm situation and is so spicy about it we have to review it.

[Executive]

Are like we are cheaper, we are better, deal with it.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Glow Reviver lip balm is one of the top selling products in recent weeks on both elfcosmetics.com and with our largest global retail partners. As we look ahead, we feel great about the pipeline of innovation we have coming in the fall. We're also leaning into our ability to entertain and engage consumers to fuel our core product launches. For example, our latest Many Trick Pony campaign is a moment to spotlight Halo Glow Liquid Filter. This is our third largest product family driving our 63% share of the highlighter category.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

The genesis of the campaign is rooted in community insights on the many ways they use Halo Glow. This multitasking product is the definition of a workhorse.

E. F. Halo Glow liquid filter isn't just a one trick pony. It can be used alone, under foundation, or as a highlighter. Glow booster. All in one affordable cruelty free product. Excuse me.

Okay. The term one trick pony is actually very offensive. Just because Josh over there only knows one trick doesn't mean we're all like that. I actually know a lot of tricks. I can do this.

I can do impressions. That was my mom. Also, do magic. Is this your card? Seven of hearts? No? Okay. Elf Halo Glow, not just a one trick pony. We just talked about this. Elf Halo Glow, a many trick pony.

The correct term is a multi talented small boned horse. Elf Halo Glow, a multi talented small boned horse. Thank you.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Within its first few weeks, the campaign is fueling Halo Gold franchise momentum, delivering an 80% boost in organic traffic and double digit lift in sales of both Halo Glow liquid filter and Halo Glow beauty wands on elfcosmetics.com. We've delivered strong growth over the past twenty five quarters by continuing to leverage our many areas of competitive advantage. Our passionate team of owners and high performance team culture, value proposition, powerhouse innovation, disruptive marketing engine and productivity model. These areas of advantage have propelled consistent growth, enabling us to strengthen our market share in both stable and uncertain macroeconomic environments. As we look ahead, we remain confident in our ability to continue to gain market share and capture the significant white space ahead of us, which we believe is further accelerated with our acquisition of Road.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

I'll now turn the call over to Mandy to talk more about our fourth quarter results and our approach to fiscal twenty twenty six.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Thank you, Tarang. Q4 net sales grew 4% year over year on top of 71% growth in Q4 of last year. We experienced growth across both digital and retail channels. Looking to our geographical regions. Our net sales in The U.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

S. Grew 1% year over year in Q4, while international sales grew 19%. Higher unit volume contributed approximately eight points to growth in Q4, which was partially offset by a four point decline from price and product mix. Q4 gross margin of 71% was up approximately 50 basis points compared to prior year. Gross margin benefits were primarily driven by favorable foreign exchange impacts on goods purchased from China and lower transportation costs.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

On an adjusted basis, SG and A as a percentage of sales was 52% in Q4 as compared to 61% in Q4 last year. The primary driver of that year over year decline was our plan for a more normalized rate of marketing and digital investment throughout the year. Marketing and digital investment for the quarter was 23% of net sales, in line with our expectations and as compared to 34% last year. Q4 adjusted EBITDA was $81,000,000 up 99% versus last year. Adjusted net income was $45,000,000 or $0.78 per diluted share compared to $31,000,000 or $0.53 per diluted share a year ago.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

The increase across profitability metrics was driven by our net sales growth, gross margin expansion and leverage in our marketing and digital spend. Now let's turn to our full year results. In fiscal twenty twenty five, we grew net sales 28%, adjusted EBITDA by 26% and increased our U. S. Market share by 190 basis points.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

We achieved new market share highs in U. S. Mass cosmetics and skincare while thoughtfully continuing our international expansion strategy. Moving to the balance sheet and cash flow. Our balance sheet remains strong, and we believe positions us well to execute our long term growth plans.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

We ended the year with $149,000,000 in cash on hand compared to a cash balance of $108,000,000 a year ago. I'm also pleased with the approximately $115,000,000 in free cash flow we generated in fiscal twenty five, up from $62,000,000 a year ago. Our liquidity position remains strong. In March, we refinanced our credit facility into a $500,000,000 revolver to give us greater flexibility and improved terms. We ended the year with less than 1x leverage in terms of net debt to adjusted EBITDA and availability on our revolver of approximately $243,000,000 Now let's turn to fiscal 'twenty six.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

As Terane discussed, there are a broad range of potential tariff outcomes. Balancing all factors, we don't believe it's prudent to provide an outlook and then have to adjust it if tariffs were to move from where they are today. As a result, we are not providing an initial full year fiscal 'twenty six outlook. With that said, I'd like to provide some color on how we're approaching the year. Starting with the top line.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

As we look ahead, we remain focused on share gains in The U. S. And expanding our business internationally, and we continue to make progress in each. Looking at q one to date, we are seeing our consumption trends better than what we saw in q four and continuing to trend well ahead of the category. In the month of April, we were the only top five cosmetics brand to post growth, with e.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

F. Gaining an additional 130 basis points of market share in The U. S. Turning to gross margin. We expect gross margin benefits from price increases, cost savings and supplier concessions to be offset by the incremental tariff costs Tarang spoke about.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Given the timing of our inventory turns, some of that tariff headwind will start to impact our gross margin in Q1. Turning to SG and A. We continue to invest in our high ROI marketing initiatives, team and infrastructure to support the significant white space we see ahead. We plan to maintain marketing and digital spend at approximately 24% to 26% of net sales in fiscal 'twenty six, in line with the range we targeted in fiscal 'twenty five. Looking to nonmarketing SG and A.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

We expect to see dollar growth on a year over year basis, primarily as we annualize the investments we made in our team and infrastructure last year, SAP rollout, and continue our international expansion. I'll now turn it back to Tarang to talk about today's exciting announcement.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Thank you, Mandy. At e. F. Beauty, our vision is to be a different kind of company by building brands that disrupt norms, shape culture, and connect communities through positivity, inclusivity, and accessibility. We disrupted the beauty industry from our inception in 02/2004, selling premium cosmetics for $1 over the Internet and democratizing access to the best of beauty for millions of consumers.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

We've been disrupting and driving industry leading growth for twenty one years in service to our growing communities around the world. We have a very high bar for M and A given the strong organic growth we've been able to deliver and only act when we find a win win force multiplier. Our acquisition of Naturium in 2023 doubled down on the white space we see in skincare and brought us the vision of founder Susan Yara, bringing the science of consistent skin care to everyone, everywhere, every day. We kept Notorium's entire team and leveraged each company's strengths to further accelerate the combined business. Naturium leveraged e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Beauty's capabilities to expand into Ulta Beauty in The US, Shoppers Drug Mart in Canada, and Boots in The UK. And in turn, we benefited from the expanded expertise in skincare to further accelerate e. L. F.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Skin. Fiscal twenty five was one of the strongest growth years ever for both Notorium and e. L. F. Skin.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

We believe the acquisition of Rhode is a unique opportunity to bring together two like minded disruptors who are best in class at delivering high quality innovation to highly engaged communities. The unique partnership accelerates our collective potential to transform the beauty industry. Founder Haley Rhode Bieber, a fellow bold disruptor, saw a clear white space opportunity to bring a lifestyle approach to beauty. I've been in the consumer space thirty four years and have been blown away by what Hayley and her team are building. In just under three years since its founding, Road has seen exceptional growth, achieving $212,000,000 of net sales in the last twelve months, DTC only with just 10 products.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Road's unique fashion forward aesthetic and lifestyle approach to beauty has driven success and scale across multiple product categories, cosmetics, skincare, and accessories. Rhode has a powerful engagement model that has cultivated an incredibly enthusiastic and vocal community of brand champions. The type of fervent community engagement that people will camp out overnight and stand in line for fourteen hours at a pop up event in LA, not just to buy product but to buy into the brand lifestyle. The brand ranks number one in earned media value amongst its skin care peers with less than 1% of road social media content being sponsored. The strength of this brand caught our attention and the attention of the world's leading global beauty retailer, Sephora.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

They see almost every beauty brand and are a destination of choice for many top brands. Sephora's standard approach is to test a brand in a subset of stores before scaling. Given Rhoades breakthrough DTC success and Sephora's belief in the potential of the brand, Rhoades planned to launch in all Sephora stores across The US and Canada this fall and in The UK by the end of the year. Sephora sees Hailey well beyond her celebrity status. They view her as a thoughtful founder with a unique vision, incredible instinct, and desirable aesthetic.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Our time getting to know Hailey affirms this. As we look ahead, we see massive runway for growth and are excited to partner together with Road to bring the brand to more faces, places, and spaces. We see potential to leverage our mutual mutual strengths. Both e. F.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And Road are known for their strong digital community engagement. We look forward to enhancing this strength by helping to accelerate Road's brand awareness. For context, Rhodes aided awareness is 20% today in The US, which is impressive for a brand this young and is half the level of other premium skincare brands which average 40% or more awareness. Looking outside The US, international drives nearly 20% of RHOAD's DTC sales while 74% of the brand's social followers are from international markets. There is significant pent up global appetite for this brand.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

We plan to invest in marketing and fuel their disruptive marketing engine to further Road's brand awareness and further build its community of loyalists. We also plan to leverage our expertise and help Road further move into retail distribution. We have deep relationships with Sephora's top management and are excited accelerate e. F. Beauty's global presence with Sephora, building upon the successful partnership we've had since launching e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

L. F. In Sephora Mexico last year. Lastly, we see potential to provide Rode with opportunities to broaden its product assortment and innovation in the skincare and hybrid makeup categories and expand into new adjacent categories in the future. Haley's instincts have proven to break through the most crowded categories and we look forward to supporting her and the team at each lifestyle stage.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

I wanna close by extending a special thank you to the e. F. Beauty and Road teams. We each owe our success to the power of our teams. On the Road side, Haley is a visionary in her unique perspective, tenacity, and passion to reinvent beauty come through in every aspect of the business.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

She surrounded herself with an exceptional team to bring the vision of road to life for millions of consumers further fueling fandom. In addition to Haley, we intend to retain cofounders Michael and Lauren Ratner, experienced CEO Nick Flajos and their passionate team. We plan to continue to operate Road from its headquarters in Los Angeles and build that team further to realize the global opportunity we both see. This approach will also allow the e. F.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Beauty team to remain focused on the significant white space we see ahead for our existing brands. We're confident our combined companies have a bright future ahead of us. We look forward to partnering with Road to continue to disrupt the industry and further our vision to create a different kind of company. I'll now turn the call over to Mandy to talk about the financial details of the transaction.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Thank you, Terane. I'll start with valuation. The billion dollar headline price breaks out into two components. The upfront purchase price of $800,000,000 at closing represents approximately 3.8 times Road's latest twelve months net sales, which compares favorably to precedent transactions in beauty. The transaction also includes additional potential earn out consideration of $200,000,000 based on the future growth of the brand over a three year time frame.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

We expect to finance the transaction using fully committed debt financing of approximately $600,000,000 as well as $200,000,000 or approximately 2,600,000.0 shares of newly issued shares of e. F. Beauty common stock issued directly to the equity holders of Road. We expect our liquidity position to remain strong with relatively low leverage post the transaction. The transaction, which is subject to customary closing conditions, is expected to close in our second quarter of fiscal twenty twenty six.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Turning to Road's financials. In the last twelve months, Road generated $212,000,000 in net sales and very strong profitability levels. We expect the addition of Road to be accretive to our top line growth, adjusted EBITDA margins and earnings. Given the expected timing of the transaction close, we expect to contribute to our results starting in our fiscal Q2. When we have more certainty on the tariff front, we plan to issue guidance inclusive of Road's contribution.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

In summary, we're excited to welcome Rhode to the e. F. Beauty family. We have remained highly disciplined in assessing M and A and looking for opportunities that can leverage our strengths and bring complementary capabilities to e. L.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

F. Finding a brand that has achieved this unique combination of disruption, curation, scale and profitability is rare, and we are equally excited about the global opportunity we still see ahead. With this acquisition, we're further diversifying e. F. Beauty with a distinct yet complementary brand that we expect to be accretive to both our growth profile and earnings.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

With that, operator, you may open the call to questions.

[Operator]

And your first question today will come from Olivia Tong with Raymond James. Please go ahead.

[Oliver Chen, Managing Director - Retail, Luxury, New Platforms Sector Head at TD Cowen]

Great. Thanks. Good afternoon. A couple of questions here. First, just on the quarter, realizing that you're not giving a fiscal twenty twenty six outlook, but it sounds like for June at least, you're still working off of pre tariff inventory.

[Oliver Chen, Managing Director - Retail, Luxury, New Platforms Sector Head at TD Cowen]

So is there anything you can tell us about performance? I mean, we've got two quarters in the books at this point, so that would be helpful. You also talked about performance across a number of channels, didn't mention Dollar General, so just wanted to see how that was going. And then in terms of Road, if you could just talk about your thought process in terms of further expansion and whether it will be run independently or integrated into the e. F. Business? Thanks so much.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Hi, Olivia. I'll take the question on kind of Q1 and any additional color there. As you said, we are not giving guidance at this time and really that's rooted in until we get more certainty from a tariff perspective, just given such a wide range of outcomes on that front. I can tell you we feel great about our business as we are in Q1. As we noted on the call, we continue to build share even into this quarter.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

We will be cycling some our space expansion in Walmart, the launch of the Naturium and Ulta Beauty and some outsized growth from an international perspective in Q1. But overall, we're feeling great about where we are.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And then Olivia, you had a question on Dollar General as well. That continues to go extremely well. We're well above their expectations. We're building a ton of share and we're really pleased with how it's doing, particularly serving the underserved rural areas that didn't have access to e. F.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Before. So we're feeling great about that. And then switching gears to Road. I can't tell you how excited we are with the acquisition of Road. If you take a look at e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Beauty, we just finished our twenty fifth consecutive quarter of net sales and market share growth. E. L. F.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Beauty is on fire and we're further fueling that fire with the acquisition of Rode. Road is going to continue to be run out of Los Angeles. They have an incredible team with Haley, our co founders, Michael D. Ratner, Lauren Ratner and experienced CEO, Nick Flahos. And so we'll continue to run that team out of Los Angeles, but we'll supplement the team and particularly increase the level of hiring to go after the global expansion opportunities that we see.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

The near term priority will be really to execute with excellence, the Sephora rollout. It's a massive rollout at Sephora in all U. S. Doors and Canadian doors, followed later this year by rollout into Sephora in The UK as well. And so we'll be looking to help the team really make sure that that's an awesome launch.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

I can tell you Sephora couldn't be happier or more excited of being able to get Road. It's an incredible brand. I mean, being able to go from 0 to $212,000,000 of net sales direct to consumer only with only 10 products. I don't think any of us have seen anything like it. So extremely excited and you'll continue to hear the news in terms of particularly once it closes in terms of our future expansion plans.

[Operator]

And your next question today will come from Dara Mohsenian with Morgan Stanley. Please go ahead.

[Dara Mohsenian, Managing Director - US Beverage/Household Products Sectors at Morgan Stanley]

Hey, guys. So Mandy, just wanted to follow-up. Obviously, you're not giving guidance for fiscal twenty twenty six. But just given we're two months into fiscal Q1, any additional perspective, your answers, Olivia, were helpful, but Q1 revenue is probably not as impacted by tariffs at this point. So, I was just hoping for any more detail there And perhaps also given the comp issue you mentioned in The U.

[Dara Mohsenian, Managing Director - US Beverage/Household Products Sectors at Morgan Stanley]

S, could you talk about your U. S. Top line growth potential relative to the scanner data? And then on the Rode acquisition, Terang, obviously, you're very excited by the growth opportunities here. Can you also just discuss organizationally the key incremental capabilities that e.

[Dara Mohsenian, Managing Director - US Beverage/Household Products Sectors at Morgan Stanley]

F. Can bring to the brand? And just vice versa, what you think growth can bring to your organization and how you think about the biggest potential opportunities on that front? Thanks.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Right. So I did provide some color there Dara on Q1 top line. Like I said, we feel great about what we're seeing from a consumption standpoint and we will be cycling those items already noted as we go through. So feeling great about Q1 overall. Now one thing that we did note on the call is that the impact of tariffs will start to hit us in Q1.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

And so that's something to be mindful of as you all think about how you're modeling profitability for the quarter.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Hi, Dara. In terms of your question on Road from an organizational capability standpoint, we've obviously built up a set of capabilities across marketing, innovation, our retail approach that we can apply to Road. More specifically, we've made the switch both brands are digitally native brands. We've made the switch successfully a number of years ago in expanding into retail. And so we'll be able to help Road, particularly as they expand into Sephora and then beyond that as they look to improve increase the global footprint of the brand.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Second, from a marketing standpoint, it's amazing what they've been able to do. The engagement model they have, again, never seen anything like it where consumers are willing to camp out overnight, stay in line fourteen hours, pop up event, not just to buy product, but to buy into the entire lifestyle. And so it's very much reminiscent of the type of community engagement we have and leveraging that strength. But in addition, we see an opportunity to increase the awareness of Road. As I mentioned, their aided awareness is only 20%.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

So our ability to invest more into the brand increased awareness. And then third, I would say from a people standpoint, it's an incredible team, but it's a small team. So our ability really across every function to be able to enhance that team and bring the capabilities we so successfully applied to e. F. To road will be there.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

So everything from retail to marketing to the overall team and expansion globally are things that we hope to help them with and help realize HAVI's vision. In terms of what we get in return, we get one of the most beautiful brands I've ever seen that is on rocket ship growth. We get to enhance our relationship and presence with Sephora globally over time and to learn from each other. I think every acquisition we've done, if I take a look at what we got out of Natura, which is a home run acquisition we did just in 2023, it brought us Susan Yara's vision in terms of the science behind consistent skincare everywhere for everyone. And we've been able to help that business too, both in terms of expanding distribution, in terms of building out the team and being able to really leverage each other's strengths such that not only is Natura growing really fast, but e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Skin just had its strongest growth year as well.

[Operator]

And your next question today will come from Oliver Chen with TD Cowen. Please go ahead.

[Jonna Kim, Director at TD Cowen]

Hi, this is Jonah on for Oliver. Thanks for taking our question. First question just on the domestic shelf space gains. Obviously, you have a bigger space now to work off of. What sort of the right pace of growth in The U.

[Jonna Kim, Director at TD Cowen]

S. In terms of distribution? And then the second question around Road, is there a potential for cross selling between Road and e. L. F.

[Jonna Kim, Director at TD Cowen]

Given the younger consumers gravitate towards those brands? Is there any sort of customer overlap sort of exercise you've done that could be synergistic cost for those brands? Thank you very much.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Hi, Jonah. So I'll take the first question. On domestic shelf space gains, we're very pleased with the shelf space gains that we've gotten over this last year. As we've talked, usually we do have some expansion. So as we talked on the call today, we have launched we're launching in Krauzat in Belgium and The Netherlands.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

We are also we also talked about Rossmann, Poland from an international standpoint. And here in The US, you know, we just had the space expansion in Target this past spring that we're very pleased with. And so there's still a lot of potential out there for us as we think about domestic shelf space expansion. We talked about Walmart last year getting that 50% shelf space increase still remains an opportunity for us on the road ahead to continue to increase space there as well really across all of our top retailers. And so that's something you'll have to stay tuned for as we go through.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And then in terms of your second question, in terms of Road and any consumer crossover, I would say both e. F. And Road have exceptional engagement efforts with our communities. And we both care deeply about each of our communities. As you know, e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Is the number one brand amongst teens. I think our share of Gen Z is 3.5 times next highest brand. We're also the most purchased brand amongst Gen Alpha and millennials. We see a skew with road also to Gen Z and the younger consumers, but both brands have multi generational appeal.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

You'll find a really rich consumer set on both brands that we continue that we'll continue to build.

[Operator]

And your next question today will come from Susan Anderson with Canaccord Genuity. Please go ahead.

[Susan Anderson, Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets]

Hi, good evening. Thanks for taking my question. I guess just a follow-up really quick on the tariffs. I think you said, Mandy, that you'll start to feel the impact in the first quarter. Guess is that just some inventory that you didn't kind of have built up because I think this whole year you kind of built some inventory in the balance sheet.

[Susan Anderson, Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets]

So just curious how long that's going to last and then at what point in first quarter are you having to flow through new inventory with additional tariffs? And then I assume as the price increases go through in August, the second quarter won't be as impacted. And then just one quick question on Naturium. I was curious if you had any new shelf space gains there for Naturium or any international plans? Thanks.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

All right. Hi, Susan. So on the tariff impact, why I'm saying that it's going to start in Q1, we were mindful on the shipments that we brought from the April period when the tariffs were at that higher rate through May when they went through the lower rate. But we will because we were mindful about that, it's really the product that we needed to ship out most immediately. So we will feel some of that tariff impact in Q1.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

And to your point, pricing will not be in effect, so that will not be a mitigating factor in Q1. And then on Naturium, we didn't have anything new to share there, but outside that it was a great year for Naturium that we're very proud of. And I'll let Tarang add a little bit Yes.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And I would say on Naturium, continue to make progress. We feel extremely great about our performance in Ulta Beauty, both in the facial skincare as well as body sections. We did take Naturium expanded Naturium's distribution at Boots and we're actually increasing the store count pretty significantly there as well. We'll continue to see talk about other expansion with Naturium as well.

[Operator]

And your next question today will come from Corinne Wolfmeyer with Piper Sandler. Please go ahead.

[Korinne Wolfmeyer, Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies]

Hey, good afternoon. Thanks so much for taking the question. I wanted to touch a little bit on the pricing that you're planning here in August. How should we be thinking about the incremental sales lift that could come from that and what kind of elasticity you think that could bring? And then any context on why timing of August for that pricing?

[Korinne Wolfmeyer, Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies]

And then also can you confirm, I think the prepared remarks was across the entire portfolio and all geographies. So does that include all brands or just e. L. F? Thanks so much.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Hi, Corine. So, yes, pricing. We just announced our pricing moves last Friday, and it's been we as as usual, we're transparent with our communities, and we posted that on our social channels. And so the pricing that we're taking effective August 1, and why that's August 1 is because many of our retailers require a ninety day window on any pricing moves. And so that's why we've landed at August 1.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

That's going to be across all of our SKUs globally. So every item within the e. F. Portfolio going up a dollar. We also had social posts across Well People, Naturium as well, and as well as Key Soul Care.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

So we will be across all of our brands taking some form of pricing. We have, know, as we think about it from a sales lift standpoint, we have incorporated as we look at it from our internal models some elasticity just given that, you know, this is a unique macro that we're operating in. But what we've seen so far from community response is like a 99% positive sentiment on our pricing. So I think more to come post August as we see how consumers react and the sales lift from pricing.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And the only other thing I would add there is we think this is an opportunity for us to continue to build market share. By taking our prices up just $1 we still have a superior value proposition, especially as we expect a lot of other people to take pricing. So it's a great opportunity for us not only to preserve the value for our community, but also continue to drive market share.

[Operator]

And your next question today will come from Andrea Teixeira with JPMorgan. Please go ahead.

[Andrea Teixeira, Analyst at JPMorgan Chase]

Thank you, operator, and good afternoon, everyone. So can you comment a little bit more about the most recent top line trends? I understand, maybe you and you, Turan, too, you both sounded positive about the most recent trends. But we have been seeing, I think, of us on this call, the tracked channel consumption in April was now back to low to mid teens for F.

[Andrea Teixeira, Analyst at JPMorgan Chase]

Beauty side of the business. Is that, would you say, reflective of the performance across all channels? That's the first question. And then on Road, can you comment factually on how much was the growth pace most recently? And then also how diversified they are into some of the products, some of them are obviously very popular and viral, Just a curiosity in terms of like the skincare side of the business against the color cosmetics side, how diversified they are and how obviously complementary they can be against the e. F. Beauty legacy portfolio? Thank you.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

All right. So Andre, thanks for the question. On top line trends, as I've said, we're very pleased with the consumption trends that we're seeing. As we think about that from a net sales standpoint for the quarter, calling out those three items again, we will be cycling the space expansion in Walmart, the launch of Naturium at Ulta Beauty and outsized growth from an international standpoint. And so I think with those pieces that you can kind of get to where we're thinking from a Q1 standpoint, but again not providing guidance at this time.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And then on your question on Road, we're not disclosing the specific growth rate other than they went from 0 to $212,000,000 in net sales in three years. So it's a very fast growing brand and we have very high hopes as they expand into Sephora as well. In terms of the product assortment, one of the things we really like about Road is just how tight the product assortment is. It's only 10 products across skincare, color cosmetics and accessories. And you see power SKUs across their entire lineup, just given how tight that range is.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

One of the things that we plan to do on one of the earlier questions on capabilities is we have an incredible innovation capability and being able to really help Hailey and the team advance their vision in terms of their lifestyle approach to beauty and other product categories that they can get into as well as broadening out some of the ranges here over time. We look forward to being able to help them with that as well.

[Operator]

And your next question today will come from Ana Luzuola with Bank of America. Please go ahead.

[Anna Lizzul, Analyst at Bank of America]

Hi, good afternoon. Thank you so much for the question. I was wondering here with the acquisition of Road, do you see any potential for other brands or products you have to benefit from potentially added distribution in Sephora? And then as we take a step back and look at the e. F.

[Anna Lizzul, Analyst at Bank of America]

Parent company now, do you see the company becoming more of a portfolio of brands with maybe additional acquisitions over time? Thank you.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Hi, Anna. In terms of Road and Sephora, we already were making progress with Sephora. I mentioned we had one of their best launches ever last year F. In Mexico.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

We've been in discussions with Sephora about other markets around the world that we could take the e. L. F. Brand in. This just accelerates our presence with Sephora in even a bigger scale and certainly there are opportunities for other parts of our brand portfolio and Sephora just as they are with every there isn't a retailer in the world right now that doesn't want e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

F. Or our portfolio of brands. And so for us, it's really about making sure we're taking a disciplined sequential approach with each retailer as we go through. And then I have a broader question, we are a portfolio of brands. One of the things that I'm really proud of is every one of our brands grew in fiscal twenty twenty five and they're distinct yet complementary to each other.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And so we love what we have with our brand portfolio, especially with the addition of Road. We have a really powerful overall portfolio that meets different consumer needs, different segments and we really like that. In terms of future acquisitions, I'd say our primary focus is always going to be to realize the white space we see for existing brand portfolio and the strong organic growth we see there. Our second priority is to make sure we close and successfully integrate in Road. So I'd say those are our two main priorities right now is we just couldn't be more excited with what Road is going to bring to e. F. Beauty and what we can do together.

[Operator]

And your next question today will come from Peter Grom with UBS. Please go ahead.

[Peter Grom, Equity Research Analyst at UBS Group]

Thanks, operator. Good afternoon, everyone. So, Randy, you talked and Doren, you both talked about the consumption performance and being pleased quarter to date. Maybe two questions. I guess as you look back to kind of the slowdown that you saw back in kind of the January, February timeframe, do you feel like you have a better understanding today in terms of what ultimately drove that weaker performance?

[Peter Grom, Equity Research Analyst at UBS Group]

And then just as you think about the improvement we've seen over the past few weeks here, totally understand that there's going to be a gap between net sales and what we're seeing from a consumption perspective. But just as we think about the improvement, what is driving that in terms of consumption? And how sustainable is that as we look forward here? Thanks.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Yes. So on your first part, in terms of the slowdown that we saw in the January through kind of March, we know exactly what happened there. We were lapping by far our biggest product launch effort with our viral lip oils as well as some of other innovation we have. We feel really good about the spring innovation, about twice the rate of most years any other year. The year before that was almost 4x higher.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

So that really you're lapping a big innovation cycle as you go through. In terms of the improved trends, again, you're seeing the impact of our overall marketing as well as innovation. I talked about our melting lip balms. Those have been a huge hit. They were requested by our community, an incredible value relative to prestige and feel really good about the innovation we have coming this fall, too.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

So really like what we're seeing on the business right now and like even more what we see coming.

[Operator]

And your next question today will come from Ashley Helgans with Jefferies. Please go ahead.

[Sydney Wagner, Equity Research Senior Associate - Beauty & Personal Care at Jefferies]

Hi, this is Sydney on for Ashley. Thank you for taking our question. Just wondering if you can share anything more on what adjacent categories you see opportunities in for road. And then the Surcana data showed mass outperformed prestige in Q1. Just curious if you're seeing any trade down or if you can kind of speak to that trend?

[Sydney Wagner, Equity Research Senior Associate - Beauty & Personal Care at Jefferies]

And then just on the innovation pace you just commented on, do you plan to keep that kind of two times speed throughout the balance of the year? Thank you.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

In terms of adjacent categories, we haven't disclosed that yet. We still don't own the business until it closes. We'll be we've had plenty of conversations with Hailey and her team about some of the categories. You're going to have to stay tuned for that, but there's plenty of room with just 10 main products for them to continue to expand Haley's vision and we look forward to helping her. In terms of trade down, we don't have a great way of seeing trade down.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

It's two different data sets between prestige and mass. What I can tell you is the secret of our success has less to do with trade down or taking share. It's more our ability to bringing access to millions of consumers who previously couldn't afford a particular segment. And that's really what I think if I look back over a long arc of time that our biggest driver of really being able to bring more consumers into a particular segment or franchise they previously didn't have access to.

[Operator]

And your next question?

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Then on the innovation sorry, I was just going to answer the last question on the pace of innovation. To Tarek's point, we feel great about our pace of innovation. In fact, he talked about the melting lip balms. We launched our Sheerfort blush as well. It's completely sold out on our elfcosmetics.com.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

So we do have some really nice indicators that our fall innovation is resonating with our community.

[Operator]

And your next question today will come from Mark Altschwager with Baird. Please go ahead.

[Mark Altschwager, Senior Research Analyst at Robert W. Baird & Co]

Good afternoon. Thank you for taking my question. Just first with respect to the price increase that you announced, what has been the feedback so far from retail partners and just anything you're hearing that would suggest you'll see pressure on volumes? And then on international, you talked about the factors affecting the first quarter, you noted cycling outsized growth in international. I guess the year over year growth rate on a percentage basis last year was pretty consistent in Q1 and Q2.

[Mark Altschwager, Senior Research Analyst at Robert W. Baird & Co]

The year over year growth on a dollar basis was pretty consistent really in the first three quarters of last year. So I guess I'm trying to I'm wondering if the comments you're giving for the first quarter, any reason to think why that wouldn't carry forward for the next few quarters as we think about just cycling international growth? Thank you.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Hey, Mark. In terms of your first question on pricing, we've heard from our retail partners that a number of different people are going to be taking pricing. I think they're bracing for it across a number of different consumer categories. That's why we feel great about our approach in terms of just taking it up a dollar, being transparent with our community. As Mandy said, the response has been overwhelmingly positive, particularly our responsibility to make sure we're having superior value for our community.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And so I'd say, so far, no real pushback from a retailer standpoint. They understand. And I think we're actually grateful that we're not going all the way to the level that I think they would expect one to take. And so overall, those conversations have gone well and I think we're going to come through it. We believe we're going to come through it well just given the approach.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

And then on your question on international, Mark, you're right. The outsized growth from an international perspective certainly will carry through the first half of the year as we think about what we launched and the number of markets that we opened and things like that. So I'm answering it in terms of Q1 because that's what folks have been asking about, but it certainly we may see that trend continue through the first half for sure.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And I'd say you're going to continue to hear us talk about additional new markets throughout the year. CrowdVac we're very excited about. We already have the number one position with Atos in The Netherlands. This will further improve our position both in The Netherlands and Belgium. Particularly excited about our launch coming up in Poland.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Rossmann has a huge share of the Poland market. And so given our success with Rossmann in Germany, you're going see that. I know you'll continue to hear about other expansion markets throughout the year as we go through. And so we'll take it one quarter at a time and update you additional expansion.

[Operator]

And your next question today will come from Bonnie Herzog with Goldman Sachs. Please go ahead.

[Bonnie Herzog, Managing Director at Goldman Sachs]

All right. Thank you. Hi, everyone. I actually wanted to go back to tariffs with a question. I understand the situation is fluid.

[Bonnie Herzog, Managing Director at Goldman Sachs]

There's a ton of uncertainty. But could you tell us in a worst case scenario, if you believe you can still generate earnings growth this fiscal year? Could you talk about potential mitigation efforts and what you would consider doing in a worst case scenario? I guess I assume you would need to take further pricing and then possibly shift production faster. Any other considerations?

[Bonnie Herzog, Managing Director at Goldman Sachs]

And then ultimately Turing, I guess, I'd like to understand your priority to drive margins and earnings growth versus balancing market share in a potential worst case scenario? Thank you.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Hi, Bonnie. So on tariffs, there is a wide range of outcomes on the tariff front, which is why we did not provide guidance today. We have a mitigation playbook, a tariff playbook that we've talked about. It really consists of three things pricing, supply chain optimization, and business diversification, of which we're making progress across all three of those. And because there are a wide range of outcomes, it's really prudent for us not to just talk about a number of different scenarios, but really to focus on the one that we talked about on the call, which is the $50,000,000 impact.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

If tariffs were to stay at the 55% level, now we know that's only in place for the next ninety days. And so we're going to take it as it comes, but until we have more certainty on that front really are not diving into more detail on the impacts of mitigation and what a worst case should be. But rest assured we've run a number of scenarios behind the scenes.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And then in terms of your question on margins versus market share, I think the beauty of e. F. Has been we've always had a very balanced plan. We've gained market share 25 consecutive quarters. We're confident of our ability to continue to gain market share.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And over the years, we've made good margin progress. As Mandy said, the range of outcomes are too broad to really speculate on overall margins at this time. Once we have greater resolution on it, we'll be able to provide that in our guidance.

[Operator]

And your next question today will come from Rupesh Parikh with Oppenheimer. Please go ahead.

[Rupesh Parikh, Managing Director and Senior Analyst at Oppenheimer & Co. Inc.]

Good afternoon. Thanks for taking my question. So just going back to the acquisition, just curious on sourcing and then if you see any limitations or limiters to growth from a capacity perspective. And then just, I guess, just going back to tariffs as well. In your base case scenario, do you believe the pricing and other mitigation efforts fully offset at least, I think, $50,000,000 exposure you guys disclosed just based on the current environment?

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Yes. So Rupesh, I'll take the first question. In terms of Road, they have an excellent supply base and they've been able to meet the demand they see. We feel confident about continuing meet that demand. They have suppliers both in Italy and South Korea, as I mentioned, with a ton of capacity.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

So we feel good about the plans, particularly as we prepare for Sephora here. So don't see any concerns from an overall capacity standpoint or ability to source. We feel highly confident we have a very good high quality set of suppliers.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

And then from a tariff standpoint, Rupesh, we have not gone into the details on how much we're mitigating of that $50,000,000 annualized impact. Again, when we have more certainty on the tariff front, we'll be back to you with what those impacts are.

[Operator]

And your next question today will come from Jon Andersen with William Blair. Please go ahead.

[Jon Andersen, Equity Research Analyst - Consumer at William Blair & Company, L.L.C]

Hey, good afternoon everybody. Thanks for the questions. I've got one for Mandy and one for Terang. Maybe Mandy on the comments you made around gross margin when you were giving some color around fiscal twenty twenty six, I think you mentioned that price and productivity will help offset tariff impact. Were you talking on a rate basis so that we should expect kind of the

[Jon Andersen, Equity Research Analyst - Consumer at William Blair & Company, L.L.C]

F. Beauty gross margins to be relatively flat year over year? And then if I could throw it in for Tarang. Tarang, I'm really curious as you kind of vetted Roe, how you got comfortable and the whole team got comfortable that this is a brand with a lifestyle brand with a long sustainable growth trajectory, not a kind of a high flyer celebrity brand maybe a little bit more fattish. I just love to kind of understand your viewpoint on that aspect. Thanks both.

[Mandy Fields, SVP & CFO at e.l.f. Beauty]

Hi, John. So on gross margins, we actually are not giving any guidance on gross margin or gross profit from that matter and the impacts and mitigation efforts. All we called out was the $50,000,000 on an annualized basis of the impact of tariffs at 55% level. We do have pricing as we talked about our mitigation efforts pricing, cost savings, concessions with our suppliers. But when we get to a point where we are having more certainty from a tariff standpoint, we will be able to come back around with gross margin impact.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

And then John, in terms of the longevity of Road and what gives us confidence, I'd say there are a number of things. First and foremost, Hailey. Hailey is well beyond a celebrity. She's one of the most thoughtful founders I've ever met. She has great instincts, a desirable aesthetic.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

She and it's not just me. Sephora is thoroughly impressed with her. Everyone is met her. The more time we spent with her, just how thoughtful she is in terms of the vision of that brand and where it can go gives us a lot of confidence. Second, it's incredibly hard to scale a brand in our space.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

We cited this stat before. There 1,900 cosmetics and skincare brands struck by Nielsen alone. Only 26 of them have more than 100,000,000 in retail sales. To be able to do $212,000,000 DTC only in net sales is simply incredible and talks to the strength of the consumer conviction behind the brand. The third thing is the quality of the products, the innovation are outstanding.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

They have amongst the highest repeat rates of any brands any brand we've seen in the category across skincare, color, cosmetics, etcetera. So there's real depth of consumer conviction in this brand. It's still young, so there's quite a few more consumers that we can attract to the brand. And but the core metrics that we look at in terms of like what is the equity of the brand, how does it resonate, what's level of community engagement, what is the quality of the products and how are they resonating, what's the repeat rates there, We feel great about all of those things see the brand for the long term and to help, hey, we build it up.

[Operator]

That concludes our question and answer session. I would like to turn the conference back over to Tarang Amin, Chairman and CEO for any closing remarks.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

Well, thank you for joining us today. I'm so proud of the incredible team at e. F. Beauty and at Rhoads for delivering another year of industry leading results. Definitely thrilled to welcome Rhoads to the e.

[Tarang Amin, Chairman and CEO at e.l.f. Beauty]

L. F. Beauty family. We look forward to seeing some of you at some of our upcoming investor meetings and speaking to in August when we'll discuss our first quarter results. Thank you and be well.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Tarang Amin, Chairman and CEO
• Mandy Fields, SVP & CFO

Analysts

• Executive
• Oliver Chen, Managing Director - Retail, Luxury, New Platforms Sector Head at TD Cowen
• Dara Mohsenian, Managing Director - US Beverage/Household Products Sectors at Morgan Stanley
• Jonna Kim, Director at TD Cowen
• Susan Anderson, Managing Director & Senior Analyst at Canaccord Genuity - Global Capital Markets
• Korinne Wolfmeyer, Vice President & Senior Equity Research Analyst - Beauty and Wellness at Piper Sandler Companies
• Andrea Teixeira, Analyst at JPMorgan Chase
• Anna Lizzul, Analyst at Bank of America
• Peter Grom, Equity Research Analyst at UBS Group
• Sydney Wagner, Equity Research Senior Associate - Beauty & Personal Care at Jefferies
• Mark Altschwager, Senior Research Analyst at Robert W. Baird & Co
• Bonnie Herzog, Managing Director at Goldman Sachs
• Rupesh Parikh, Managing Director and Senior Analyst at Oppenheimer & Co. Inc.
• Jon Andersen, Equity Research Analyst - Consumer at William Blair & Company, L.L.C