e.l.f. Beauty, Inc. (NYSE:ELF) Q4 2023 Earnings Conference Call May 24, 2023 4:30 PM ET

Company Participants

KC Katten - Investor Relations

Tarang Amin - Chairman and Chief Executive Officer

Mandy Fields - Senior Vice President and Chief Financial Officer

Conference Call Participants

Olivia Tong - Raymond James

Dara Mohsenian - Morgan Stanley

Bill Chappell - Truist Securities

Linda Bolton-Weiser - D.A. Davidson

Anna Lizzul - Bank of America

Andrea Teixeira - JPMorgan

Susan Anderson - Canaccord Genuity

Korinne Wolfmeyer - Piper Sandler

Ashley Helgans - Jefferies

Oliver Chen - TD Cowen

Rupesh Parikh - Oppenheimer

Jon Andersen - William Blair

KC Katten

Thank you for joining us today to discuss e.l.f. Beauty’s Fourth Quarter and Fiscal ‘23 results. I am KC Katten, Vice President of Corporate Development and Investor Relations. With me today are Tarang Amin, Chairman and Chief Executive Officer; and Mandy Fields, Senior Vice President and Chief Financial Officer.

We encourage you to tune into our webcast presentation for the best viewing experience, which you can access on our website at investor.elfbeauty.com. Since many of our remarks today contain forward-looking statements, please refer to our earnings release and reports filed with the SEC where you will 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 Tarang.

Tarang Amin

Thank you, KC and good afternoon everyone. Today, we will discuss the drivers of our exceptional fiscal ‘23 performance and outlook for fiscal ‘24. I want to start by recognizing the e.l.f. Beauty team. We have so much to be proud of in fiscal ‘23. Our value proposition, powerhouse innovation and disruptive marketing engine continue to fuel our performance. Our results speak for themselves.

In fiscal ‘23, we grew net sales by 48% and adjusted EBITDA by 56%, well above our original expectations and hitting major milestones by reaching over $500 million in net sales and over $100 million in adjusted EBITDA for the first time. Q4 marked our 17th consecutive quarter of net sales growth.

In Q4, we grew net sales by 78%, increased gross margin by approximately 470 basis points and delivered $21 million in adjusted EBITDA, up 66%. We are encouraged by the continued strength we are seeing across the color cosmetics category. In Q4, the category grew 18% versus a year ago. e.l.f. continue to significantly outperform the category, growing 64% in tracked channels. We grew our market share by 270 basis points, increasing our rank from number five a year ago to the number three brand for the first time. We continue to be the fastest growing top five brand by a wide margin.