e.l.f. Beauty Reports Strong Fiscal 2025 Third Quarter Results, Updates Full-Year Outlook
e.l.f. Beauty announced its financial results for the third quarter and the first nine months of fiscal year 2025, which ended on December 31, 2024. The company delivered another impressive quarter, showcasing strong growth in net sales and market share gains, reflecting its robust performance across various categories, including digital platforms, color cosmetics, skincare, and international markets.
Leadership Commentary
“I’m incredibly proud of the e.l.f. Beauty team for delivering another quarter of consistent, category-leading growth,” said Tarang Amin, Chairman and Chief Executive Officer of e.l.f. Beauty. “In Q3, we achieved a 31% increase in net sales and gained 220 basis points of market share in the U.S. We believe we are still in the early stages of unlocking significant opportunities across digital channels, color cosmetics, skincare, and international markets.”
Third Quarter Fiscal 2025 Financial Highlights (Three Months Ended December 31, 2024)
- Net Sales: Increased 31% year-over-year to $355.3 million. This growth was driven by strong performance in both retail and e-commerce channels domestically and internationally.
- Gross Margin: Improved by 40 basis points to 71%, primarily due to favorable foreign exchange rates on goods sourced from China, cost-saving initiatives, and inventory adjustments. These gains were partially offset by product mix and higher transportation costs.
- Selling, General, and Administrative (SG&A) Expenses: Rose by $58.1 million to $218.2 million, representing 61% of net sales. Adjusted SG&A expenses grew by $45.5 million to $192.9 million, or 54% of net sales. The increase was primarily driven by higher marketing and digital spending, increased compensation and benefits, operational costs, general administrative expenses, investments in retail fixtures, visual merchandising, and depreciation and amortization.
- Other Expenses: Increased 306% to $5.3 million, largely due to foreign currency exchange losses stemming from fluctuations between the British pound and the U.S. dollar.
- Net Income: Reported at $17.3 million on a GAAP basis. Adjusted net income was $43.0 million, reflecting the exclusion of specific non-recurring items.
- Earnings Per Share (EPS): Diluted EPS was $0.30 on a GAAP basis. Adjusted diluted EPS was $0.74.
- Adjusted EBITDA: Increased to $68.7 million, representing 19% of net sales, marking a 16% year-over-year growth.
Nine-Month Fiscal 2025 Financial Highlights (Nine Months Ended December 31, 2024)
- Net Sales: Climbed 40% year-over-year to $980.9 million, fueled by robust growth in both U.S. and international retail and e-commerce channels.
- Gross Margin: Expanded by 50 basis points to 71%, driven by cost-saving measures and favorable foreign exchange rates on imports from China, partially offset by inventory adjustments and product mix impacts.
- SG&A Expenses: Increased by $220.7 million to $584.9 million, accounting for 60% of net sales. Adjusted SG&A grew by $188.1 million to $517.6 million, or 53% of net sales. The growth reflects higher investments in marketing, digital platforms, employee compensation, operational infrastructure, administrative functions, retail fixturing, and depreciation.
- Other Expenses: Rose 168% to $1.3 million, primarily due to foreign currency exchange losses linked to fluctuations between the British pound and the U.S. dollar.
- Net Income: Reported at $83.8 million on a GAAP basis, with adjusted net income reaching $152.3 million.
- Earnings Per Share (EPS): Diluted EPS was $1.43 on a GAAP basis. Adjusted diluted EPS stood at $2.61.
- Adjusted EBITDA: Reached $215.5 million, representing 22% of net sales, reflecting an 11% year-over-year increase.
Liquidity Position
As of December 31, 2024, e.l.f. Beauty had $73.8 million in cash and cash equivalents and $154.1 million in long-term debt. This compares to $72.7 million in cash and $164.4 million in long-term debt as of December 31, 2023, indicating improved liquidity and a reduction in debt obligations.
Updated Fiscal 2025 Outlook
Mandy Fields, Chief Financial Officer of e.l.f. Beauty, provided an updated outlook for fiscal 2025, citing softer-than-expected trends in January as the rationale for a more cautious approach for the final quarter.
“Given the recent market trends, we are revising our fiscal 2025 projections. However, our strong year-to-date performance underscores the resilience of our brand and the effectiveness of our strategic initiatives,” said Fields.
| Metric | Updated Fiscal 2025 Outlook | Previous Fiscal 2025 Outlook |
|---|---|---|
| Net Sales | $1,300 – $1,310 million | $1,315 – $1,335 million |
| Adjusted EBITDA | $289 – $293 million | $304 – $308 million |
| Adjusted Effective Tax Rate | 19% – 20% | 19% – 20% |
| Adjusted Net Income | $193 – $196 million | $205 – $208 million |
| Adjusted Diluted EPS | $3.27 – $3.32 | $3.47 – $3.53 |
| Fiscal Year Ending Shares (Diluted) | 59 million | 59 million |
Despite the adjusted projections, e.l.f. Beauty remains optimistic about its growth trajectory and is committed to driving value through continued innovation, strategic investments, and market expansion.
