e.l.f. Beauty, Inc. (NYSE:ELF) Q3 2023 Earnings Call Transcript

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Thomas Nass: Great. Thanks and a quick follow-up on skin care. Can you just add some color on the main drivers of the recent success there and where you might be taking share?

Tarang Amin: Yes. I mean we’re still small in skin care. So I think less about where we’re taking share and more about the fundamental drivers and the fundamental drivers are very similar to the fundamental drivers we have on the color business. We have an incredible value proposition, prestige quality at accessible price points. We have meaningful innovation that’s resonating with the consumer. If I look at our Halo, holy hydration franchise, I look at our recent will launch and we know how to engage and attract consumers. It was only a couple of quarters ago that we’ve put our first dedicated support on skin care and we’ve seen good returns from there. So we’re going to follow a similar formula in a different category with more education and more dedicated focus there. But I like the momentum we have in there and that momentum is now sustained for a number of quarters here and I feel like we have a huge opportunity there.

Operator: Our next question comes from Mark Astrachan with Stifel. Please go ahead.

Mark Astrachan: Yeah, thanks and afternoon, everyone. One €“ just a follow-up question, one more broad question. In thinking about how to model the top-line, if you back away international back-away digital, the sales are sort of directionally in line with the scanner data. So, obviously, then a lot of what we’re not seeing is what you referenced in terms of the strong digital and international growth. Anything there from not just a quarter standpoint, because you’ve obviously given us fourth quarter, but anything that we should be thinking about, both positives and negatives there in terms of how the business has fared over the last couple of quarters here that we should be modeling or thinking about as we model?

Mandy Fields: You hit on it, Mark. I mean our digital and international growth and just growth in our untracked channels has been very strong this year. And so, I think that if you parse out what you’re seeing in track channel and then it kind of take forward what you’re seeing from an untrack standpoint, you probably get to the right place from a modeling view.

Mark Astrachan: Got it. So basically, keep the trend in 4Q and that’s sort of how we bridge €“ bridge the gap. Okay. And then more just category related and somewhat following the last question, any thoughts not specific to your guidance, but how you think about category performance talking more broad beauty trends, if you have thoughts on 2023 and even just on the cycle, train your comment on coming out of the pandemic. The last time the beauty category had a cycle make up, in particular, it lasted, I think, five plus years. Are we kind of year two in a longer-term cycle? How are you thinking about all of that?

Tarang Amin: Yes. I mean we’re always going to be balanced. I am hopeful that we’re in the start of a really good cycle here, both what €“ the comments I made on the broader economy more importantly, consumers wanting to express themselves. And then we’re also seeing good things from a competitive standpoint. I’ve long been a believer that I actually wish really well for our larger global competitors because the more they do to bring interest to the category either through innovation or their own investment levels, I think it’s good for the category, which in turn is really good for e.l.f. because our value proposition comes shining through. So I’ve been bullish for maybe times when I shouldn’t have been bullish on the category, but I was bullish then. So I am certainly bullish now in terms of how the category continues to gain momentum.

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