Core Viewpoint - Analysts expect e.l.f. Beauty to report earnings of $3.42 per share and revenue of $1.29 billion for the full year, reflecting increases of +7.55% and +25.53% respectively from the previous year [1] Company Performance - e.l.f. Beauty's stock closed at $205.91, down -1.59% from the previous day, underperforming the S&P 500 which fell by 0.16% [2] - The company is projected to report an EPS of $0.92, indicating a 16.36% decrease from the same quarter last year, while revenue is expected to reach $300.26 million, up 38.79% year-over-year [5] - Over the past month, e.l.f. Beauty's shares have increased by 13.24%, outperforming the Consumer Staples sector which declined by 3.04% and the S&P 500 which gained 3.15% [8] Valuation Metrics - e.l.f. Beauty has a Forward P/E ratio of 61.11, significantly higher than the industry average of 25.35 [6] - The company also has a PEG ratio of 4.42, compared to the Cosmetics industry's average PEG ratio of 3.38 [11] Analyst Estimates - Recent changes in analyst estimates for e.l.f. Beauty indicate a shifting business landscape, with positive revisions suggesting optimism about the company's outlook [7] - The Zacks Rank for e.l.f. Beauty is currently 3 (Hold), with a 4.01% decline in the Zacks Consensus EPS estimate over the past month [9]

Core Insights - The article highlights investment opportunities in lesser-known stocks that have shown strong growth potential, particularly in the fintech and cosmetics sectors [2][10]. Group 1: Sezzle (SEZL) - Sezzle is a fintech company specializing in "Buy Now, Pay Later" solutions, with a market cap of $470 million and a P/E ratio of 37 [3]. - The stock has nearly quadrupled year-to-date, driven by an increase in user accounts [3]. - Sezzle's fiscal 2024 guidance for GAAP net income has been raised from $20 million to $30 million, indicating a 50% increase in a single quarter [4]. - Revenue guidance has also been increased to project 25% year-over-year growth, up from a previous estimate of 20% [4]. - In Q1 2024, Sezzle reported a 35.5% year-over-year revenue increase and a 364.3% year-over-year rise in net income, achieving a net profit margin of 17% [11]. Group 2: E.l.f. Beauty (ELF) - E.l.f. Beauty reported a 71% year-over-year revenue growth in Q4 FY24, attributing this success to retailer and e-commerce channels [6]. - The company has gained market share for five consecutive years and has seen 21 consecutive quarters of net sales and market share growth [6]. - E.l.f. Beauty's shares have increased by 51% year-to-date and over 1,500% in the past five years, showcasing impressive revenue growth [13]. - The company generated $88 million in GAAP net income in Q1 2024, a significant turnaround from a $34.4 million net loss in the same quarter last year [15]. - E.l.f. Beauty is expected to continue its growth trajectory into fiscal 2025, particularly as it captures market share from slower-growing competitors [14]. Group 3: SoFi (SOFI) - SoFi is a fintech firm offering a range of financial services, including bank accounts and loans, but has faced a 34% drop in share price year-to-date [8]. - The company reported $645 million in revenue for Q1 2024, reflecting a 37% year-over-year improvement [15]. - Memberships have grown to 8.1 million, a 44% increase compared to the same quarter last year, with the lending segment contributing significantly to revenue [16]. - Despite recent challenges, SoFi is positioned to diversify its offerings and potentially recover quickly once momentum builds [17].

Company Performance - e.l.f. Beauty is expected to report an EPS of $0.93, reflecting a 15.45% decline compared to the same quarter last year [1] - The anticipated quarterly revenue is $299.84 million, which represents a 38.59% increase from the previous year [1] - For the full year, the Zacks Consensus Estimates project earnings of $3.42 per share and revenue of $1.28 billion, indicating changes of +7.55% and +25.49% respectively from the prior year [12] Valuation Metrics - e.l.f. Beauty has a Forward P/E ratio of 57.63, significantly higher than the industry average Forward P/E of 26.83, suggesting that the company is trading at a premium [3] - The company has a PEG ratio of 4.17, compared to the industry average PEG ratio of 3.47, indicating a higher valuation relative to expected earnings growth [9] Industry Context - The Cosmetics industry is part of the Consumer Staples sector and currently holds a Zacks Industry Rank of 190, placing it in the bottom 25% of over 250 industries [4] - Over the past month, shares of e.l.f. Beauty have gained 17.23%, while the Consumer Staples sector has lost 3.57% and the S&P 500 has gained 3.96% [6] Analyst Sentiment - Recent adjustments in analyst estimates for e.l.f. Beauty reflect shifting dynamics in short-term business patterns, with positive revisions indicating optimism about the company's outlook [7] - The Zacks Rank system currently rates e.l.f. Beauty as 3 (Hold), with the consensus EPS estimate moving 4.07% lower over the past month [8]

Core Viewpoint - e.l.f. Beauty is experiencing significant growth in market share within the Cosmetics and Skincare sectors, driven by strong product innovation and effective marketing strategies, despite potential macroeconomic challenges that could impact profitability and return on investment in marketing [2][5][10]. Financial Performance - e.l.f. Beauty reported a 77% year-over-year revenue growth to $1.02 billion for FY24, marking the 21st consecutive quarter of market share gains [10]. - The company achieved an Adjusted EBITDA of $234 million for FY24, reflecting over 100% growth year-over-year [11]. - For FY25, management projects revenue growth of 21% to $1.24 billion, with an Adjusted EBITDA margin of 23% [15]. Market Share and Growth Strategy - e.l.f. Cosmetics grew by 30% in Q4 FY24, capturing an incremental market share increase of 325 basis points to 10.5% [10]. - e.l.f. Skin outperformed the category with a 38% growth, increasing its market share to 1.6% [10]. - International sales grew by 115% year-over-year in Q4, contributing 16% of net sales [10]. Marketing and Innovation - The company maintains a strong marketing spend, with 25% of sales allocated to marketing and digital initiatives, which is above the previously guided range [11]. - e.l.f. Beauty's average product price point is $6.50, significantly lower than competitors, enhancing its value proposition [14]. - The company has seen a 70% year-over-year increase in digital consumption, with digital channels driving 22% of total consumption [14]. Future Outlook - The company anticipates continued growth in the high teens range over the next two years, projecting total revenue of $1.7 billion by FY27 [15]. - Management's focus on expanding retail presence and product innovation is expected to drive further market share gains [14][15].

Core Viewpoint - A slow and steady investment approach focusing on blue-chip stocks can yield better long-term results than high-risk portfolios, with specific companies identified as having significant growth potential. Group 1: Texas Roadhouse (TXRH) - Texas Roadhouse operates 753 restaurants, with 644 company-owned and 109 franchise locations, showing a year-over-year (YOY) growth of 5.4% for company-owned and 17.2% for franchise restaurants [3] - The company has a market capitalization of $11.5 billion and a price-to-earnings (P/E) ratio of 35, which is considered reasonable compared to peers [4] - Texas Roadhouse reported a 12.5% YOY revenue growth and a 31.0% YOY net income growth in Q1 of 2024, indicating strong financial performance [4] - The stock has increased by 45% year-to-date (YTD) and 211% over the past five years, reflecting its strong market position [5] Group 2: Meta Platforms (META) - Meta Platforms is a trillion-dollar company with significant growth potential, despite its already high valuation [7] - The company achieved a 35% YTD gain and a 170% gain over five years, with net income more than doubling YOY in Q1 of 2024 and revenue increasing by 27% YOY [8] - Meta's primary revenue source is advertising, and while it is expanding into artificial intelligence, it remains fundamentally an ad company [9] - Daily active users across Meta's platforms reached 3.24 billion, marking a 7% YOY increase, indicating strong user engagement [10] Group 3: Elf Beauty (ELF) - Elf Beauty has an 85 P/E ratio, reflecting high investor demand, with the stock up 34% YTD and an impressive 1,470% gain over the past five years [12] - The company achieved its 21st consecutive quarter of net sales growth, with a 71% YOY revenue increase in Q4 of 2024, surpassing $1 billion in net sales for the first time [13] - Despite initial low guidance that concerned investors, Elf Beauty has consistently exceeded expectations and sees significant opportunities in international markets [14]

Core Viewpoint - e.l.f. Beauty is outperforming the broader market with a 75% increase in stock price over the past year, demonstrating resilience in an inflationary environment and potential for further growth [1] Company Performance - In the fiscal fourth quarter of 2024, e.l.f. reported a 71% increase in sales year-over-year, with growth in both wholesale and e-commerce channels [3] - Gross margin expanded to 71% in the first quarter due to lower transportation costs and favorable currency fluctuations, although net income decreased from $16.2 million to $14.5 million [4] - Adjusted net income, excluding acquisition costs, was $30.8 million [4] Future Growth Expectations - Management anticipates a 21% sales increase in 2025, along with a similar rise in adjusted EBITDA and a slight increase in adjusted net income [5] - e.l.f. is focusing on low pricing strategies, with an average product price of $6.50 compared to $9.50 for competitors, which is driving demand [7] Marketing and Brand Positioning - e.l.f. is heavily investing in innovative marketing, increasing its marketing spend from 7% to 25% of sales, which helps it stand out and build strong customer relationships [8] - The brand is ranked No. 5 in market share with 6.6% and sees significant opportunities for growth [8] Market Opportunities - Skincare sales for e.l.f. increased by 38%, while the overall skincare industry grew by only 2%, indicating potential for market share capture [9] - International sales surged by 115% year-over-year in the fourth quarter, with only 16% global penetration, suggesting strong growth potential [9] Valuation Considerations - e.l.f. stock trades at a high price-to-earnings ratio of 82, reflecting its growth potential but also indicating it may be considered expensive by traditional valuation metrics [10] - Despite the high valuation, Wall Street projects a modest 12% gain over the next 12 to 18 months, suggesting that long-term investors may still find value [11]

Group 1 - e.l.f. Beauty's stock rose 15% in May following a positive surprise in its fiscal fourth-quarter results for 2024, despite earlier declines due to concerns over consumer spending [1][2] - The company expects approximately $1.2 billion in net sales for fiscal 2025, indicating a year-over-year growth rate of about 21%, which is a significant slowdown from the 77% growth in fiscal 2024 [3][4] - e.l.f. Beauty has nearly tripled its revenue in the last three years, making the projected 21% growth impressive in the context of its recent performance [4][5] Group 2 - Established competitors like Ulta Beauty are experiencing single-digit growth, highlighting e.l.f. Beauty's ability to capture market share despite a general slowdown in cosmetic spending [5][6] - The company's success is attributed to effective viral social-media marketing, raising questions about the sustainability of its growth and whether competitors could replicate its success [7][8] - e.l.f. Beauty's stock valuation is considered high compared to Ulta Beauty, which has seen its valuation drop to more reasonable levels, suggesting a potential investment consideration based on growth sustainability [8][9]

Group 1: Growth Stocks Overview - The stock market offers various methods for wealth growth, with growth stocks being a significant driver of financial success due to their potential for accelerated earnings growth [1][2] - Earnings growth is the primary driver of stock market returns, and as growth companies scale, they achieve higher EPS growth, leading to increased stock prices [1] Group 2: Cybersecurity Sector - Cybersecurity is a key area for growth, with increasing cyber threats and regulatory requirements driving investments in this sector [5] - Palo Alto Networks (PANW) is highlighted as a leading growth stock in cybersecurity, with a competitive advantage demonstrated by its contract with Change Healthcare [4][6] - PANW reported a 15% year-over-year revenue growth to $2 billion in Q3 of fiscal year 2024, with remaining performance obligations growing 23% to $11.3 billion [7] Group 3: e.l.f. Beauty Performance - e.l.f. Beauty (ELF) is recognized as a top growth stock, with a remarkable 77% revenue increase for the full fiscal year 2024, following an 18% stock surge after a strong quarterly performance [11][12] - The company has increased its market share for five consecutive years, with Q4 of fiscal year 2024 marking the 21st consecutive quarter of revenue growth [12] - For 2025, e.l.f. Beauty projects revenues between $1.23 to $1.25 billion, indicating a growth rate of 20-22% [13] Group 4: Snowflake's Growth Potential - Snowflake (SNOW) is positioned for growth through its data cloud and AI integrations, achieving a 34% year-over-year growth in the recent quarter [16] - The company is investing in AI products, with Cortex AI already in use by 750 enterprise customers, and plans to release additional AI products later this year [18] - Snowflake's development of its own large language model, Artic, which outperformed leading models in benchmark tests, positions it as a top enterprise AI data platform [19]

Part I [Business](index=5&type=section&id=Item%201.%20Business) e.l.f. Beauty, Inc. is a multi-brand beauty company offering cosmetics and skincare, focusing on value, innovation, digital marketing, and a unique team culture [Overview and Brands](index=5&type=section&id=Item%201.%20Business.Overview%20and%20Brands) e.l.f. Beauty operates a portfolio of five clean, vegan, and cruelty-free beauty brands distributed through major retailers and online channels - The company operates a family of five brands: e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, and Keys Soulcare[21](index=21&type=chunk) - e.l.f. Beauty's products are characterized as inclusive, accessible, clean, vegan, and cruelty-free[20](index=20&type=chunk) - The company's mission is to make the best of beauty accessible to every eye, lip, face, and skin concern[22](index=22&type=chunk) [Products and Strategy](index=6&type=section&id=Item%201.%20Business.Products%20and%20Strategy) The company's strategy is built on four pillars: strong value proposition, rapid innovation, disruptive digital marketing, and a unique 'one-team' culture - The company's strategy is based on four key pillars: Value Proposition, Powerhouse Innovation, Disruptive Marketing Engine, and Unique One-Team Culture[24](index=24&type=chunk)[26](index=26&type=chunk) - e.l.f. Cosmetics' average product price is approximately **$6**, significantly lower than other mass brands (over $9) and prestige brands (over $20)[26](index=26&type=chunk) - Marketing and digital expenses for fiscal year 2024 totaled **$256.0 million**, representing about **25% of net sales**[26](index=26&type=chunk) - All full-time employees receive a base salary, are eligible for the same bonus plan, and receive an annual equity award in e.l.f. Beauty stock[27](index=27&type=chunk)[45](index=45&type=chunk) [Distribution and Customers](index=7&type=section&id=Item%201.%20Business.Distribution%20and%20Customers) The company uses an omni-channel distribution strategy, with retailers accounting for 84% of FY2024 net sales and the U.S. market representing 85% FY 2024 Sales Distribution | Channel/Region | Percentage of Net Sales | | :--- | :--- | | Retailers (National & International) | 84% | | E-commerce | 16% | | United States | 85% | | International | 15% | FY 2024 Top Customer Concentration | Customer | Percentage of Net Sales | | :--- | :--- | | Target | 25% | | Walmart | 17% | | Ulta Beauty | 16% | [Supply Chain](index=9&type=section&id=Item%201.%20Business.Supply%20Chain) e.l.f. Beauty operates an asset-light supply chain, primarily sourcing and manufacturing products in China through third-party partners - The company employs an asset-light supply chain, sourcing and manufacturing nearly all products through third-party partners in China[35](index=35&type=chunk) - Distribution is managed by third-party logistics providers with centers in the U.S. (California, Utah, Ohio, Georgia) and internationally (UK, Germany, Canada)[37](index=37&type=chunk) [Human Capital and Social Impact](index=9&type=section&id=Item%201.%20Business.Human%20Capital%20and%20Social%20Impact) The company emphasizes diversity and inclusion, with 475 employees, a two-thirds female board, and commitments to cruelty-free and Fair Trade practices - As of March 31, 2024, the company had **475 full-time employees**, with 377 in the US, UK, and Canada, and 98 in China[38](index=38&type=chunk) - The Board of Directors is **67% female** and over one-third diverse. The overall employee base is **75% female** and over **40% diverse**[40](index=40&type=chunk)[42](index=42&type=chunk) - The company was the first in the beauty industry to have a third-party manufacturing facility become Fair Trade Certified™[50](index=50&type=chunk) - The company is **100% cruelty-free** and holds dual certification from PETA and the Leaping Bunny Program for its main brands[55](index=55&type=chunk) [Government Regulation](index=13&type=section&id=Item%201.%20Business.Government%20Regulation) The company's products are subject to U.S. and international regulations, with new stringent requirements introduced by MoCRA for cosmetics - The company is subject to regulation by the FDA, CPSC, and FTC in the United States, and international bodies like Health Canada and the European Commission[58](index=58&type=chunk) - The Modernization of Cosmetic Regulation Act of 2022 (MoCRA) will significantly expand FDA authority with new requirements for facility registration, product listing, safety substantiation, and mandatory recalls[63](index=63&type=chunk)[186](index=186&type=chunk) - Certain products, such as sunscreens and acne treatments, are regulated as over-the-counter (OTC) drugs by the FDA and must comply with specific monograph requirements[64](index=64&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20factors) The company faces diverse risks including intense competition, supply chain reliance on China, cybersecurity threats, and evolving regulations [Industry and Competition Risks](index=17&type=section&id=Item%201A.%20Risk%20factors.Industry%20and%20Competition) Success in the highly competitive beauty industry depends on anticipating trends, launching new products, and maintaining brand reputation - The beauty industry is highly competitive, with pressure from large multinational companies (L'Oréal, Estee Lauder) and new 'indie' brands[76](index=76&type=chunk)[77](index=77&type=chunk) - The success of new product introductions is not guaranteed and involves risks such as lack of consumer acceptance, supply chain delays, and potential cannibalization of existing product sales[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - Damage to brand reputation, which is critical to financial success, can arise from failure to comply with ethical or product standards, adverse publicity, or poor product quality[85](index=85&type=chunk)[88](index=88&type=chunk) [Growth, Profitability, and Acquisition Risks](index=21&type=section&id=Item%201A.%20Risk%20factors.Growth,%20Profitability,%20and%20Acquisitions) Future growth is not guaranteed and depends on successful strategy implementation and integration of acquisitions like Naturium, which carry inherent risks - The company's ability to successfully implement its growth strategy, which includes building brand demand, leading innovation, and driving retail productivity, is not assured[92](index=92&type=chunk) - Acquisitions, such as the purchase of Naturium, present risks including integration challenges, diversion of management attention, and potential incurrence of unanticipated liabilities[99](index=99&type=chunk)[103](index=103&type=chunk) - The acquisition of Naturium brings specific risks, such as the potential for inaccurate assumptions about its performance, discovery of unknown liabilities, and reliance on a limited number of third-party suppliers for raw materials[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) [Operations, Supply Chain, and Macroeconomic Risks](index=27&type=section&id=Item%201A.%20Risk%20factors.Operations,%20Supply%20Chain,%20and%20Macroeconomic%20Conditions) The business is vulnerable to global supply chain disruptions, reliance on third-party suppliers in China, and adverse macroeconomic conditions affecting consumer spending - Operations are subject to disruption risks in the supply chain, including manufacturing issues, shipping delays (port congestion, container shortages), and problems at third-party distribution centers[110](index=110&type=chunk)[111](index=111&type=chunk) - The company relies on a number of third-party suppliers and manufacturers, primarily in China, without long-term contracts, exposing it to risks of quality control problems, production delays, and increased costs[115](index=115&type=chunk) - Adverse economic conditions, such as inflation, rising interest rates, or a recession, could decrease consumer discretionary spending and negatively impact net sales and profitability[129](index=129&type=chunk) - Failure to effectively manage inventory can lead to obsolescence, write-downs, and reduced profit margins[121](index=121&type=chunk) [Financial and Customer Risks](index=35&type=section&id=Item%201A.%20Risk%20factors.Financial%20and%20Customer%20Risks) The company's indebtedness and heavy reliance on a few key retailers pose significant financial and operational risks, exacerbated by seasonal sales fluctuations - As of March 31, 2024, the company had **$262.9 million** of total indebtedness, which could require substantial cash flow for debt service and limit operational flexibility[135](index=135&type=chunk) - A limited number of retailers account for a large portion of net sales, and the loss or reduced business from one or more of these customers could adversely affect results[145](index=145&type=chunk) - The business is seasonal, with higher net sales in the third and fourth fiscal quarters due to holiday purchasing and shelf resets, making these periods critical for annual performance[148](index=148&type=chunk) [IT, Cybersecurity, and AI Risks](index=39&type=section&id=Item%201A.%20Risk%20factors.IT,%20Cybersecurity,%20and%20AI%20Risks) Increasing IT dependence, cyberattack vulnerability, new system implementation risks, and AI challenges pose significant operational and reputational threats - The company relies heavily on IT networks and systems, making it vulnerable to service interruptions, data corruption, and cyberattacks, which are increasing in frequency and sophistication[151](index=151&type=chunk)[155](index=155&type=chunk) - The implementation of major new IT systems, such as SAP software, presents risks of disruption, significant capital expenditure, and potential delays[162](index=162&type=chunk)[163](index=163&type=chunk) - The use of Artificial Intelligence (AI) presents risks including accuracy issues, unintended biases, increased cybersecurity vulnerabilities, and evolving legal and regulatory uncertainty[165](index=165&type=chunk) - A breach of security involving sensitive consumer information could damage the company's reputation, lead to litigation and regulatory fines, and harm financial results[166](index=166&type=chunk)[170](index=170&type=chunk) [International and Regulatory Risks](index=46&type=section&id=Item%201A.%20Risk%20factors.International%20and%20Regulatory%20Risks) Significant operations in China and evolving global regulations, including MoCRA and data privacy laws, expose the company to political, economic, and compliance risks - Sourcing and manufacturing substantially all products in China exposes the company to risks inherent to that country, including rising labor costs, and a fluid political and legal climate[176](index=176&type=chunk)[177](index=177&type=chunk) - Evolving regulations, particularly the Modernization of Cosmetic Regulation Act of 2022 (MoCRA) in the U.S., could increase costs, require product reformulation, and expand FDA oversight[183](index=183&type=chunk)[186](index=186&type=chunk) - The business is subject to complex and evolving data privacy laws such as the GDPR in Europe and the CCPA/CPRA in California, which impose significant compliance obligations and penalties for non-compliance[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - Compliance with anti-corruption laws like the FCPA is critical due to international sourcing and sales operations[205](index=205&type=chunk) [Legal, Intellectual Property, and Marketing Risks](index=58&type=section&id=Item%201A.%20Risk%20factors.Legal,%20IP,%20and%20Marketing%20Risks) The company faces risks from legal proceedings, product liability claims, intellectual property infringement, and reputational damage from social media marketing - The company could be required to recall products or face product liability claims, which could result in significant costs and reputational harm[213](index=213&type=chunk)[214](index=214&type=chunk) - Protecting intellectual property is vital, but the company may not be successful in asserting trademark protection in all jurisdictions and faces risks of infringement claims from others[216](index=216&type=chunk)[221](index=221&type=chunk) - Heavy reliance on social media platforms like TikTok for marketing exposes the company to risks from platform policy changes, regulatory actions (e.g., potential U.S. ban on TikTok), and negative publicity[224](index=224&type=chunk)[227](index=227&type=chunk) - Use of social media influencers for marketing carries risks, as their behavior could reflect poorly on the brand, and the company has limited control over their communications[229](index=229&type=chunk) [Unresolved Staff Comments](index=72&type=section&id=Item%201B.%20Unresolved%20staff%20comments) The company reports that it has no unresolved staff comments from the SEC - None[259](index=259&type=chunk) [Cybersecurity](index=72&type=section&id=Item%201C.%20Cybersecurity) The company has a cybersecurity risk management program overseen by the Board, with no past material threats identified, but acknowledges future risks - The company has a cybersecurity risk management program guided by frameworks from NIST and COSO to identify, assess, and manage cybersecurity risks[260](index=260&type=chunk)[261](index=261&type=chunk) - The Board of Directors oversees the cybersecurity program, with the Chief Digital Officer (CDO) having primary management responsibility[264](index=264&type=chunk)[266](index=266&type=chunk) - The company has not identified any past cybersecurity threats that have materially affected its operations or financial condition[263](index=263&type=chunk) [Properties](index=74&type=section&id=Item%202.%20Properties) The company leases all its properties, including headquarters and offices, and utilizes third-party distribution centers globally, totaling over 500,000 sq ft - All company properties are leased, with the principal executive offices located in Oakland, California[270](index=270&type=chunk)[272](index=272&type=chunk) Leased Property Overview | Use | Total Square Feet | | :--- | :--- | | Commercial Space (Offices) | ~57,018 | | Distribution Centers | ~465,219 | - The company utilizes third-party distribution centers in Ohio, Utah, Georgia, California, New Jersey, England, Germany, and Canada[273](index=273&type=chunk) [Legal Proceedings](index=74&type=section&id=Item%203.%20Legal%20proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business[274](index=274&type=chunk) [Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20safety%20disclosures) This item is not applicable to the company - Not applicable[275](index=275&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=75&type=section&id=Item%205.%20Market%20for%20registrant%27s%20common%20equity,%20related%20stockholder%20matters%20and%20issuer%20purchases%20of%20equity%20securities) e.l.f. Beauty's common stock trades on the NYSE, has never paid dividends, and significantly outperformed market indices over five years - The company's common stock trades on the NYSE under the symbol 'ELF'[277](index=277&type=chunk) - The company has never paid cash dividends and does not plan to in the foreseeable future, as earnings are retained for business expansion[279](index=279&type=chunk) 5-Year Stock Performance ($100 Investment on 3/31/2019) | Index | Value as of 3/31/2024 | | :--- | :--- | | **e.l.f. Beauty, Inc. (ELF)** | **$1,849.34** | | S&P 500 Index | $185.38 | | S&P 500 Consumer Discretionary Index | $172.62 | - No shares were repurchased during the fiscal year ended March 31, 2024. A total of **$17.1 million** remains available for purchase under the authorized Share Repurchase Program[290](index=290&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=78&type=section&id=Item%207.%20Management%27s%20discussion%20and%20analysis%20of%20financial%20condition%20and%20results%20of%20operations) In fiscal 2024, net sales grew 77% to $1.02 billion, gross margin improved to 71%, and net income more than doubled, supported by the Naturium acquisition [Acquisition of Naturium](index=78&type=section&id=Item%207.%20MD%26A.Acquisition%20of%20Naturium) On October 4, 2023, the company acquired Naturium LLC for $333.0 million in cash and stock to expand its brand portfolio - The company acquired Naturium LLC on October 4, 2023, for a total purchase price of **$333.0 million**, consisting of cash and company common stock[296](index=296&type=chunk) [Results of Operations](index=81&type=section&id=Item%207.%20MD%26A.Results%20of%20Operations) Fiscal 2024 net sales increased 77% to $1.02 billion, with net income reaching $127.7 million and gross margin expanding to 71% Consolidated Statements of Operations (Fiscal Years 2022-2024) | (in thousands) | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | **Net sales** | **$1,023,932** | **$578,844** | **$392,155** | | Gross profit | $724,096 | $390,396 | $251,732 | | *Gross Margin* | *71%* | *67%* | *64%* | | Operating income | $149,678 | $68,143 | $29,770 | | **Net income** | **$127,663** | **$61,530** | **$21,770** | - **FY 2024 vs. FY 2023:** Net sales increased by **$445.1 million (77%)**, driven by strength in both retailer channels (+$353.5M) and e-commerce (+$91.6M). Gross margin improved from **67% to 71%** due to favorable FX, cost savings, and improved transportation costs[312](index=312&type=chunk)[313](index=313&type=chunk) - **FY 2023 vs. FY 2022:** Net sales increased by **$186.6 million (48%)**, driven by growth in retailer channels (+$158.0M) and e-commerce (+$28.6M). Gross margin improved from **64% to 67%**, primarily due to pricing, cost savings, and product mix[319](index=319&type=chunk)[320](index=320&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=84&type=section&id=Item%207.%20MD%26A.Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company had $108.2 million in cash, $262.9 million in debt, with operating cash flow of $71.2 million funding investments and acquisitions Cash Flow Summary (FY 2024) | (in thousands) | Amount | | :--- | :--- | | Net cash provided by operating activities | $71,154 | | Net cash used in investing activities | ($284,660) | | Net cash provided by financing activities | $200,945 | - As of March 31, 2024, the company had **$108.2 million** in cash and cash equivalents and total debt of **$262.9 million**[326](index=326&type=chunk)[506](index=506&type=chunk) - To fund the Naturium acquisition, the company borrowed an incremental term loan of **$115.0 million** and drew on its revolving credit facility[135](index=135&type=chunk)[339](index=339&type=chunk)[346](index=346&type=chunk) [Critical Accounting Policies](index=89&type=section&id=Item%207.%20MD%26A.Critical%20Accounting%20Policies) The company's critical accounting policies involve significant judgment in revenue recognition, business combinations, and impairment testing of assets - **Revenue Recognition:** Involves estimating variable consideration from sales discounts, markdowns, and other allowances based on historical and expected trends[352](index=352&type=chunk)[353](index=353&type=chunk) - **Business Combinations:** Requires allocating the purchase price of acquisitions to assets and liabilities based on estimated fair values, with any excess recorded as goodwill[354](index=354&type=chunk) - **Impairment of Long-Lived Assets:** Goodwill and intangible assets are tested for impairment annually or when triggering events occur, using qualitative assessments and quantitative comparisons of carrying value to fair value[355](index=355&type=chunk)[356](index=356&type=chunk)[359](index=359&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=91&type=section&id=Item%207A.%20Quantitative%20and%20qualitative%20disclosures%20about%20market%20risk) The company is exposed to interest rate risk, with a 1% increase impacting annual interest expense by $2.6 million, and foreign exchange risk, particularly with the Chinese Renminbi - A hypothetical **1% increase** in interest rates would increase the company's annualized interest expense by approximately **$2.6 million** as of March 31, 2024[365](index=365&type=chunk) - A hypothetical **10% adverse movement** in the Chinese Renminbi (RMB) against the US dollar would have adversely affected cost of sales and net income by approximately **$32.0 million** for fiscal year 2024[367](index=367&type=chunk) [Financial Statements and Supplementary Data](index=94&type=section&id=Item%208.%20Financial%20statements%20and%20supplementary%20data) This section presents the company's audited consolidated financial statements for FY2024 and the unqualified audit report from Deloitte & Touche LLP - This section includes the audited consolidated financial statements and the report of the independent registered public accounting firm[368](index=368&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the financial statements and on the effectiveness of internal control over financial reporting[380](index=380&type=chunk)[416](index=416&type=chunk) - The audit of internal control over financial reporting excluded the recently acquired operations of Naturium LLC, which represented **4% of total assets** and **5% of total revenues** for fiscal 2024[382](index=382&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=94&type=section&id=Item%209.%20Changes%20in%20and%20disagreements%20with%20accountants%20on%20accounting%20and%20financial%20disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None[369](index=369&type=chunk) [Controls and Procedures](index=94&type=section&id=Item%209A.%20Controls%20and%20procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2024, excluding the Naturium acquisition - Management concluded that disclosure controls and procedures were effective as of March 31, 2024[370](index=370&type=chunk) - Management concluded that internal control over financial reporting was effective as of March 31, 2024. The assessment excluded the acquired operations of Naturium[372](index=372&type=chunk)[373](index=373&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter that materially affected, or are reasonably likely to materially affect, internal controls[376](index=376&type=chunk) [Other Information](index=96&type=section&id=Item%209B.%20Other%20information) No director or officer adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fourth quarter - During the three months ended March 31, 2024, no director or officer adopted, terminated, or modified a Rule 10b5-1 trading plan[388](index=388&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=98&type=section&id=Item%209C.%20Disclosure%20regarding%20foreign%20jurisdictions%20that%20prevent%20inspections) This item is not applicable to the company - Not applicable[389](index=389&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=99&type=section&id=Item%2010.%20Directors,%20executive%20officers%20and%20corporate%20governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the Definitive Proxy Statement for the 2024 annual meeting of stockholders[392](index=392&type=chunk) [Executive Compensation](index=99&type=section&id=Item%2011.%20Executive%20compensation) Information concerning executive compensation is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the Definitive Proxy Statement for the 2024 annual meeting of stockholders[393](index=393&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=99&type=section&id=Item%2012.%20Security%20ownership%20of%20certain%20beneficial%20owners%20and%20management%20and%20related%20stockholder%20matters) Information regarding security ownership by beneficial owners and management is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the Definitive Proxy Statement for the 2024 annual meeting of stockholders[394](index=394&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=99&type=section&id=Item%2013.%20Certain%20relationships%20and%20related%20transactions,%20and%20director%20independence) Information on related party transactions and director independence is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the Definitive Proxy Statement for the 2024 annual meeting of stockholders[395](index=395&type=chunk) [Principal Accountant Fees and Services](index=99&type=section&id=Item%2014.%20Principal%20accounting%20fees%20and%20services) Information detailing fees paid to the principal independent accountant is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the Definitive Proxy Statement for the 2024 annual meeting of stockholders[396](index=396&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=100&type=section&id=Item%2015.%20Exhibits,%20financial%20statement%20schedules) This section lists all documents filed as part of the Annual Report, including financial statements and various exhibits - This section provides an index of all exhibits filed with the Form 10-K, including financial statements, credit agreements, and executive compensation plans[399](index=399&type=chunk) [Form 10-K Summary](index=103&type=section&id=Item%2016.%20Form%2010-K%20summary) This optional item is listed as a heading, but no summary content is provided in this report - No summary is provided under this optional item[403](index=403&type=chunk)[404](index=404&type=chunk)

Core Insights - e.l.f. Beauty reported strong fourth-quarter fiscal 2024 results, with both net sales and earnings exceeding expectations and improving from the previous year [1][2][3] Financial Performance - Adjusted earnings per share reached 53 cents, surpassing the Zacks Consensus Estimate of 35 cents, marking a 26.2% increase year-over-year [3] - Net sales surged 71.4% year-over-year to $321.1 million, exceeding the consensus estimate of $292 million, driven by robust performance in retail and e-commerce channels [3] Market Position - The company expanded its market share by 325 basis points, achieving its 21st consecutive period of growth in both net sales and market share [2] Profitability Metrics - Gross profit increased 76% year-over-year to $227.2 million, with gross margin expanding 180 basis points to 70.7% due to favorable foreign exchange effects and cost savings [4] - Adjusted EBITDA rose to $40.9 million from $21.2 million in the prior year, with the adjusted EBITDA margin increasing 140 basis points to 12.7% [6] Expense Management - Adjusted selling, general and administrative (SG&A) expenses increased 72.9% year-over-year to $196.9 million, with SG&A as a percentage of net sales decreasing by 50 basis points to 61.3% [5] Cash and Debt Position - The company ended the quarter with cash and cash equivalents of $108.2 million and long-term debt of $161.8 million, alongside total shareholders' equity of $642.6 million [9] Fiscal 2025 Outlook - For fiscal 2025, e.l.f. Beauty anticipates a 20-22% year-over-year increase in net sales, projecting net sales between $1.23 billion and $1.25 billion [10] - Adjusted EBITDA is expected to be between $285 million and $289 million, indicating growth from the previous year's $235 million [10] - Adjusted net income is forecasted between $187 million and $191 million, with adjusted earnings per share expected to be $3.20-$3.25 [11]