Financial Data and Key Metrics Changes - In Q3, net sales grew by 38% year-over-year, with adjusted EBITDA increasing by 79% [3][29] - The acquisition of Rhode contributed approximately $128 million, or about 36 percentage points, to Q3 net sales growth [29] - Q3 gross margin was 71%, down approximately 30 basis points year-over-year but up 200 basis points sequentially from Q2 [30] - Adjusted net income was $74 million, or $1.24 per diluted share, compared to $43 million, or $0.74 per diluted share a year ago [31] Business Line Data and Key Metrics Changes - e.l.f. Cosmetics brand grew 8% in the U.S., outperforming the category by two times [3] - e.l.f. Skin consumption grew 16% in the U.S., also outperforming the category by two times [4] - Naturium, acquired two years ago, continues to drive strong growth, while Rhode achieved the No. 1 brand ranking in Sephora North America [4][26] Market Data and Key Metrics Changes - U.S. net sales grew by 36% year-over-year, while international net sales grew by 44% [30] - The company increased its market share by 130 basis points, the largest share gain among over 700 cosmetics brands tracked by Nielsen [4] - International sales account for approximately 20% of total net sales, compared to legacy peers with over 70% [28] Company Strategy and Development Direction - The company aims to democratize access to beauty with a value proposition that offers products at accessible price points [6] - Plans for spring 2026 include expanding retail space within Ulta Beauty in the U.S. and launching with DM in Germany [25] - The company is focused on innovation and disruptive marketing to fuel brand awareness and deepen community connections [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue gaining market share and delivering growth, despite some softness in the UK and Germany [29][30] - The outlook for fiscal 2026 has been raised, expecting net sales growth of approximately 22%-23% year-over-year, up from 18%-20% previously [33] - Management noted that global consumption growth is expected to be around 6%, with some headwinds from pipeline dynamics [35] Other Important Information - The company ended the quarter with $197 million in cash on hand, compared to $74 million a year ago [32] - The company repurchased approximately $50 million of outstanding common stock during the quarter [32] - The marketing spend for the quarter was 21% of net sales, down from 27% in Q3 of the previous year [31] Q&A Session Summary Question: Can you elaborate on your approach to spending and guidance? - Management indicated that the adjusted EBITDA margin for the second half is expected to be around 19%, up from 17% previously, due to timing shifts in costs and increased marketing spend [41][42] Question: What is the plan for expanding Rhode at a faster pace? - Management emphasized the importance of maintaining quality in launches rather than rushing expansion, noting strong demand for Rhode [43][44] Question: What strategies are in place to drive growth for the core e.l.f. brand? - Management highlighted the importance of innovation and market share gains, noting that the brand is the most productive in terms of sales per linear foot [46][47] Question: Can you provide an update on the base e.l.f. Cosmetics business in the U.S.? - Management reported that the brand is healthy, with a successful price increase and strong consumer acceptance [52][53] Question: What are the plans for innovation and portfolio around Rhode in the U.S.? - Management mentioned ongoing innovation efforts, including new product launches and a focus on maintaining momentum [55][56]