Financial Data and Key Metrics Changes - In Q1 2026, net sales grew by 9% on top of a 50% growth in Q1 of the previous year, reaching $354 million [5][32] - Adjusted EBITDA was $87 million, up 12% year-over-year [5][34] - Gross margin for Q1 was 69%, down approximately 215 basis points compared to the prior year, primarily due to incremental tariff costs [33] - Adjusted net income was $51 million, or $0.89 per diluted share, compared to $64 million, or $1.10 per diluted share a year ago [35] Business Line Data and Key Metrics Changes - In color cosmetics, e.l.f. holds the number one unit share brand with approximately 15% share, and the number two share brand with approximately 13% share, more than double from three years ago [7][14] - Skincare now drives nearly 20% of global consumption, more than double the level from a few years ago [17] - The Halo Glow Skin Tint was the top-selling cosmetics product on e.l.f.'s website in Q1 [14][21] Market Data and Key Metrics Changes - International net sales grew by 30% in Q1, with significant growth in existing markets and expansion into new markets [23][25] - In the UK, e.l.f. Cosmetics outpaced category growth by three times in Q1, increasing its rank from the number four brand to the number three brand [23] - International sales have increased from $28 million six years ago to $266 million today, representing 20% of total sales [25] Company Strategy and Development Direction - The company aims to more than double its business over the coming years, focusing on color cosmetics, skincare, and international expansion [6][31] - The acquisition of Rhode is expected to enhance e.l.f.'s position in accessible beauty and drive brand awareness [26][27] - The company plans to leverage its marketing and innovation capabilities to continue gaining market share across segments [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue gaining market share and capturing significant growth opportunities despite tariff uncertainties [26][40] - The company is monitoring consumer response to recent price increases and expects to maintain strong performance in the U.S. market [78][79] - Management highlighted the importance of innovation and value proposition in driving consumer engagement and sales growth [12][19] Other Important Information - The company ended the quarter with $170 million in cash, up from $109 million a year ago, and generated $20 million in free cash flow [35][36] - The transition to SAP was reported as successful, indicating strong operational capabilities [37][38] Q&A Session Summary Question: Can you talk about how much inventory might be trapped in at the 170% rate versus the 50% rate? - Management indicated that inventory consists of a mixture of tariff rates, with more of the 170% expected to flow through in Q2, leading to lower gross margins [45][46] Question: Can you expand on the greater than 9% sales growth for the first half? - Management confirmed that the addition of Rhode will help drive Q2 sales higher than Q1, with continued positive performance in the e.l.f. business [51][53] Question: What are your thoughts on the U.S. core business growth expectations? - Management remains optimistic about the U.S. business, expecting continued growth despite potential challenges from pricing and consumer behavior [64][66] Question: How have retail partners reacted to the price increases? - Overall acceptance of the price increase has been good, with transparency in communication contributing to positive feedback [81][82] Question: What is the expected revenue contribution from Road? - Management did not provide specific revenue figures but expressed confidence in Road's long-term accretive potential [124]

Financial Data and Key Metrics Changes - In Q1 2026, net sales grew by 9% following a 50% growth in Q1 2025, reaching $354 million [4][34] - Adjusted EBITDA increased by 12% to $87 million, with adjusted net income at $51 million or $0.89 per diluted share, down from $64 million or $1.10 per diluted share a year ago [34][37] - Gross margin for Q1 was 69%, down approximately 215 basis points year-over-year due to tariff costs [35] Business Line Data and Key Metrics Changes - In color cosmetics, e.l.f. holds a 15% unit share, making it the number one brand, with significant growth in market share over the past three years [6][13] - Skincare now accounts for nearly 20% of global consumption, more than double from previous years, with e.l.f. Skin and Naturium being the fastest-growing brands [16][20] - The Halo Glow Skin Tint was the top-selling product in Q1, showcasing the success of innovation strategies [10][13] Market Data and Key Metrics Changes - International net sales grew by 30% in Q1, with significant growth in the UK, where e.l.f. outpaced category growth by three times [26][28] - The company has expanded its presence in new markets, including a successful launch in over 1,200 stores in the Netherlands and Belgium [27][28] - International sales now represent 20% of total sales, up from 10% six years ago, indicating strong growth potential [28] Company Strategy and Development Direction - The acquisition of Rhode is expected to enhance e.l.f.'s position in the beauty market, with plans to accelerate brand awareness and expand distribution [5][30] - The company aims to double its business over the coming years by capitalizing on opportunities in color cosmetics, skincare, and international markets [5][29] - E.l.f. continues to focus on innovation and disruptive marketing to maintain its competitive edge in the beauty industry [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to gain market share despite challenges from tariffs and a competitive landscape [29][41] - The company is monitoring consumer response to recent price increases and expects to see continued growth in the first half of the year [41][80] - Future guidance will depend on clarity regarding tariffs, with expectations for net sales growth above 9% in the first half of the year [41][43] Other Important Information - The company ended Q1 with $170 million in cash, up from $109 million a year ago, and generated $20 million in free cash flow [37][39] - E.l.f. is transitioning to SAP for its ERP system, which is expected to enhance operational efficiency [39][40] Q&A Session Summary Question: Can you talk about how much inventory might be trapped in at the 170% rate versus the 50% rate? - Management indicated that inventory consists of a mix of tariff rates, with expectations for more 170% inventory to flow through in Q2, leading to lower gross margins [46][48] Question: Can you expand on the greater than 9% sales growth for the first half? - Management confirmed that the addition of Rhode will contribute to higher sales growth in Q2, and they are optimistic about the e.l.f. business performance [54][56] Question: What channels or partners have been stronger or weaker in the U.S. market? - Management noted growth across brick-and-mortar and e-commerce channels, but did not provide specific details on weaker channels [90][92] Question: How is the company managing the Road acquisition and its impact on margins? - Management stated that while Road is expected to be accretive in the long term, there will be initial dilution in Q2 margins due to the lack of sell-in to Sephora [124][125] Question: Can you provide context on the gross margin expectations for Q2? - Management acknowledged that Q2 gross margins will be impacted by higher tariff costs, but pricing benefits from recent increases are expected to help offset some of this pressure [130][131]