Financial Data and Key Metrics Changes - The company has a strong platform with over 1,900 stores in North America and a highly profitable business model that generates significant cash flow [4] - The expectation is to deliver mid-single-digit growth while expanding margins, indicating a potential re-rating of the stock [5] Business Line Data and Key Metrics Changes - The core business categories such as body care, home fragrance, soaps, and sanitizers are growing, and the company plans to innovate and sharpen stories in these categories [19] - The company is focusing on a smaller number of categories to drive productivity and better full-price selling, moving away from overwhelming assortments [21][22] Market Data and Key Metrics Changes - The company has identified a challenge in acquiring new consumers, despite being effective at driving spend and repeat purchases from existing customers [10] - The company is expanding its distribution channels, recently launching products in 600 college bookstores to reach a younger demographic [17] Company Strategy and Development Direction - The guiding philosophy for growth is to put the consumer at the center of every decision, focusing on creating innovative products and telling bold brand stories [7][8] - The company is working on improving its digital presence and consumer experience, with plans to relaunch its app and mobile web [11][12] - The strategy includes reducing promotions to build trust with consumers and clarify the brand's identity [29][30] Management's Comments on Operating Environment and Future Outlook - Management believes the consumer environment will remain stable, with expectations for spending habits to be about the same in the second half of 2025 [35] - The company is well-positioned regarding tariffs, with 80% of its supply chain sourced from the U.S. and plans to mitigate tariff impacts through supply chain optimization [25][26] Other Important Information - The loyalty program has been successful, with 39 million members, and the company continues to engage these members through exclusive offers [34] - The company is optimistic about its off-mall strategy, which has outperformed mall locations, and aims to increase off-mall locations to potentially 75% [33] Q&A Session All Questions and Answers Question: What is the expectation for the environment in the second half of 2025? - Management expects the consumer environment to remain stable, with spending habits anticipated to be about the same [35] Question: How do you think about pricing and promotions? - The company acknowledges price elasticity and plans to thoughtfully reduce promotions while ensuring clarity in their promotional strategies [36][29] Question: Can you talk about your expectations for inventory growth into the second half? - Inventory is expected to be up in the second half, but not to the same magnitude as the first half, with no anticipated disruptions in shipments [37] Question: How are you thinking about non-tariff margin drivers? - Management does not anticipate meaningful changes in freight, wages, or materials costs and will continue to manage external pressures [37] Question: What are your thoughts on market share consolidation? - The company is focused on taking market share and leveraging its profitable fleet to drive growth across core categories [38] Question: Can you walk us through changes made during the semi-annual sale? - The semi-annual sale performed well, with changes including timing adjustments and leveraging social influencers to create buzz [40]

Core Insights - e.l.f. Beauty, Inc. reported strong fiscal first-quarter results for 2026, with both net sales and earnings surpassing expectations, although earnings decreased compared to the previous year [1][3][9] Financial Performance - Adjusted earnings per share were 89 cents, exceeding the Zacks Consensus Estimate of 84 cents, but down from $1.10 in the same quarter last year [3][9] - Net sales increased by 9% year-over-year to $353.7 million, slightly above the consensus estimate of $353 million, driven by strong performance in retail and e-commerce channels [3][9] Market Position - The company gained 210 basis points in market share, marking 26 consecutive quarters of category-leading growth, attributed to a strong value proposition, innovation, and effective marketing [2][9] Cost and Margin Analysis - Gross margin contracted by 215 basis points to 69%, influenced by tariffs, though partially offset by favorable foreign exchange impacts [4] - Adjusted selling, general, and administrative expenses rose by $12.9 million to $177.3 million, primarily due to increased professional fees and marketing costs, despite reductions in compensation and operational costs [5] EBITDA and Cash Flow - Adjusted EBITDA was $87.1 million, reflecting a 12% increase from the previous year, with an adjusted EBITDA margin of 25% [6] - The company ended the quarter with cash and cash equivalents of $170 million and net cash from operating activities of $27.2 million [7] Future Outlook - The company has not provided a full-year financial outlook for fiscal 2026 due to tariff uncertainties but expects net sales growth in the first half to exceed the 9% increase reported in Q1 [8][9] - Adjusted EBITDA margins for the first half of fiscal 2026 are anticipated to be around 20%, down from approximately 23% in the same period of fiscal 2025, primarily due to higher tariff costs [8]