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e.l.f. Beauty, Inc. (ELF)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 delivered strong top-line growth but softer profitability: net sales rose 31% YoY to $355.3M, gross margin held at 71%, GAAP EPS was $0.30 and adjusted EPS $0.74; adjusted EBITDA was $68.7M (19% margin), with both adjusted EBITDA and adjusted net income impacted by an unanticipated ~$7M FX loss .
  • Management lowered FY2025 guidance modestly on a softer January and tough Q4 compares: net sales to $1.300–$1.310B (from $1.315–$1.335B), adjusted EBITDA to $289–$293M (from $304–$308M), adjusted EPS to $3.27–$3.32 (from $3.47–$3.53); gross margin expansion outlook was raised to ~+40 bps YoY (from ~+30 bps) .
  • Q4 outlook trimmed: net sales growth of -1% to +2% YoY as the category slowed in January, the company laps last year’s viral lip oil launch, and initial reads on a few new items were slower; management emphasized Q4 is not indicative of the underlying run-rate .
  • Strategic execution remains robust: U.S. market share +220 bps in Q3; international net sales +66% YoY, now 20% of sales; digital consumption +~30% YoY; retailer space gains (e.g., #2 rank at Walmart) support medium-term share capture .

What Went Well and What Went Wrong

What Went Well

  • Sustained share and category outperformance: “We grew net sales 31% and gained 220 basis points of market share in the U.S.” (24th straight quarter of net sales and share gains) .
  • International and digital momentum: International net sales +66% YoY and reached 20% of net sales; digital consumption +~30% YoY, with Amazon growth even higher .
  • Raised gross margin outlook: FY25 gross margin expansion outlook increased to ~+40 bps YoY (from ~+30 bps), despite Naturium wholesale mix and higher transportation costs .

What Went Wrong

  • Near-term demand softness and guide cut: January category down (~5%), lower social conversation, tough lip oil comp, and slower starts for a couple of spring launches drove Q4 net sales outlook to -1% to +2% YoY and reduced FY25 guide (sales, EBITDA, EPS) .
  • FX drag on profitability: An unanticipated ~$7M FX loss drove “Other expense, net” to $5.3M and weighed on adjusted EBITDA and adjusted net income; Q3 adjusted EBITDA margin fell to 19% from 23–24% in Q2/Q1 .
  • Naturium wholesale mix and higher transportation costs pressured gross margin offsetting some FX and cost-savings benefits (gross margin flat at 71% YoY with ~+40 bps expansion) .

Financial Results

MetricQ1 FY2025Q2 FY2025Q3 FY2025
Net Sales ($M)$324.5 $301.1 $355.3
GAAP Diluted EPS ($)$0.81 $0.33 $0.30
Adjusted Diluted EPS ($)$1.10 $0.77 $0.74
Gross Margin (%)71% 71% 71%
Adjusted EBITDA ($M)$77.4 $69.3 $68.7
Adjusted EBITDA Margin (%)24% 23% 19%
Adjusted SG&A (% of Sales)51% 53% 54%

KPIs (Q3 FY2025)

  • U.S. market share: +220 bps YoY (Q3) .
  • International net sales growth: +66% YoY; international mix 20% (vs 15% a year ago) .
  • Digital consumption: ~+30% YoY; digital drove 24% of consumption .
  • Marketing & Digital investment: 27% of net sales in Q3 .
  • Cash and cash equivalents: $73.8M; Inventory: $214.8M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY2025$1,315–$1,335M $1,300–$1,310M Lowered
Adjusted EBITDAFY2025$304–$308M $289–$293M Lowered
Adjusted Net IncomeFY2025$205–$208M $193–$196M Lowered
Adjusted Diluted EPSFY2025$3.47–$3.53 $3.27–$3.32 Lowered
Adjusted Effective Tax RateFY202519–20% 19–20% Maintained
Gross Margin YoY expansionFY2025~+30 bps ~+40 bps Raised
FY Diluted Shares (ending)FY202559M 59M Maintained
Net Sales (YoY)Q4 FY2025Not provided-1% to +2% Lowered (new disclosure)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY2025)Current Period (Q3 FY2025)Trend
Digital & SocialSustained growth; raised FY guide; strong brand momentum; GM 71% Digital consumption ~+30% YoY; 24% of consumption; Amazon outpaced overall digital; loyalty >5.6M Up
Supply Chain & TariffsN/ATariffs: incremental 10% on China goods not in FY25; 2019 playbook (supplier concessions, savings, selective pricing); more supplier diversification Watch
Product Performance & InnovationRecord growth and share gains; raised FY outlook Lapping viral lip oil; initial slower reads on some Spring items; refocus on core franchises (Power Grip, Halo Glow) Mixed near term; strong LT
Regional/InternationalInternational +91% YoY in Q2; global expansion ongoing International +66% YoY, 20% mix; top 3 ranks in new markets (Rossmann DE, Etos NL, Douglas IT; Sephora MX) Strong
Retailers & Shelf SpaceBroad momentum across channels #2 brand rank at Walmart; space expansions at Target/Walgreens in spring resets; Dollar General rollout exceeding expectations Strong
Macro/CategoryN/AJanuary category down; social conversation down >20%; cautious near-term outlook; expect normalization Near-term headwind

Management Commentary

  • “In Q3, we delivered another quarter of consistent category-leading growth. We grew net sales 31%, delivered $69 million in adjusted EBITDA and increased our U.S. market share by 220 basis points.” – Tarang Amin, CEO .
  • “Our updated outlook for fiscal 2025 reflects an expected 27–28% year-over-year increase in net sales… Q3 net sales growth came in better than expected… In Q4, our consumption trends are starting off softer than we expected.” – Mandy Fields, CFO .
  • “We believe we have a successful playbook to leverage from 2019 when tariffs moved to the 25% level… with increased supplier diversification outside of China and our growing international sales base.” – Mandy Fields, CFO .
  • “We reached the #2 brand rank at Walmart for the first time…[and] see significant runway… in digital, color cosmetics, skin care and international.” – Tarang Amin .

Q&A Highlights

  • January softness and Q4 guide: Category decline (~5%), lapping viral lip oil, slower early reads on a couple of spring items; expect social conversation to normalize and resets/marketing to help; Q4 guide is prudently conservative .
  • International: Continued strong execution, top 3 ranks at new retailers; not seeing same level of category headwinds internationally; pipeline timing can affect quarterly cadence .
  • Marketing cadence and spend: Balanced support between innovation and core franchises; FY25 marketing/digital 24–26% of sales (vs 34% in Q4 last year, implying leverage in Q4) .
  • Profit/margin drivers: FX loss (~$7M) weighed on adjusted EBITDA and adjusted net income; Naturium wholesale mix and higher transportation costs were offsets to gross margin benefits .
  • Retail inventory/destocking: No signs of retailer destocking; e.l.f. remains the most productive brand for key partners .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates for Q3 FY2025 were unavailable due to a temporary request limit, so we could not include vs-consensus beats/misses in this recap. We default to company-reported results and call commentary for performance assessment [Values retrieved from S&P Global unavailable].

Key Takeaways for Investors

  • Near-term caution, long-term momentum: The FY25 guide-down (sales, EBITDA, EPS) reflects transitory January/category/lapping effects; management emphasized Q4 is not the run-rate and raised FY gross margin outlook, signaling underlying resilience .
  • Share gains remain the core bull case: +220 bps U.S. share in Q3; international +66% with 20% mix; ranked #2 at Walmart; continued shelf expansions should support FY26 growth reacceleration as macro normalizes .
  • Watch Q4 execution levers: Spring resets (Target/Walgreens), marketing activations behind new items and core franchises (Power Grip, Halo Glow), and social conversation normalization are key to stabilizing consumption .
  • FX and mix are the swing factors on profit: The ~$7M FX loss in Q3 was unusual; Naturium wholesale expansion and transportation costs are manageable within a higher gross margin outlook .
  • Tariffs not a FY25 issue; FY26 mitigation credible: No FY25 tariff impact; 2019 playbook (supplier concessions, cost savings, selective pricing) and supplier diversification reduce risk to FY26 .
  • Setup into FY26: With continued white space (skin care share ~2%; international at 20% vs peers >70%), retailer space gains, and digital leadership, the medium-term thesis remains intact despite near-term volatility .

Notes: All financial and operational metrics are sourced from e.l.f. Beauty’s Q3 FY2025 8-K/press release and earnings call transcript. Citations appear in bracketed format after each statement.