e.l.f. Beauty, Inc. (NYSE:ELF) has delivered exceptional, consistent, category-leading growth, achieving over $1 billion in net sales in fiscal 2024. The company's multi-brand portfolio, including e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, and Keys Soulcare, has resonated strongly with consumers, driving impressive financial results.
Financials
In fiscal 2024, e.l.f. Beauty reported net sales of $1,023,932,000, a 77% increase from the prior year. The company's net income for the year reached $127,663,000, while operating cash flow and free cash flow stood at $71,154,000 and $62,495,000, respectively. These robust financial metrics underscore e.l.f. Beauty's ability to consistently deliver strong top-line growth and profitability.
The company's fourth quarter results were particularly noteworthy, with net sales increasing 71% year-over-year to $270,943,000. Gross margin expanded by approximately 180 basis points to 71%, and adjusted EBITDA grew 93% to $41 million. e.l.f. Beauty's disciplined approach to marketing and digital investments, coupled with its focus on innovation and brand building, has enabled it to drive exceptional performance.
Business Overview
One of the key drivers of e.l.f. Beauty's success has been its strong performance in the color cosmetics category. In the fourth quarter, the e.l.f. Cosmetics brand grew 30% in tracked channels, significantly outpacing the overall category, which declined 3%. The company gained 325 basis points of market share, reaching the number two brand position on a dollar share basis and the number one brand on a unit share basis.
The company's skincare portfolio, led by the e.l.f. SKIN and Naturium brands, has also been a standout performer. In the fourth quarter, e.l.f. SKIN grew 38% in tracked channels, 19 times the category growth of 2%. Naturium, which e.l.f. Beauty acquired in October 2023, contributed approximately 17 points to the company's net sales growth in the quarter.
Internationally, e.l.f. Beauty has also demonstrated impressive momentum, with net sales growing 115% in the fourth quarter. The company's brands have gained significant market share in key markets like Canada and the United Kingdom, where e.l.f. is now the number three and number four brand, respectively.
Competitive Advantages
e.l.f. Beauty's success is underpinned by its powerful value proposition, innovative product pipeline, and disruptive marketing approach. The company's mission to make the best of beauty accessible to every eye, lip, face, and skin concern has resonated with consumers, who are drawn to the brand's high-quality, cruelty-free, and affordable offerings.
The company's innovation engine has been a key driver of its category leadership, with e.l.f. holding the number one or two position across 18 segments that collectively make up almost 80% of its Cosmetics sales. Recent launches, such as the Power Grip Dewy setting spray and the e.l.f. SKIN bronzing drops, have been well-received by consumers and demonstrate the company's ability to identify and address unmet needs.
e.l.f. Beauty's marketing strategy, which blends the best of beauty, culture, and entertainment, has also been a significant competitive advantage. The company's strong engagement with Gen Z consumers, as evidenced by its ranking as the number one teen brand in the latest Piper Sandler Taking Stock With Teens survey, has helped it expand its reach and appeal to a broader audience.
Outlook
Looking ahead, e.l.f. Beauty sees significant white space opportunities in color cosmetics, skincare, and international expansion. The company plans to continue its productivity-led model to drive further market share gains, particularly in key retail partnerships like Target, where it is already the number one brand. In skincare, the company aims to leverage the complementary strengths of the e.l.f. SKIN and Naturium brands to capture a larger share of the growing category.
Internationally, e.l.f. Beauty is focused on expanding its presence in its largest global markets, Canada and the United Kingdom, while also entering new geographies, such as Sephora Mexico. The company's successful engagement model across social platforms has helped drive consumer demand in new markets, paving the way for its retail partnerships.
Liquidity
e.l.f. Beauty's strong balance sheet and liquidity position, with less than 1x net debt-to-adjusted EBITDA, provide the company with the financial flexibility to execute its growth strategies. For fiscal 2025, the company has provided an initial outlook of net sales growth of approximately 20% to 22%, adjusted EBITDA between $285 million and $289 million, and adjusted earnings per share of $3.20 to $3.25.
Conclusion
Overall, e.l.f. Beauty's consistent, category-leading performance, driven by its powerful brand portfolio, innovative product pipeline, and disruptive marketing approach, positions the company well to capitalize on the significant growth opportunities ahead. The company's focus on delivering exceptional value to consumers, while maintaining a strong financial profile, underscores its ability to drive sustainable, profitable growth in the years to come.