EPS of $0.25 decreased by 16.1% from previous year
Gross margin of 70.7%
Net income of 14.53M
"In fiscal '24, we grew net sales by 77%, increased gross margin by approximately 330 basis points, grew adjusted EBITDA by 101% and increased market share of 305 basis points, well above our original expectations." - Tarang Amin
elf Beauty Inc (ELF) Q4 2024 Results: Surging net sales, margin expansion, and international acceleration with a constructive FY25 outlook
Executive Summary
Executive summary: elf Beauty delivered a landmark quarter and a strong fiscal year. In Q4'24, net sales rose 71% year-over-year to $321.1 million, contributing to a full-year net sales increase of 77% and the achievement of over $1 billion in annual net sales. Gross margin expanded roughly 180 basis points in Q4 and approximately 330 basis points for FY'24, while adjusted EBITDA surged about 93% in the quarter and 101% for the full year, underscoring the companyβs ability to translate top-line momentum into profitability. Management credited three enduring pillarsβvalue proposition, product innovation, and a disruptive marketing engineβas the engine of category-leading growth. International growth accelerated meaningfully (Q4 international net sales up 115%), and Naturium, acquired in October, contributed meaningfully to net sales in Q4 and is central to near-term and longer-term growth plans.
Execution remains differentiated by a highly efficient go-to-market, rapid market-share gains in color cosmetics and skin care, and a meaningful expansion in international penetration. Despite macro uncertainty and some cost headwinds (notably transportation and FX effects in FY'25 planning), management outlined a disciplined, quarter-by-quarter approach to the FY'25 outlook with a 20β22% net sales growth target and modest gross-margin expansion (roughly +10 bps year-over-year). The company signaled continued aggressive investment in marketing and digital channels (roughly 24β26% of net sales in FY'25) to sustain the flywheel. Investors should monitor: 1) Naturium integration and Ulta launch execution; 2) international rollout cadence and space gains at CVS, Walmart, and Sephora Mexico; 3) evolving freight, FX, and retailer activity costs that influence near-term gross margins; and 4) the path to continued EBITDA margin expansion as top-line momentum converts into operating leverage.
Key Performance Indicators
Revenue
321.14M
QoQ: 18.53% | YoY:71.41%
Gross Profit
227.20M
70.75% margin
QoQ: 18.36% | YoY:75.95%
Operating Income
17.03M
QoQ: -46.51% | YoY:111.68%
Net Income
14.53M
QoQ: -45.97% | YoY:-10.58%
EPS
0.26
QoQ: -46.94% | YoY:-16.13%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $321.143 million in Q4'24; YoY growth β 71% (per management commentary). QoQ growth β 18.53% (as per reported quarterly metrics).
Operating income: $17.030 million; operating margin β 5.30% (operating income / net sales).
EBITDA and margins: GAAP EBITDA β $31.236 million in Q4'24; adjusted EBITDA β $41.0 million in Q4'24; Q4 adjusted EBITDA margin β 13.0% of net sales.
Net income and EPS: Net income $14.527 million; net income margin β 4.52%; diluted EPS $0.25 (the quarter), with $0.53 per diluted share on an adjusted basis for Q4.
Financial Highlights
Revenue and profitability metrics (Q4'24 vs prior year):
- Revenue: $321.143 million in Q4'24; YoY growth β 71% (per management commentary). QoQ growth β 18.53% (as per reported quarterly metrics).
- Gross profit: $227.202 million; gross margin β 70.75% (227.202 / 321.143).
- Operating income: $17.030 million; operating margin β 5.30% (operating income / net sales).
- EBITDA and margins: GAAP EBITDA β $31.236 million in Q4'24; adjusted EBITDA β $41.0 million in Q4'24; Q4 adjusted EBITDA margin β 13.0% of net sales.
- Net income and EPS: Net income $14.527 million; net income margin β 4.52%; diluted EPS $0.25 (the quarter), with $0.53 per diluted share on an adjusted basis for Q4.
- Full-year (FY'24) performance: Net sales up 77%; adjusted EBITDA up 101% (strongest growth year ever); gross margin expanded ~330 basis points; marketing and digital investment reached ~25% of net sales across the year.
- Balance sheet and cash flow: Cash at end of period $108.183 million; inventory $191.489 million; total assets $1.129 billion; total debt $290.601 million; net debt $182.418 million; net debt/adjusted EBITDA < 1x; net cash from operating activities $37.015 million; free cash flow $34.34 million.
- Share count and liquidity: Diluted weighted-average shares β 58.488 million; fully diluted share count guide around 59 million for FY'25.
- Segments and channel mix: International accounted for 16% of Q4 sales (up from 13% prior year); digital channels drove ~22% of consumption in Q4; Naturium contributed approximately 17 percentage points to Q4 net sales growth.
- Guidance (FY'25): Net sales growth of 20β22%; adjusted EBITDA $285β$289 million; adjusted net income $187β$191 million; adjusted diluted EPS $3.20β$3.25; gross margin up ~10 bps; marketing & digital spend at ~24β26% of net sales; 59 million fully diluted shares; tax rate ~20β21%.
Key observations from the earnings transcript support a velocity-driven model with a strong forward trajectory: management highlighted a milestone of exceeding $1 billion in net sales for the year, a 21st consecutive quarter of growth and market-share gains, and a continued emphasis on color cosmetics, skin care, and international ΡΠ°Π·Π²ΠΈΡ. Management also underscored a disciplined, quarter-by-quarter guidance approach and the acceleration potential from Naturium and international expansion. Quotes to note include: Tarang Amin confirming the FY'24 milestone and growth deltas; Mandy Fields highlighting Q4'24 net sales growth drivers and FY'25 guidance framework.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
321.14M
71.41%
18.53%
Gross Profit
227.20M
75.95%
18.36%
Operating Income
17.03M
111.68%
-46.51%
Net Income
14.53M
-10.58%
-45.97%
EPS
0.26
-16.13%
-46.94%
Key Financial Ratios
currentRatio
1.6
grossProfitMargin
70.7%
operatingProfitMargin
5.3%
netProfitMargin
4.52%
returnOnAssets
1.29%
returnOnEquity
2.26%
debtEquityRatio
0.45
operatingCashFlowPerShare
$0.67
freeCashFlowPerShare
$0.62
priceToBookRatio
16.57
priceEarningsRatio
183.24
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights by theme:
- Strategy and growth trajectory
- Tarang Amin: We hit over $1 billion in net sales in fiscal '24, with net sales up 77%, gross margin up ~330 bps, and adjusted EBITDA up 101%.
- Tarang Amin: In Q4, we grew net sales 71%, gross margin up ~180 bps, and adjusted EBITDA up 93%; international grew 115% in Q4, with Canada and the U.K. strengthening brand position.
- Category leadership and product pipeline
- Tarang Amin: Color cosmetics continued to outperform, with elf Cosmetics up 30% in tracked channels in Q4 vs a category down 3%; e.l.f. SKIN grew 38% in tracked channels; Naturium contributed roughly 17 points to Q4 net sales growth.
- Tarang Amin: Bronzing drops and Power Grip Dewy setting spray extended the Power Grip franchise into new categories; 2x penetration opportunity in skin care remains, with less than 2% share today versus 10.5% in cosmetics.
- International expansion and partnerships
- Tarang Amin: International net sales grew 115% in Q4; Canada ranked 3rd and U.K. 4th, with continued space gains planned at CVS, Walmart, Superdrug, Boots, and Sephora Mexico.
- Tarang Amin: New European footprint (London office) established; Douglas Italy and Etos Netherlands demonstrations show high demand pre- and post-entry, indicating pent-up demand beyond the U.S.
- Marketing strategy and brand awareness
- Tarang Amin: Marketing investment increased from 7% to 25% of net sales over five years, delivering ROI multiples above industry benchmarks; unaided U.S. awareness rose from 13% to 26% since 2020.
- Mandy Fields: Q4 marketing and digital investment comprised ~34% of net sales; full-year marketing spend was 25% of net sales; guidance assumes a balanced cadence of marketing spend in FY'25.
- Operational execution and capital allocation
- Mandy Fields: Net debt less than 1x for FY'24; Naturium integration and Ulta launch are key near-term catalysts; the company remains disciplined on M&A with a focus on existing brands and white space opportunities.
- Tarang Amin: Naturium is being deployed with aggressive distribution (Target, Amazon, Ulta) and planned international expansion; the company maintains a strong balance sheet capable of absorbing additional bolt-ons if strategically compelling.
In fiscal '24, we grew net sales by 77%, increased gross margin by approximately 330 basis points, grew adjusted EBITDA by 101% and increased market share of 305 basis points, well above our original expectations.
β Tarang Amin
Q4 net sales grew 71% year-over-year, driven by broad-based strength across national and international retailers as well as digital commerce.
β Mandy Fields
Forward Guidance
Forward-looking analysis based on the FY'25 guidance and management commentary:
- Revenue trajectory: Net sales growth expected to be 20β22% for FY'25, with Q1 tracking above the annual range due to Naturium contributions and favorable Nielsen-based momentum. The company emphasizes a unit-led growth model supported by continued outperformance in Nielsen data in the 20s range.
- Gross margin: FY'25 gross margin expected to be up about 10 basis points year over year; the first half is anticipated to be flat to prior year as higher transportation costs (Red Sea disruption) are cycled, with recovery in the second half.
- Marketing and digital: Planned marketing/digital investment of roughly 24β26% of net sales in FY'25 (vs 25% in FY'24), with a more balanced cadence across the year to support top-line growth while aiming for EBITDA margin expansion.
- EBITDA and margins: FY'25 adjusted EBITDA guidance of $285β$289 million, implying 21β23% growth versus FY'24 and ~20 bps of year-over-year margin leverage. The company notes that EBITDA growth may be lumpy across the year, with stronger leverage expected in the second half as top-line momentum sustains.
- Key watch items: (1) Naturiumβs ongoing contribution and Ulta expansion; (2) international expansion cadence and space gains (e.g., CVS, Walmart, Sephora Mexico, Superdrug); (3) potential macro shocks (FX, freight, tariffs) and their impact on gross margin; (4) continued capacity to scale digital and loyalty programs (Beauty Squad >4.8 million members) and app engagement.
- Investment thesis and risk: The flywheel of top-line momentum, margin expansion from mix and FX, and disciplined capex plus ERP transition to SAP should support profitable growth. However, macroeconomic uncertainty, freight cost volatility, retailer activity costs, and currency movements remain meaningful risks that could modulate the pace of margin improvement and earnings progression.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ELF Focus
70.75%
5.30%
2.26%
183.24%
PG
49.60%
18.90%
6.24%
32.06%
CL
59.50%
23.00%
1.18%
22.85%
COTY
60.70%
2.67%
-2.53%
-21.85%
KVUE
55.70%
12.50%
2.92%
31.52%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment thesis: elf Beauty's Q4'24 results validate a high-velocity growth model underpinned by a compelling value proposition, a robust product pipeline, and a disruptive marketing engine. The Naturium acquisition adds meaningful scale in skincare and accelerates international opportunities, with Ulta and Sephora Mexico launches acting as catalysts for near-term growth. The FY25 guidance of 20β22% net sales growth with modest gross-margin expansion and EBITDA growth of 21β23% reflects a disciplined balance between top-line investments and profitability. The company has a strong balance sheet (net debt < 1x) and healthy FCF generation, supporting continued investments in ERP, distribution, and brand-building. Valuation remains at a premium given the growth trajectory and brand momentum, so investors should monitor the pace of international expansion, the Naturium integration trajectory, and potential margin pressures from freight and FX. Under a base-case scenario, ELF offers a compelling longer-term upside through sustained market-share gains, international expansion, and innovation-driven margin improvements, with the key catalysts being Walmart and CVS shelf gains and Ulta/Naturium deployments. Cautious stakeholders should watch macro developments, supply-chain costs, and the execution of international rollouts as primary risk factors to the thesis.
Key Investment Factors
Growth Potential
Long-run growth supported by three engines: (1) Color cosmetics leadership and expanding share; (2) Skin care expansion via Naturium and e.l.f. SKIN, with significant white space domestically and internationally; (3) International expansion through tier-one retailers and Sephora Mexico, with potential for additional geographies following Douglas Italy and Etos Netherlands success.
Profitability Risk
Key risks include macroeconomic uncertainty, freight/transportation cost volatility, FX exposure, retailer consolidation or underperformance (e.g., Ulta commentary), execution risk around Naturium integration and Sephora Mexico expansion, and potential tariffs affecting cost structure in FY26. Valuation remains premium, with the stock trading at elevated multiples given growth expectations.
Financial Position
Solid balance sheet with cash of $108.2 million, total debt of $290.6 million, and net debt of $182.4 million; net debt/adjusted EBITDA reported as <1x for FY'24. The company generates positive free cash flow ($34.34 million for FY'24) and intends to reinvest in growth initiatives, ERP transition (SAP), and distribution capacity to support demand.
SWOT Analysis
Strengths
Exceptional gross margin resilience (Q4 GM β 70.7%); strong unit economics driven by favorable value proposition (average price ~$6.50 vs prestige >$20).
Market leadership in color cosmetics with 21 consecutive quarters of net sales growth and a top-tier share gain (12.8% color cosmetics share at year-end).
Strategic acquisition of Naturium expanding skincare footprint and accelerating international opportunities.
Robust digital ecosystem and loyalty program (Beauty Squad >4.8 million members; ~80% of elfcosmetics.com sales).
International expansion momentum (Canada and UK leading gains; 115% international growth in Q4).
Weaknesses
High near-term reliance on marketing spend to drive top-line growth (FY24 marketing ~25% of net sales; cadence implications for FY25).
Export and supply-chain sensitivity (Red Sea disruption impacting freight costs; FX headwinds).
Premium valuation and reliance on TM (Naturium) integration for further upside; execution risk in new geographic markets.
Opportunities
Expanded shelf-space gains with Walmart, CVS, Target, and CVS expansion in FY25; potential Ulta Ulta expansion for Naturium.
Sephora Mexico entry broadening LATAM footprint and potential for subsequent Sephora markets.
Bronzing drops and other skincare innovations to close skin care share gap (less than 2% skin care share vs roughly 10.5% cosmetics share).
EUR/UK expansion aided by new European office in London and continued content-driven social engagement beyond Gen Z.
elf Beauty Inc (ELF) Q1 2025 Results Analysis: 50% Net Sales Growth Fueled by Naturium, International Expansion, and a Best-in-Class Marketing Engine...