Executive Summary
In Q3 2025, elf Beauty delivered another period of category-leading growth with a 31% year-over-year increase in net sales to $355.32 million and adjusted EBITDA of $69.1 million. The company expanded US market share by 220 basis points and extended its 24-quarter streak of net sales growth and market-share gains. Growth was broad-based across digital, color cosmetics, skincare, and international segments, with international net sales up 66% and contributing 20% of total net sales in the quarter. Management remains confident in long-term expansion, anchored by strong brand equity, a proprietary innovation engine, a disruptive marketing model, and an asset-light supply chain. However, management also highlighted softer consumer demand in January, softer momentum for several spring launches, and updated the Q4 outlook to a softer trajectory, resulting in a 27-28% full-year net sales growth guide for fiscal 2025 (down from 28-30% previously) and a Q4 net sales range of -1% to +2%. The company expects gross margin to improve ~40 bps YoY in fiscal 2025, with marketing/digital investment targeted at 24-26% of net sales; adjusted EBITDA for the year is guided to $289-293 million. The combination of white-space opportunities in color cosmetics, skincare (notably Naturium and e.l.f. Skin), and international expansion, coupled with a disciplined cost structure and SAP ERP transition, supports a constructive longer-term investment thesis, even as near-term execution faces macro-driven headwinds.
Key Performance Indicators
Key Insights
Revenue: 355.32 million; YoY growth 31.14%; QoQ growth 18.02%
Gross Profit: 253.305 million; Gross margin 71.289% (YoY gross profit up 31.96%; QoQ up 18.33%)
Operating Income: 35.085 million; operating margin 9.874%
EBITDA: 69.085 million; EBITDA margin 9.87%
Net Income: 35.299 million; net margin 9.93%
EPS (Diluted): 0.60; EPS (non-diluted): 0.63; Weighted avg shares diluted: 58.353 million; Weighted avg shares basic: 56.358 million
Marketing & SG&A (selling, general & administrativ...
Financial Highlights
Revenue: 355.32 million; YoY growth 31.14%; QoQ growth 18.02%
Gross Profit: 253.305 million; Gross margin 71.289% (YoY gross profit up 31.96%; QoQ up 18.33%)
Operating Income: 35.085 million; operating margin 9.874%
EBITDA: 69.085 million; EBITDA margin 9.87%
Net Income: 35.299 million; net margin 9.93%
EPS (Diluted): 0.60; EPS (non-diluted): 0.63; Weighted avg shares diluted: 58.353 million; Weighted avg shares basic: 56.358 million
Marketing & SG&A (selling, general & administrative): 218.22 million; SG&A as % of net sales: 54%
Cash Flow: Net cash provided by operating activities -$14.71 million; Free cash flow -$19.76 million
Cash & Investments: Cash and cash equivalents $73.85 million; total debt $302.43 million; net debt $228.58 million
Balance Sheet Highlights: Total assets $1,264.83 million; total current assets $559.08 million; total liabilities $497.45 million; stockholders’ equity $767.39 million; inventory $214.79 million; accounts receivable $187.74 million; goodwill $340.58 million; cash at end of period $73.85 million; leverage <1.0x (net debt/adjusted EBITDA)
Liquidity/Leverage: Net debt to adjusted EBITDA < 1.0x; liquidity position described as strong; cash priorities include growth investments, SAP ERP transition, distribution capacity expansion
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
355.32M |
31.14% |
18.02% |
| Gross Profit |
253.31M |
31.96% |
18.33% |
| Operating Income |
35.09M |
10.21% |
25.67% |
| Net Income |
35.30M |
31.28% |
85.59% |
| EPS |
0.63 |
28.57% |
85.29% |
Key Financial Ratios
operatingProfitMargin
9.87%
operatingCashFlowPerShare
$-0.26
freeCashFlowPerShare
$-0.35
Management Commentary
Key management themes from the Q3 2025 earnings call:
- Growth and market share: Tarang Amin emphasized category-leading growth with 24 consecutive quarters of net sales growth and market share gains; Q3 net sales up 31% and US market share up 220 bps. Quote: '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 US market share by 220 basis points.'
- 2H2025 guidance and near-term softness: Tarang noted softer calendar 2025 consumption and guided Q4 net sales to -1% to +2%, with 14-16% net sales growth in the second half of 2025 on top of 77% growth in the prior year’s second half. Quote: 'As updated, our outlook contemplates 14% to 16% net sales growth in the second half of 2025 on top of the 77% growth we delivered in the second half of last year.' Mandy reaffirmed a cautious stance for Q4 given softer January trends.
- Digital/DTC strength and retention: The company highlighted digital consumption up nearly 30% YoY in Q3, with digital channels contributing 24% of consumption; Beauty Squad loyalty surpassed 5.6 million members; the mobile app exceeded 3 million downloads. Quote: 'Q3 digital consumption trends were up nearly 30% year-over-year... The Beauty Squad loyalty program recently surpassed 5.6 million members, with enrollment consistently growing over 20% year-over-year.'
- Color cosmetics leadership and retail expansion: ELF outperformed the category with 16% growth in tracked channels, gaining 220 bps market share; leadership at Target (over 20% share) and Walmart (ranked #2 for the first time); expansion into Dollar General with early over-performance. Quote: 'In Q3, e.l.f. Cosmetics grew 16% in tracked channels, as compared to a category that was down 5%, increasing our market share by 220 basis points.'
- Skincare & Naturium: ELF Skin growth remains strong; Naturium has doubled skincare penetration to 18% of retail sales; Ulta performance and global expansion cited as meaningful drivers. Quote: 'e.l.f. Skin today holds about a 2% share... With the acquisition of Naturium, we have doubled our skincare penetration to 18% of our retail sales.'
"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 US market share by 220 basis points."
— Tarang Amin
"As updated, our outlook contemplates 14% to 16% net sales growth in the second half of 2025 on top of the 77% growth we delivered in the second half of last year."
— Tarang Amin
Forward Guidance
Full-year fiscal 2025 guidance updated to net sales growth of 27-28% (down from 28-30% previously). The second-half performance is projected at 14-16% net sales growth, reflecting continued category headwinds in mass cosmetics but with sustained market-share gains and international expansion. Q4 net sales guidance is -1% to +2% (vs prior expectations of stronger growth). Gross margin is expected to be up approximately 40 bps year-over-year for fiscal 2025, excluding any tariff impact; marketing and digital investment is guided to 24-26% of net sales (vs 25% in 2024); adjusted EBITDA for the year is guided to $289M-$293M (down from $304M-$308M previously) due to FX headwinds and a softer top line. The company cited multiple levers to address potential tariff impacts (supplier diversification outside China, cost savings, and potential price adjustments). Management emphasized continued investment in growth initiatives (SAP ERP migration, distribution capacity, international expansion) to sustain long-term growth. Key factors investors should monitor include: (1) trajectory of January/February social conversation and demand normalization; (2) effectiveness of spring product launches and retailer resets (Target/Walgreens) in restoring momentum; (3) progress of Naturium and ELF Skin in the skincare category; (4) international expansion cadence and new market penetration; (5) potential tariff impacts and mitigations; (6) SAP ERP implementation progress and its impact on operating efficiency.