e.l.f. Beauty, Inc.

Previous wording

e.l.f. Beauty, Inc., a Delaware corporation (“e.l.f. Beauty” and together with its subsidiaries, the “Company,” or “we”), is a multi-brand beauty company that offers inclusive, accessible, clean, vegan and cruelty free cosmetics and skin care products. Our mission is to make the best of beauty accessible to every eye, lip, face and skin concern.

Current wording

e.l.f. Beauty, Inc., a Delaware corporation (“e.l.f. Beauty” and together with its subsidiaries, the “Company”), is a multi-brand beauty company that offers inclusive, accessible, clean, vegan and cruelty free cosmetics and skin care products. The Company's mission is to make the best of beauty accessible to every eye, lip and face.

Previous wording

We believe our ability to deliver cruelty free, clean, vegan and premium-quality products at accessible prices with broad appeal differentiates us in the beauty industry. We believe the combination of our value proposition, innovation engine, ability to attract and engage consumers, and our world-class team’s ability to execute with speed has positioned us well to navigate the competitive beauty market.

Current wording

We believe our ability to deliver cruelty free, clean, vegan and premium-quality products at accessible prices with broad appeal differentiates us in the beauty industry. Additionally, we believe the combination of our passionate team of owners, value proposition, powerhouse innovation, disruptive marketing engine and productivity model have positioned us well to navigate the competitive beauty market.

Previous wording

Our family of brands includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People and Keys Soulcare. Our brands are available online and across leading beauty, mass-market, and specialty retailers. We have strong relationships with our retail customers such as Target, Walmart, Ulta Beauty and other leading retailers that have enabled us to expand distribution both domestically and internationally.

Current wording

The Company's family of brands includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, and Keys Soulcare. The Company's brands are available online and across leading beauty, mass-market and specialty retailers. The Company has strong relationships with its retail customers such as Target, Walmart, Ulta Beauty, Amazon and other leading retailers that have enabled the Company to expand distribution both domestically and internationally.

Previous wording

Net sales increased $84.4 million, or 31%, to $355.3 million for the three months ended December 31, 2024, compared to $270.9 million for the three months ended December 31, 2023. The increase was driven primarily by strength in both our retailer and e-commerce channels. Net sales increased $72.7 million, or 34%, in our retailer channels and $11.6 million, or 21%, in our e-commerce channels. From a price and volume perspective, a higher volume of units sold drove $81.2 million of the increase in net sales. A higher average item price and mix within retailer and e-commerce orders drove the remaining $3.2 million increase in net sales as compared to the three months ended December 31, 2023.

Current wording

Net sales increased $29.3 million, or 9%, to $353.7 million for the three months ended June 30, 2025, compared to $324.5 million for the three months ended June 30, 2024. The increase was driven primarily by strength in both our retailer and e-commerce channels. Net sales increased $20.4 million, or 8%, in our retailer channels and $8.9 million, or 17%, in our e-commerce channels. From a price and volume perspective, a higher volume of units sold drove $29.3 million of the increase in net sales as compared to the three months ended June 30, 2024.

Previous wording

Gross profit increased $61.3 million, or 32%, to $253.3 million for the three months ended December 31, 2024, compared to $192.0 million for the three months ended December 31, 2023. Higher unit volume drove $57.5 million of the increase in gross profit, with the remaining increase of $3.8 million driven by higher average item price and mix. Gross margin increased approximately 40 basis points to 71% when compared to the three months ended December 31, 2023. The increase in gross margin was primarily driven by favorable foreign exchange impacts on goods purchased from China, cost savings and inventory adjustments, partially offset by mix and higher transportation costs.

Current wording

Gross profit increased $13.3 million, or 6%, to $244.5 million for the three months ended June 30, 2025, compared to $231.3 million for the three months ended June 30, 2024. Higher unit volume drove $20.9 million increase in gross profit, offset by $7.6 million of cost mix impact. Gross margin decreased approximately 215 basis points to 69% when compared to the three months ended June 30, 2024. The decrease in gross margin was primarily driven by tariffs, partially offset by favorable foreign exchange impacts, cost savings and mix.

Previous wording

SG&A expenses were $218.2 million for the three months ended December 31, 2024, an increase of $58.1 million, or 36%, from $160.1 million for the three months ended December 31, 2023. SG&A expenses as a percentage of net sales increased to 61% for the three months ended December 31, 2024 from 59% for the three months ended December 31, 2023. The $58.1 million increase was primarily related to an increase in marketing and digital spend of $26.5 million, increased compensation and benefits expense of $17.7 million partially attributed to $6.6 million incremental stock-based compensation expense recognized related to a new policy on retirement eligible awards granted to eligible employees beginning June 2024 which have a shorter requisite service period as the policy provides, subject to certain conditions, acceleration of vesting at retirement, increased operations costs of $4.5 million, increased general administrative expense of $4.2 million, increased retail fixturing and visual merchandising costs of $3.8 million, and increased depreciation and amortization of $1.3 million.

Current wording

SG&A expenses were $195.8 million for the three months ended June 30, 2025, an increase of $15.3 million, or 8%, from $180.6 million for the three months ended June 30, 2024. SG&A expenses as a percentage of net sales decreased to 55% for the three months ended June 30, 2025 from 56% for the three months ended June 30, 2024. The $15.3 million increase was primarily related to an increase in professional fees of $5.7 million, increased retail fixturing and visual merchandising costs of $4.7 million, marketing and digital spend of $4.5 million and increased depreciation and amortization of $4.1 million, offset by decreased compensation and benefits expense of $2.1 million and decreased operations costs of $1.9 million.

Previous wording

Other expense, net totaled $5.3 million for the three months ended December 31, 2024, as compared to other income, net of $2.6 million for the three months ended December 31, 2023. The year-over-year variance is primarily due to an increase in foreign currency exchange loss in the period primarily attributable to foreign currency rate fluctuation between the British pound and US dollar.

Current wording

Other income, net totaled $5.0 million for the three months ended June 30, 2025, as compared to $0.2 million for the three months ended June 30, 2024. The year-over-year variance is primarily due to an increase in foreign currency gains in the period attributable to currency rate fluctuation.

Previous wording

Interest expense, net was $3.5 million for the three months ended December 31, 2024, as compared to $4.0 million for the three months ended December 31, 2023. The year-over-year variance was primarily due to repayment of borrowings, partially offset by lower interest earned on our cash balances. See Note 6, “Debt,” in our unaudited condensed consolidated financial statements for further details on our debt.

Current wording

Interest expense, net was $2.6 million for the three months ended June 30, 2025, as compared to interest expense, net of $3.7 million for the three months ended June 30, 2024. The year-over-year variance was primarily due to higher interest costs and lower interest earned on our cash balances. See Note 6, “Debt,” in the Notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details on our debt.

Previous wording

The income tax provision was $9.0 million, or an effective rate of 34.3%, for the three months ended December 31, 2024, as compared to a provision of $3.5 million, or an effective rate of 11.6%, for the three months ended December 31, 2023. The change in the income tax provision was primarily driven by a decrease in discrete tax benefits of $5.4 million, primarily related to stock-based compensation, partially offset by the tax effects of a decrease in income before taxes of $4.1 million, resulting in a higher provision.

Current wording

The income tax provision was $17.8 million, or an effective rate of 34.8%, for the three months ended June 30, 2025, as compared to a benefit of $0.3 million, or an effective rate of (0.7)%, for the three months ended June 30, 2024. The change in the income tax (provision) benefit was primarily driven by a decrease in discrete tax benefits of $11.4 million, primarily related to stock-based compensation, and an increase in income before taxes of $3.9 million, resulting in a higher provision.

Previous wording

As of December 31, 2024, we had $73.8 million of cash and cash equivalents. In addition, as of December 31, 2024, we had borrowing capacity of $10.5 million under our Amended Revolving Credit Facility.

Current wording

As of June 30, 2025, we had $170.0 million of cash and cash equivalents. In addition, as of June 30, 2025, we had borrowing capacity of $243.3 million under our Amended Revolving Credit Facility.

Previous wording

Our primary working capital requirements are for product and product-related costs, compensation and benefits, rent, distribution costs and marketing. Fluctuations in working capital are primarily driven by the timing of when a retailer rearranges or restocks its products, expansion of space within our existing retailer base, expansion to new retailers and the general seasonality of our business. As of December 31, 2024, we had working capital, excluding cash and cash equivalents, of $191.3 million, compared to $69.8 million as of March 31, 2024. Working capital, excluding cash and cash equivalents and debt, was $291.6 million and $170.1 million as of December 31, 2024 and March 31, 2024, respectively.

Current wording

Our primary working capital requirements are for product and product-related costs, compensation and benefits, rent, distribution costs and marketing. Fluctuations in working capital are primarily driven by the timing of when a retailer rearranges or restocks its products, expansion of space within our existing retailer base, expansion to new retailers and the general seasonality of our business. As of June 30, 2025, we had working capital, excluding cash and cash equivalents, of $247.8 million, compared to $214.8 million as of March 31, 2025. Working capital, excluding cash and cash equivalents and debt, was $247.8 million and $214.8 million as of June 30, 2025 and March 31, 2025, respectively.

Previous wording

We believe that our operating cash flow, existing cash and cash equivalents and available financing under the Amended Revolving Credit Facility will be adequate to meet our planned operating, investing and financing needs for the next twelve months. The unused balance of the Amended Revolving Credit Facility as of December 31, 2024 was $10.5 million. If necessary, we can borrow funds under our Amended Revolving Credit Facility to finance our liquidity requirements, subject to customary borrowing conditions. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all.

Current wording

We believe that our operating cash flow, existing cash and cash equivalents and available financing under the Amended Revolving Credit Facility will be adequate to meet our planned operating, investing and financing needs for the next twelve months. The unused balance of the Amended Revolving Credit Facility as of June 30, 2025 was $243.3 million. If necessary, we can borrow funds under our Amended Revolving Credit Facility to finance our liquidity requirements, subject to customary borrowing conditions. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all.

Previous wording

For the nine months ended December 31, 2023, net cash provided by operating activities was $34.1 million. This included net income as adjusted for depreciation, amortization and other non-cash items of $167.2 million, and payment of acquisition-related seller expenses of $10.5 million in connection with the Acquisition, partially offset by an increase in working capital of $122.5 million. The increase in working capital was primarily driven by a $106.9 million increase in inventory. The increase was reflective of building inventory to support net sales growth, as well as $8.7 million related to Naturium inventory, and $27.7 million related to a change in certain vendor arrangements where we now take ownership of inventory at shipment from China versus when it enters our U.S. distribution center. Additional changes to working capital include a $50.7 million increase in prepaid expense and other assets, a $45.9 million increase in accounts receivable and a $3.8 million decrease related to other liabilities, partially offset by an $84.7 million increase in accounts payable and accrued expenses.

Current wording

For the three months ended June 30, 2025, net cash provided by operating activities was $27.2 million. This included net income as adjusted for depreciation, amortization and other non-cash items of $74.5 million, partially offset by an increase in working capital of $47.2 million. The increase in working capital was primarily driven by a $46.2 million increase in accounts receivable, a $16.3 million increase in prepaid expense and other assets, an $18.7 million decrease in inventory, a $1.5 million decrease in accounts payable and accrued expenses, and a $1.9 million decrease related to other liabilities.

Previous wording

For the nine months ended December 31, 2024, net cash used in operating activities was $2.3 million. This included an increase in working capital of $178.1 million, partially offset by net income as adjusted for depreciation, amortization and other non-cash items of $175.8 million. The increase in working capital was primarily driven by a $77.5 million increase in prepaid expense and other assets, a $65.1 million increase in accounts receivable, a $23.7 million increase in inventory, a $6.1 million decrease related to other liabilities, and a $5.7 million decrease in accounts payable and accrued expenses.

Current wording

For the three months ended June 30, 2024, net cash provided by operating activities was $1.3 million. This included net income as adjusted for depreciation, amortization and other non-cash items of $76.8 million, partially offset by an increase in working capital of $75.5 million. The increase in working capital was primarily driven by a $31.8 million increase in accounts receivable, a $30.5 million increase in prepaid expense and other assets, a $8.1 million increase in inventory, a $3.1 million decrease in accounts payable and accrued expenses, and a $2.0 million decrease related to other liabilities.

Previous wording

For the nine months ended December 31, 2024, net cash used in investing activities was $7.7 million primarily consisting of capital expenditures related to fixturing, equipment and software.

Current wording

For the three months ended June 30, 2025, net cash used in investing activities was $7.6 million primarily consisting of capital expenditures related to fixturing, equipment and software.

Previous wording

For the nine months ended December 31, 2023, net cash used in investing activities was $281.0 million. This includes $275.0 million related to the Acquisition, and capital expenditures related to fixturing, equipment and software of $6.0 million.

Current wording

For the three months ended June 30, 2024, net cash used in investing activities was $0.9 million consisting of capital expenditures related to fixturing, equipment and software.

Previous wording

For the nine months ended December 31, 2024, net cash used in financing activities was $24.3 million and was primarily driven by repurchases of our common stock of $17.1 million and repayment on the Amended Term Loan Facility (as defined below) of $8.1 million, partially offset by cash received from the exercise of stock options.

Current wording

For the three months ended June 30, 2025, net cash provided by financing activities was $0.1 million primarily related to cash received from the exercise of stock options.

Previous wording

On April 30, 2021, we amended and restated our prior credit agreement (as further amended, supplemented or modified from time to time, the “Amended Credit Agreement”) and refinanced all loans under the prior credit agreement. The Amended Credit Agreement has a five year term and consists of revolving credit facility (the “Amended Revolving Credit Facility” and term loan facility (the “Amended Term Loan Facility”).

Current wording

On April 30, 2021, the Company amended and restated its prior credit agreement (such amended and restated credit agreement, as further amended, supplemented or modified from time to time, the “Amended Credit Agreement”) and refinanced all loans under the prior credit agreement. The Amended Credit Agreement has a five year term and consists of a revolving credit facility (the “Amended Revolving Credit Facility”) and a term loan facility (the “Amended Term Loan Facility”).

Previous wording

All amounts under the Amended Revolving Credit Facility are available for draw until the maturity date on April 30, 2026. The Amended Revolving Credit Facility is collateralized by substantially all of our assets and requires payment of an unused fee ranging from 0.10% to 0.30% (based on our consolidated total net leverage ratio (as defined in the Amended Credit Agreement)) times the average daily amount of unutilized commitments under the Amended Revolving Credit Facility. The Amended Revolving Credit Facility also provides for sub-facilities in the form of a $7 million letter of credit and a $5 million swing line loan; however, all amounts drawn under the Amended Revolving Credit Facility cannot exceed $100 million. The unused balance of the Amended Revolving Credit Facility as of December 31, 2024 was $10.5 million.

Current wording

All amounts under the Amended Revolving Credit Facility are available for draw until the maturity date on April 30, 2026. The Amended Revolving Credit Facility was collateralized by substantially all of the Company’s assets and requires payment of an unused fee ranging from 0.10% to 0.30% (based on the Company’s consolidated total net leverage ratio (as defined in the Amended Credit Agreement)) times the average daily amount of unutilized commitments under the Amended Revolving Credit Facility. The Amended Revolving Credit Facility also provided for sub-facilities in the form of a $7 million letter of credit and a $5 million swing line loan.

Previous wording

Prior to the Second Amendment (as defined below), both the Amended Revolving Credit Facility and the Amended Term Loan Facility bear interest, at borrowers’ option, at either (i) a rate per annum equal to an adjusted LIBOR rate determined by reference to the cost of funds for the US dollar deposits for the applicable interest period (subject to a minimum floor of 0%) plus an applicable margin ranging from 1.25% to 2.125% based on our consolidated total net leverage ratio or (ii) a floating base rate plus an applicable margin ranging from 0.25% to 1.125% based on our consolidated total net leverage ratio. On March 29, 2023, we amended the Amended Credit Agreement to transition the benchmark from LIBOR to an adjusted Secured Overnight Financing Rate (“SOFR”) (which is equal to the applicable SOFR plus 0.10%) (such transaction, the “First Amendment”). In connection with the First Amendment, all outstanding LIBOR loans were converted to SOFR loans. The annual interest rate for SOFR borrowings will be equal to term SOFR, subject to a floor of 0%, plus a margin ranging from 1.25% to 2.125%.

Current wording

Prior to the Second Amendment (as defined below), both the Amended Revolving Credit Facility and the Amended Term Loan Facility bore interest, at the borrowers’ option, at either (i) a rate per annum equal to an adjusted LIBOR rate determined by reference to the cost of funds for the United States (“US”) dollar deposits for the applicable interest period (subject to a minimum floor of 0%) plus an applicable margin ranging from 1.25% to 2.125% based on our consolidated total net leverage ratio (the “Applicable Margin”) or (ii) a floating base rate plus an applicable margin ranging from 0.25% to 1.125% based on our consolidated total net leverage ratio. On March 29, 2023, the Company amended the Amended Credit Agreement to transition the benchmark from LIBOR to an adjusted Secured Overnight Financing Rate (“SOFR”) (which is equal to the applicable SOFR plus 0.10%) (such transaction, the “First Amendment”). In connection with the First Amendment, all outstanding LIBOR loans were converted to SOFR loans. The annual interest rate for SOFR borrowings will be equal to term SOFR plus 0.10%, subject to a floor of 0%, plus a margin ranging from 1.25% to 2.125%.

Previous wording

On August 28, 2023, we entered into the Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”). Pursuant to the Second Amendment, we may borrow incremental term loans in a principal amount equal to $115.0 million under the Amended Credit Agreement (the “Incremental Term Loan”). The Incremental Term Loan will bear interest at a rate per annum equal to, at our election, adjusted term SOFR or an alternate base rate as set forth in the Second Amendment, plus an interest rate margin, to be based on consolidated total net leverage ratio levels, ranging from, (i) in the case of SOFR loans, 1.50% to 2.375%; provided that if SOFR is less than 0.00%, such rate shall be deemed to be 0.00%, and (ii) in the case of alternate base rate loans, 0.50% to 1.375%; provided that if the alternate base rate is less than 1.00%, such rate shall be deemed to be 1.00%. The Incremental Term Loan amortizes at 5.00% per annum payable in equal quarterly installments of 1.25% per annum, commencing with the fiscal quarter ending on December 31, 2023. We used the Incremental Term Loan together with cash from our balance sheet and additional borrowings under our Amended Revolving Credit Facility to consummate the Acquisition and to pay related fees and expenses in connection with the Naturium acquisition and Second Amendment.

Current wording

On August 28, 2023, the Company entered into the Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”). Pursuant to the Second Amendment, the Company borrowed incremental term loans in a principal amount equal to $115.0 million under the Amended Credit Agreement (the “Incremental Term Loan”). The Incremental Term Loan bore interest at a rate per annum equal to, at the Company’s election, adjusted term SOFR or an alternate base rate as set forth in the Second Amendment, plus an interest rate margin, based on consolidated total net leverage ratio levels, ranging from, (i) in the case of SOFR loans, 1.50% to 2.375%; provided that if SOFR is less than 0.00%, such rate shall be deemed to be 0.00%, and (ii) in the case of alternate base rate loans, 0.50% to 1.375%; provided that if the alternate base rate is less than 1.00%, such rate shall be deemed to be 1.00%. The Incremental Term Loan amortized at 5.00% per annum payable in equal quarterly installments of 1.25% per annum, commencing with the fiscal quarter ended on December 31, 2023. The Company used the Incremental Term Loan together with cash from its balance sheet and additional borrowings under its Amended Revolving Credit Facility to consummate the Acquisition (as defined in Note 3, “Acquisition,” in the Notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) and to pay related fees and expenses in connection with the Acquisition and Second Amendment.

Previous wording

The Amended Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict our ability to pay dividends and distributions or repurchase our capital stock, incur additional indebtedness, create liens on assets, engage in mergers or consolidations and sell or otherwise dispose of assets. The Amended Credit Agreement also includes reporting, financial and maintenance covenants that require us to, among other things, comply with certain consolidated total net leverage ratios and consolidated fixed charge coverage ratios.

Current wording

The Amended Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Company’s ability to pay dividends and distributions or repurchase capital stock, incur additional indebtedness, create liens on assets, engage in mergers or consolidations and sell or otherwise dispose of assets. The Amended Credit Agreement also includes reporting, financial and maintenance covenants that require the Company to, among other things, comply with certain consolidated total net leverage ratios and consolidated fixed charge coverage ratios.

Previous wording

On August 26, 2024, we entered into the Third Amendment to Amended and Restated Credit Agreement (the “Third Amendment”). Pursuant to the Third Amendment, we increased our capacity to make restricted payments, provided, that after giving effect to any such payment, we comply with a certain consolidated total net leverage ratio.

Current wording

On August 26, 2024, the Company entered into the Third Amendment to Amended and Restated Credit Agreement (the “Third Amendment”). Pursuant to the Third Amendment, the Company increased its capacity to make restricted payments, provided that after giving effect to any such payment, the Company complies with a certain consolidated total net leverage ratio.

Previous wording

The interest rate as of December 31, 2024 for the Incremental Term Loan was approximately 5.9%.

Current wording

The interest rate as of June 30, 2025 for the New Revolving Facility was approximately 5.4%.

Previous wording

The MD&A is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited condensed consolidated financial statements required the use of estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and expenses. Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results may differ from these estimates. There have been no significant changes to the critical accounting policies and estimates included in the Annual Report.

Current wording

The MD&A is based upon our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with US GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances and evaluate these estimates on an on-going basis. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant changes to the critical accounting policies and estimates included in the Annual Report.

Previous wording

Recent accounting pronouncements are disclosed in Note 2 to our unaudited condensed consolidated financial statements.

Current wording

Recent accounting pronouncements are disclosed in Note 2, “Summary of Significant Accounting Policies,” in the Notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.