e.l.f. Beauty, Inc.

Previous 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.

Current wording

The Company's family of brands includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, Keys Soulcare, and rhode. 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

See the risk factor titled “Additional US tariffs or other restrictions placed on imports, retaliatory trade measures taken by other countries and resulting trade wars may have a material adverse impact on the Company’s financial condition and results of operations” included as part of Item 1A. Risk Factors of this Quarterly Report on Form 10-Q for additional information regarding risk related to tariffs.

Current wording

See the risk factor titled “Additional US tariffs or other restrictions placed on imports, retaliatory trade measures taken by other countries and resulting trade wars may have a material adverse impact on our financial condition and results of operations” included as part of Item 1A. Risk Factors of this Quarterly Report on Form 10-Q for additional information regarding risk related to tariffs.

Previous wording

On August 5, 2025, we consummated the acquisition of HRBeauty LLC (“rhode”), a fast-growing, multi-category lifestyle beauty brand founded by Hailey Bieber for $800.0 million at closing, subject to customary adjustments, in a combination of $600.0 million of cash and $200.0 million of stock, and potential earnout consideration of up to $200.0 million based on the future growth of the brand over a three-year timeframe.

Current wording

On August 5, 2025, we consummated the acquisition of HRBeauty LLC (“rhode”), the fast-growing, multi-category lifestyle beauty brand founded by Hailey Bieber for a purchase price of $896.5 million in a combination of cash, equity consideration, and potential earnout.

Previous 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.

Current wording

Net sales increased $42.9 million, or 14%, to $343.9 million for the three months ended September 30, 2025, compared to $301.1 million for the three months ended September 30, 2024. The increase was driven primarily by growth in both our retailer and e-commerce channels. Net sales increased $22.3 million, or 9%, in our retailer channels and $20.6 million, or 39%, in our e-commerce channels. From a price and mix perspective, higher average item price and mix drove $62.2 million increase in net sales as compared to the three months ended September 30, 2024. This was partially offset by lower volume impacting sales by $19.4 million.

Previous 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.

Current wording

Gross profit increased $24.8 million, or 12%, to $238.9 million for the three months ended September 30, 2025, compared to $214.1 million for the three months ended September 30, 2024. Higher average item price and mix drove an increase of $38.6 million, offset by lower volume impacting gross profit by $13.8 million. Gross margin decreased approximately 165 basis points to 69% when compared to the three months ended September 30, 2024. The decrease in gross margin was primarily driven by tariffs, partially offset by pricing and mix.

Previous 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.

Current wording

SG&A expenses were $231.1 million for the three months ended September 30, 2025, an increase of $45.0 million, or 24%, from $186.1 million for the three months ended September 30, 2024. SG&A expenses as a percentage of net sales increased to 67% for the three months ended September 30, 2025 from 62% for the three months ended September 30, 2024. The $45.0 million increase was primarily related to an increase in marketing, merchandising and distribution costs of $23.0 million, increased compensation and benefits expense of $10.4 million, increased depreciation and amortization of $7.9 million, and increased professional fees $2.8 million.

Previous 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.

Current wording

The income tax benefit was $7.0 million, or an effective rate of 175.1%, for the three months ended September 30, 2025, as compared to a provision of $8.9 million, or an effective rate of 31.9%, for the three months ended September 30, 2024. The change in the income tax provision was primarily driven by the tax effects of a decrease in income before taxes of $31.9 million, as well as an increase in discrete tax benefits of $1.3 million, primarily related to stock-based compensation, resulting in a higher benefit.

Previous 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.

Current wording

Other income, net totaled $3.2 million for the six months ended September 30, 2025, as compared to $4.0 million for the six months ended September 30, 2024. The year-over-year variance is primarily due to a decrease in foreign currency gains in the period attributable to currency rate fluctuation.

Previous 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.

Current wording

Interest expense, net was $11.8 million for the six months ended September 30, 2025, as compared to interest expense, net of $7.4 million for the six months ended September 30, 2024. The year-over-year variance was primarily due to the Fifth Amendment which established the Term Facility and increased debt. See Note 7, “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

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.

Current wording

As of September 30, 2025, we had $194.4 million of cash and cash equivalents and $5.0 million of restricted cash. In addition, as of September 30, 2025, we had borrowing capacity of $243.3 million under our Amended Revolving Credit Facility.

Previous wording

Our primary cash needs are for working capital, fixturing, retail product displays and digital investments. Cash needs typically vary depending on strategic initiatives selected for the fiscal year, including investments in infrastructure, digital capabilities and expansion within or to additional retailer store locations. We expect to fund ongoing cash needs from existing cash and cash equivalents, cash generated from operations and, if necessary, draws on our Amended Revolving Credit Facility.

Current wording

Our primary cash needs are for working capital, fixturing, retail product displays, digital investments and debt service. We have also used cash for acquisitions. Cash needs typically vary depending on strategic initiatives selected for the fiscal year, including investments in infrastructure, digital capabilities and expansion within or to additional retailer store locations. We expect to fund ongoing cash needs from existing cash and cash equivalents, cash generated from operations and, if necessary, draws on 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 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.

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 September 30, 2025, we had working capital, excluding cash and cash equivalents and restricted cash, of $246.0 million, compared to $214.8 million as of March 31, 2025. Working capital, excluding cash and cash equivalents, restricted cash and debt, was $268.5 million and $214.8 million as of September 30, 2025 and March 31, 2025, respectively.

Previous 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.

Current wording

For the six months ended September 30, 2025, net cash provided by operating activities was $50.6 million. This included net income as adjusted for depreciation, amortization and other non-cash items of $134.9 million, partially offset by acquisition-related seller expenses of $47.1 million in connection with the rhode Acquisition, and a decrease in working capital of $37.2 million. The decrease in working capital was primarily driven by a $48.8 million increase in prepaid expense and other assets, a $19.2 million increase in inventory, partially offset by a $24.4 million increase in accounts payable and accrued expenses, a $3.5 million increase related to other liabilities, and a $3.0 million decrease in accounts receivable.

Previous 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.

Current wording

For the six months ended September 30, 2024, net cash provided by operating activities was $12.4 million. This included net income as adjusted for depreciation, amortization and other non-cash items of $126.6 million, partially offset by an increase in working capital of $114.2 million. The increase in working capital was primarily driven by a $48.9 million increase in prepaid expense and other assets, a $45.1 million increase in inventory, a $21.2 million increase in accounts receivable, and a $4.2 million decrease related to other liabilities, partially offset by a $5.2 million increase in accounts payable and accrued expenses.

Previous 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.

Current wording

For the six months ended September 30, 2024, net cash used in investing activities was $2.5 million consisting of capital expenditures related to fixturing, equipment and software.

Previous 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.

Current wording

For the six months ended September 30, 2024, net cash used in financing activities was $22.0 million primarily driven by repurchases of our common stock of $17.1 million and repayment on the Amended Term Loan Facility of $5.4 million, partially offset by cash received from the exercise of stock options.

Previous 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”).

Current wording

On April 30, 2021, we amended and restated our 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 $100.0 million revolving credit facility (the “Amended Revolving Credit Facility”) and a $100.0 million term loan facility.

Previous 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.

Current 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 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.

Previous 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.

Current wording

On August 28, 2023, we entered into the Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”). Pursuant to the Second Amendment, we borrowed incremental term loans in an aggregate original principal amount of $115.0 million under the Amended Credit Agreement (the “Incremental Term Loan”). 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 of Naturium (as defined in Note 4, “Acquisitions,” 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 of Naturium and Second Amendment.

Previous 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.

Current 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.

Previous wording

On March 3, 2025, the Company entered into the Fourth Amendment to Amended and Restated Credit Agreement and First Amendment to Pledge and Security Agreement (the “Fourth Amendment”). The Fourth Amendment, among other things, established a revolving credit facility in an aggregate principal amount of $500 million (the “New Revolving Facility”), refinanced the existing indebtedness under the Amended Credit Agreement and reduced the interest rate margin for loans. Additionally, certain baskets under the Amended Credit Agreement were increased as part of the Fourth Amendment. The proceeds of the New Revolving Facility are available to e.l.f. Cosmetics and certain other subsidiaries of the Company for working capital, capital expenditures and other general corporate purposes, including to finance acquisitions and investments permitted under the Amended Credit Agreement and other permitted distributions on account of the equity interests of the Company and its subsidiaries. In addition, up to $35 million of the New Revolving Facility is available for issuing letters of credit. The maturity date of the New Revolving Facility is March 3, 2030. The unused balance of the New Revolving Credit Facility as of June 30, 2025 was $243.3 million.

Current wording

On March 3, 2025, we entered into the Fourth Amendment to Amended and Restated Credit Agreement and First Amendment to Pledge and Security Agreement (the “Fourth Amendment”). The Fourth Amendment, among other things, established a revolving credit facility in an aggregate principal amount of $500.0 million (the “Revolving Credit Facility”), refinanced the existing indebtedness under the Amended Credit Agreement and reduced the interest rate margin for loans. Additionally, certain baskets under the Amended Credit Agreement were increased as part of the Fourth Amendment. The proceeds of the Revolving Credit Facility are available to e.l.f. Cosmetics and certain of our other subsidiaries for working capital, capital expenditures and other general corporate purposes, including to finance acquisitions and investments permitted under the Amended Credit Agreement and other permitted distributions on account of our and our subsidiaries’ equity interests. In addition, up to $35.0 million of the Revolving Credit Facility is available for issuing letters of credit. The maturity date of the Revolving Credit Facility is March 3, 2030.

Previous wording

The Fourth Amendment also amended the Pledge and Security Agreement, dated as of December 23, 2016, among the Company, certain subsidiaries of the Company, and the Agent pursuant to which certain covenants and thresholds set forth therein were amended, amongst other changes.

Current wording

The Fourth Amendment also amended the Pledge and Security Agreement, dated as of December 23, 2016, among us, certain of our subsidiaries, and the Agent pursuant to which certain covenants and thresholds set forth therein were amended, amongst other changes.

Previous wording

Loans under the New Revolving Facility will bear interest at a rate per annum equal to, at e.l.f. Cosmetics’ election: SOFR or an alternate base rate as set forth in the Fourth 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, 1.125% to 1.875%; 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, 0.125% to 0.875%; provided that if the alternate base rate is less than 1.00%, such rate shall be deemed to be 1.00%.

Current wording

Loans under the Amended Credit Agreement will bear interest at a rate per annum equal to, at e.l.f. Cosmetics’ election: SOFR (subject to a 0.00% floor) or an alternate base rate (subject to a 1.00% floor) as set forth in the Fifth Amendment, plus an interest rate margin, to be determined based on consolidated total net leverage ratio levels, ranging from, (i) in the case of SOFR loans, 1.50% to 2.25%, and (ii) in the case of alternate base rate loans, 0.50% to 1.25%.

Previous wording

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

Current wording

The interest rate as of September 30, 2025 for the Term Facility was approximately 6.3%.