e.l.f. Beauty, Inc.

Previous wording

The US tariff policies are continuing to evolve. As a result, our risks and mitigation plans will also continue to evolve as further developments arise. Any alteration of trade agreements and terms between China and the United States, including limiting trade with China, imposing additional tariffs on imports from China and potentially imposing other restrictions on imports from China to the United States may result in further or higher tariffs or retaliatory trade measures by China. We are in the process of determining our incremental tariff cost exposure in light of continuing changes to tariff policies, and the full extent of our potential mitigation plans, as well as the associated timing to implement such plans. To mitigate our risk of ongoing exposure to tariffs, the Company raised prices globally for all products sold as of August 1, 2025. The Company may also seek to shift production outside of China into regions where we expect tariffs to be lower and to source the same products in more than one region, to the extent it is possible and not cost-prohibitive.

Current wording

The US tariff policies are continuing to evolve. As a result, our risks and mitigation plans will also continue to evolve as further developments arise. Any alteration of trade agreements and terms between China and the United States, including limiting trade with China, imposing additional tariffs on imports from China and potentially imposing other restrictions on imports from China to the United States may result in further or higher tariffs or retaliatory trade measures by China. We are in the process of determining our incremental tariff cost exposure in light of continuing changes to tariff policies, and the full extent of our potential mitigation plans, as well as the associated timing to implement such plans. To mitigate our risk of ongoing exposure to tariffs, the Company raised prices globally for all products sold as of August 1, 2025. The Company may also seek to shift production outside of China into regions where we expect tariffs to be lower and to source the same products in more than one region, to the extent it is possible and not cost-prohibitive. Moreover, the United States has imposed, increased, or indicated a willingness to continue to impose or increase tariffs on other countries where we source our products or into which we make sales. Such tariffs may lead to retaliatory actions, including counter-tariffs and increased production costs, disruptions to global supply chains and otherwise create operational challenges for us.

Previous 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.

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 $897.5 million in a combination of cash, equity consideration, and potential earnout.

Previous 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.

Current wording

Net sales increased $134.2 million, or 38%, to $489.5 million for the three months ended December 31, 2025, compared to $355.3 million for the three months ended December 31, 2024. Net sales growth was driven by both our retailer and e-commerce channels. The rhode Acquisition contributed $128.2 million to our growth in the three months ended December 31, 2025, with the remaining $6.0 million contributed from our existing business. Net sales increased $67.5 million, or 101%, in our e-commerce channels and $66.8 million, or 23%, in our retailer channels. From a price and mix perspective, higher average item price and mix drove $136.0 million increase in net sales as compared to the three months ended December 31, 2024. This was partially offset by lower volume impacting sales by $1.8 million.

Previous 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.

Current wording

Gross profit increased $94.2 million, or 37%, to $347.5 million for the three months ended December 31, 2025, compared to $253.3 million for the three months ended December 31, 2024. Higher average item price and mix drove an increase of $95.5 million, offset by lower volume impacting gross profit by $1.3 million. Gross margin decreased approximately 30 basis points to 71% when compared to the three months ended December 31, 2024. The decrease in gross margin was primarily driven by tariffs, partially offset by pricing and mix.

Previous 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.

Current wording

SG&A expenses were $280.0 million for the three months ended December 31, 2025, an increase of $61.7 million, or 28%, from $218.2 million for the three months ended December 31, 2024. The $61.7 million increase was primarily related to an increase in marketing, merchandising and distribution costs of $24.7 million, increased compensation and benefits expense of $22.0 million, increased depreciation and amortization of $9.9 million, and increased professional fees $2.1 million.

Previous wording

Other expense, net totaled $1.9 million for the three months ended September 30, 2025, as compared to other income, net of $3.8 million for the three months ended September 30, 2024. 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 expense, net totaled $1.3 million for the three months ended December 31, 2025, as compared to other expense, net of $5.3 million for the three months ended December 31, 2024. The year-over-year variance is primarily due to an decrease in foreign currency exchange loss in the period primarily attributable to foreign currency rate fluctuation between the British pound and US dollar.

Previous wording

Interest expense, net was $9.2 million for the three months ended September 30, 2025, as compared to $3.8 million for the three 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.

Current wording

Interest expense, net was $12.4 million for the three months ended December 31, 2025, as compared to $3.5 million for the three months ended December 31, 2024. The year-over-year variance was primarily due to the Fifth Amendment which established the Term Facility and increased debt. 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 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.

Current wording

The income tax provision was $14.5 million, or an effective rate of 26.9%, for the three months ended December 31, 2025, as compared to a provision of $9.0 million, or an effective rate of 34.3%, for the three months ended December 31, 2024. The change in the income tax provision was primarily driven by the tax effects of an increase in income before taxes of $27.6 million, which was partially offset by an increase in discrete tax benefits of $4.2 million, primarily related to stock-based compensation.

Previous wording

Comparison of the six months ended September 30, 2025 to the six months ended September 30, 2024

Current wording

Comparison of the nine months ended December 31, 2025 to the nine months ended December 31, 2024

Previous wording

Net sales increased $72.1 million, or 12%, to $697.7 million for the six months ended September 30, 2025, compared to $625.6 million for the six months ended September 30, 2024. The increase was driven primarily by growth in both our retailer and e-commerce channels. Net sales increased $42.7 million, or 8%, in our retailer channels and $29.5 million, or 28%, in our e-commerce channels. From a price and mix perspective, higher average item price and mix within retailer and e-commerce orders drove $62.8 million of the increase in sales. A higher volume of units sold drove the remaining $9.3 million increase in net sales as compared to the six months ended September 30, 2024.

Current wording

Net sales increased $206.3 million, or 21%, to $1,187.2 million for the nine months ended December 31, 2025, compared to $980.9 million for the nine months ended December 31, 2024. The rhode Acquisition contributed $180.6 million to our growth in the three months ended December 31, 2025, with the remaining $25.7 million contributed from our existing business. Net sales growth was driven by both our retailer and e-commerce channels. Net sales increased $109.5 million, or 14%, in our retailer channels and $96.9 million, or 56%, in our e-commerce channels. From a price and mix perspective, higher average item price and mix within retailer and e-commerce orders drove $198.8 million of the increase in sales. A higher volume of units sold drove the remaining $7.5 million increase in net sales as compared to the nine months ended December 31, 2024.

Previous wording

Gross profit increased $38.1 million, or 9%, to $483.4 million for the six months ended September 30, 2025, compared to $445.3 million for the six months ended September 30, 2024. Higher average item price and mix drove $31.4 million increase in gross profit, with the remaining increase of $6.6 million driven by higher unit volume. Gross margin decreased approximately 190 basis points to 69% when compared to the six months ended September 30, 2024. The decrease in gross margin was primarily driven by tariffs, partially offset by pricing and mix.

Current wording

Gross profit increased $132.2 million, or 19%, to $830.9 million for the nine months ended December 31, 2025, compared to $698.6 million for the nine months ended December 31, 2024. Higher average item price and mix drove $126.9 million increase in gross profit, with the remaining increase of $5.3 million driven by higher unit volume. Gross margin decreased approximately 124 basis points to 70% when compared to the nine months ended December 31, 2024. The decrease in gross margin was primarily driven by tariffs, partially offset by pricing and mix.

Previous wording

SG&A expenses were $427.0 million for the six months ended September 30, 2025, an increase of $60.3 million, or 16%, from $366.7 million for the six months ended September 30, 2024. SG&A expenses as a percentage of net sales increased to 61% for the six months ended September 30, 2025 from 59% for the six months ended September 30, 2024. The $60.3 million increase was primarily related to an increase in marketing, merchandising and distribution costs of $30.3 million, increased depreciation and amortization of $12.1 million, increased professional fees of $8.5 million, and increased compensation and benefits expense of $8.3 million.

Current wording

SG&A expenses were $706.9 million for the nine months ended December 31, 2025, an increase of $122.0 million, or 21%, from $584.9 million for the nine months ended December 31, 2024. The $122.0 million increase was primarily related to an increase in marketing, merchandising and distribution costs of $55.0 million, increased compensation and benefits expense of $30.3 million, increased depreciation and amortization of $21.9 million, and increased professional fees of $10.6 million.

Previous 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.

Current wording

Other income, net totaled $1.8 million for the nine months ended December 31, 2025, as compared to other expense of $1.3 million for the nine months ended December 31, 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 $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.

Current wording

Interest expense, net was $24.1 million for the nine months ended December 31, 2025, as compared to interest expense, net of $11.0 million for the nine months ended December 31, 2024. The year-over-year variance was primarily due to the Fifth Amendment which established the Term Facility and increased debt. 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 $10.8 million, or an effective rate of 23.0%, for the six months ended September 30, 2025, as compared to a provision of $8.6 million, or an effective rate of 11.4%, for the six months ended September 30, 2024. The change in the income tax provision was primarily driven by a decrease in discrete tax benefits of $10.1 million, primarily related to stock-based compensation, offset by the effects of a decrease in income before taxes of $28.1 million, resulting in a higher provision.

Current wording

The income tax provision was $25.3 million, or an effective rate of 25.1%, for the nine months ended December 31, 2025, as compared to a provision of $17.6 million, or an effective rate of 17.4%, for the nine months ended December 31, 2024. The change in the income tax provision was primarily driven by a decrease in discrete tax benefits of $5.9 million, primarily related to stock-based compensation.

Previous 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.

Current wording

As of December 31, 2025, we had $196.8 million of cash and cash equivalents. In addition, as of December 31, 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 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.

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 December 31, 2025, we had working capital, excluding cash and cash equivalents, of $250.5 million, compared to $214.8 million as of March 31, 2025. Working capital, excluding cash and cash equivalents and debt, was $280.5 million and $214.8 million as of December 31, 2025 and March 31, 2025, respectively.

Previous 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.

Current wording

For the nine months ended December 31, 2025, net cash provided by operating activities was $110.1 million. This included net income as adjusted for depreciation, amortization and other non-cash items of $225.3 million, partially offset by acquisition-related seller expenses of $47.1 million in connection with the rhode Acquisition, and an increase in working capital of $68.1 million. The change in working capital was primarily driven by a $53.5 million increase in prepaid expense and other assets, a $32.6 million increase in accounts receivable, partially offset by a $9.8 million increase in accounts payable and accrued expenses, a $7.4 million decrease in inventory, and a $0.8 million increase related to other liabilities.

Previous 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.

Current 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.

Previous wording

For the six months ended September 30, 2025, net cash used in investing activities was $595.0 million primarily related to the rhode Acquisition.

Current wording

For the nine months ended December 31, 2025, net cash used in investing activities was $603.0 million primarily related to the rhode Acquisition and capital expenditures related to fixturing, equipment and software.

Previous 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.

Current wording

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

Previous wording

For the six months ended September 30, 2025, net cash provided by financing activities was $594.9 million primarily related to Fifth Amendment which established the Term Facility and increased debt.

Current wording

For the nine months ended December 31, 2025, net cash provided by financing activities was $540.9 million primarily driven by proceeds from the Fifth Amendment which established the Term Facility and increased debt, partially offset by the repurchase of our common stock.

Previous 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.

Current wording

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

Previous wording

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

Current wording

The interest rate as of December 31, 2025 for the Term Facility was approximately 5.9%.

Previous wording

The interest rate as of September 30, 2025 for the Revolving Credit Facility was approximately 6.2%. The unused balance of the Revolving Credit Facility as of September 30, 2025 was $243.3 million.

Current wording

The interest rate as of December 31, 2025 for the Revolving Credit Facility was approximately 5.8%. The unused balance of the Revolving Credit Facility as of December 31, 2025 was $243.3 million.