The beauty player's results exceeded Wall Street's expectations, with net sales rising an impressive 76% to $438 million for the first six months of the year, compared to the same period last year. This result was underpinned by second-quarter results that also rose 76% to $215.5 million.
The revenues were far more than financial market expectations and sent e.l.f. stock soaring by around 10% when they were first announced last week, leading to applause and a succession of affirmative ratings from the financial world.
19 straight quarters of growth
"We continue to deliver exceptional, consistent, category-leading sales growth," said Tarang Amin, e.l.f. Beauty's Chairman and Chief Executive Officer.
"In Q2, we grew net sales by 76% and category share by 330 basis points, marking our 19th consecutive quarter of growth in each. As we look ahead, the significant whitespace we see across color cosmetics, skin care and international gives us confidence that we are in the early innings of unlocking the full potential we see for e.l.f. Beauty."
Bucking the consumer trend
Melinda Fried, e.l.f. Beauty's head of communications expressed her reaction to the latest results and pointed out how significant the achievement was in today's precarious economic climate, where consumers generally watch their spending on beauty.
“e.l.f. Beauty is one of only five public consumer companies, out of 274, that has grown for 19 straight quarters and averaged at least 20% sales growth per quarter."
The company reported a net income of $33.3 million for the first quarter on a GAAP basis, which also contributed to a net income of $86.2 million over the first six months of the year on the same basis.
Color cosmetics and skin sales drive the results
Sales were driven by positive results across the board, including retailer and e-commerce channels, representing solid performances from all of its brands, including its eyes.lips.face. color cosmetics range, the e.l.f. skin line, the plant-based Well People, and the clean lifestyle brand Keys Soulcare, which singer Alicia Keys fronts.
e.l.f. Beauty has built its reputation off the back of its eponymous color cosmetic brand, which is competitively priced with products generally ranging from $2 to $20 – price points resonating with younger consumers wanting to stretch limited budgets.
However, in recent years, the company has been growing its skincare portfolio. This strategy helped it through the COVID-19 pandemic when color cosmetic sales fell dramatically on the back of lockdowns and restrictions that kept consumers away from stores.
Skincare is driving gains
Consumer interest in skincare has grown significantly in recent years as more people become aware of the importance of skin health and the difference that following a skincare regimen can have. This prompted a spike in skincare sales during the Pandemic, and that momentum has been primarily sustained ever since.
Reflecting this, the company has continued to invest in this area of the business, and only last month, it closed on the acquisition of Naturium, a high-performance skincare brand for which it paid $355 million.
Raising its outlook for 2024, the executives said that they expect the strong growth momentum to continue, with sales expected to grow by 55 – 57%, compared to the previous forecast of 37 – 39% made earlier in the year. This outlook also includes an expected boost of around $48 million from adding Naturium to the portfolio.