00:00Elf Beauty earnings showed impressive profit growth thanks to strong skin care momentum from the Rode brand.
00:05The company also announced a new partnership with the television series Survivor.
00:09Joining us now is CFO Mandy Fields.
00:11Mandy, great to have you on.
00:13I want to ask about the business mix specifically because Rode, with an impressive 35% top line growth this
00:20quarter, 34 percentage points of that came from Rode.
00:24Are you just Rode now basically despite the name of being Elf Beauty?
00:28Well, thank you so much for having me.
00:30Look, we're really impressed with the momentum that we're seeing behind Rode.
00:34They had an incredible quarter contribution, 34 of the 35 points of growth that we delivered was driven by Rode.
00:41So very pleased with the performance that we're seeing there and really across all of Elf Beauty.
00:46I mean, for the year we delivered, a 25% growth year, our seventh consecutive year of growth, 29 quarters
00:52running.
00:54Talk to me about the partnership with Survivor.
00:58It's apparently in its 50th season, which made me feel pretty old.
01:02And I saw the spot, the ad that you guys made for it, which is pretty brilliant with one of
01:07the cast members camouflaging herself.
01:11What do you expect to get from this?
01:14Well, I'm with you.
01:15I also felt pretty old here in 50 seasons of Survivor.
01:19I remember when it first started, but I'm really excited that we were able to partner with them.
01:24You know, this is just another one of those culturally relevant moments that Elf found its way into.
01:30And we really are excited for what we saw there last night.
01:34Just to that point, because it does feel like the way that beauty is now targeted in advertisements.
01:39It's all TikTok, it's all Instagram, it's influencers.
01:42This feels decidedly different.
01:44Is it a different audience you're trying to achieve?
01:47Have you kind of grown already on the social media influencer side and this is something different?
01:53Are you looking for an older audience?
01:55What does this get to?
01:57We're always looking to connect with our community and our community is very diverse.
02:01I mean, we have, we're the most purchased brand by Gen Alpha, Gen Z, and Millennials.
02:07And so if we can tap into the Gen X crowd a little bit more with this, we certainly want
02:13to be there for that community as well.
02:15I want to just point out, producer Will Shaker reminded us, it's not 50 years old, it's been 50 seasons.
02:22And they do two seasons each year.
02:25So it's only, it's a measly 25 years old.
02:30And I mean, you know, that's, that's how old Danny is.
02:34Correct.
02:35In terms of the, the growth, Mandy, where do you want to get it regionally?
02:39I mean, how, how focused are you on the U.S. and how important is international?
02:45Well, both are very important to us.
02:47In the quarter, we saw 75% growth in our international markets, 26% growth in the U.S. market.
02:54So both are continuing to be growth drivers for us.
02:57But if you think about Elf Beauty as a whole, roughly about 20% of our sales are outside of
03:02the U.S.
03:03So international still represents a huge opportunity, particularly compared to our other beauty peers who can have 70% of
03:10their business outside of the U.S.
03:11So all eyes on international.
03:13International and road will be launching in the EU this fall, 19 countries.
03:18And so more to come there.
03:19I just, I thought it was interesting that your gross margin is about the same as Nvidia's, right?
03:25I mean, it's 73%.
03:27Nvidia's 75.
03:29With them, I get it.
03:30With you, how do you achieve that?
03:32Aren't you paying high costs?
03:35Don't you have to deal with tariffs?
03:38You know, this marketing budget must be big.
03:41How do you get to those gross margins?
03:44Our gross margins have always been something that we focus on.
03:49You know, to go back in the day, maybe 10, 11 years ago, we were probably around 47% gross
03:54margins.
03:55And each year, we've kind of worked on those through our supply chain initiatives, through our innovation mix, and continue
04:02to strengthen those margins.
04:03I don't mean to cut you off, but we're almost out of time.
04:05I'm super curious about this because, again, enviable margins.
04:08But you also in your earnings noted that in some places, you're reducing prices for more value-oriented consumer.
04:14What's going on there, and how do you keep high margins while cutting costs?
04:18And only about a minute here, Mandy.
04:20Yeah.
04:20So we are always going to be focused on providing value.
04:24Really, the way ELF has been architected, our supply chain is built as such so that we can provide that
04:30value to our consumers.
04:31And if you think about it, 75% of our portfolio, $10 or less.
04:35And we're just being very thoughtful about where the consumer is right now.
04:39And if there's an opportunity for us to get sharper on prices in a couple places, we're certainly going to
04:44do that.
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