ELF Beauty delivered a robust quarter with strong sales growth, according to its third-quarter financial results to December.

The company reported a 31 per cent increase in net sales, reaching $355.3 million, driven by strong performance across retail and e-commerce channels in the US and international markets.

ELF Beauty’s chairman and CEO, Tarang Amin, attributed the results to the entire team’s consistent performance.

“We believe we are still in the early innings of unlocking the whitespace we see across digital, color cosmetics, skincare, and international.”

Gross margin improved by about 40 basis points to 71 per cent, supported by favorable impacts on goods purchased from China, cost savings, and inventory adjustments. 

However, these gains were partially offset by changes in product mix and higher transportation costs.

Selling, general, and administrative (SG&A) expenses increased by $58.1 million, reaching $218.2 million, which represents 61 per cent of net sales. Adjusted SG&A rose by $45.5 million to $192.9 million, or 54 per cent of net sales. 

This expense growth was driven by higher marketing and digital spending, increased compensation and benefits, operational costs, retail fixtures, visual merchandizing expenses, and depreciation and amortization. 

Additionally, other net expenses surged by 306 per cent to $5.3 million, primarily due to foreign currency exchange losses resulting from fluctuations between the British pound and the US dollar.

ELF Beauty reported a GAAP net income of $17.3 million, while adjusted net income was $43 million. Adjusted EBITDA reached $68.7 million, representing 19 per cent of net sales, marking a 16 per cent year-on-year increase.

Despite the strong third-quarter performance, ELF Beauty’s CFO Mandy Fields said the company had revised its fiscal 2025 outlook downward due to softer-than-expected trends in January. 

“Our updated outlook for fiscal 2025 reflects an expected 27 to 28 per cent year-over-year increase in net sales, compared to an expected 28 to 30 per cent increase previously,” she added.