E.l.f. Beauty just came off the third quarter with revenues up a stunning 85% year-over-year, reaching $291 million, and adjusted EBITDA up 61% to $591 million, or 22% of net sales. Through the first nine months, revenues have advanced 80% to $703 million, fueled by dynamic growth in both e-commerce and retailer channels.
“This is our 20th consecutive quarter of growth, making us one of only five public consumer companies out of 274 that have grown 20 consecutive quarters with at least 20% growth,” E.l.f. CEO Tarang Amin shared with me.
Yet when your brand is on such a roll, it’s not time to take your foot off the gas but push down harder, which is why it is returning to the Super Bowl for the second time, with Judge Judy and an entertaining cast of supporting characters.
Beauty In The Super Bowl
Last year, actor Jennifer Coolidge did a delightfully funny take on the brand’s Power Grip Primer, showcasing how well it preps skin to make foundation stick.
As its first test in television advertising, that commercial ran only in regional markets, but it obviously worked splendidly because E.l.f. is going national in Super Bowl LVIII, where a thirty-second slot costs $7 million.
This year, Judge Judy Sheindlin takes center stage under a new persona, Judge Beauty – “Beauty fades. Dumb is forever.” Defendant Gina Torres stands accused by Rick Hoffman, both of “Suits” fame, of spending too much on makeup.
A wild cast of characters assisting Judge Beauty in the courtroom, including “Suits” Sarah Rafferty, ”Judy Justice” Sarah Rose, and former NFL player Emmanual Acho providing the muscle. Sitting in the jury box to pass judgment are singer-songwriter Meghan Trainor, “RuPaul’s Drag Race” queen Heidi N Closet, comedian Benito Skinner, and “Jury Duty” Ronald Gladden.
The commercial keeps the same satiric edge as last year’s – “In E.l.f. we trust.” And it builds on the brand’s core values: high-performance, clean, cruelty-free beauty products for the eyes, lips and face at a remarkedly affordable price.
The hero product this year is E.l.f.’s Halo Glow Liquid Filter, a hybrid formula of skincare and complexion enhancer, priced at $14. It’s recognized by Dupeshop as a dupe for Charlotte Tilbury Flawless Filter at $49.
The company says one unit is sold every four seconds, making it the brand’s best-selling product of 2023. After Sunday’s airing, it’s sales are sure to get kicked up higher.
Background
The company has been around since 2004, originally founded by NYU business student Joseph Shamah, his father Alan and beauty entrepreneur Scott Vincent Borba. They identified white space in the beauty market for inexpensive, high-quality cosmetics for eyes, lips and face, thus its name: E.l.f. It is also notable as one of the digitally-native pioneers in the category.
It launched originally with a collection of 13 products at a $1 price tag. Prices have risen since then and the product line has expanded greatly, including into skincare, but it’s kept true to its founding mission.
Early buzz got it picked up by Target
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TPG Growth acquired a majority stake in 2014 and followed with an IPO in 2016. At the same time, Amin was appointed chairman and CEO. He hailed from Schiff Nutrition and before that Clorox
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Besides its flagship E.l.f. Cosmetics and E.l.f. Skin brands, it also built a portfolio including Well People, Keys Soulcare with celebrity Alicia Keys and dermatologist Dr. Renée Snyder and its newest member, Naturium skincare.
In 2016, E.l.f. started trading at about $25 per share and today, it’s over $170. That says something about the company’s management and core value proposition when prestige industry giant Estée Lauder is trading at around $150 per share.
When asked the secret of E.l.f.’s success, Amin described it as staying true to what made it great in the first place. “It’s a continuation of the momentum we have going for us: our powerhouse innovation, marketing engine and value proposition.”
Innovation Engine
E.l.f. has built its product assortment around specific beauty franchises anchored by what it calls “Holy Grail” products, like Halo Glow Filter. It builds each franchise by introducing innovative new takes within the category, so that a newer version of an old favorite may become the next holy grail anchor.
For example, the Halo Glow franchise includes five products with different applicators and applications, like blush and powder. It’s Power Grip Primer featured in last year’s Super Bowl outing is another, priced at $10 versus the $38 prestige item and it has a large selection underneath it.
And the entire product franchise benefits from it. “As soon as we launch something new within a franchise, the entire franchise grows,” Amin noted.
The company gathers inspiration for new product innovation from trends in the market, most especially from customers who ask for an alternative to a prestige brand offering. E.l.f. has built a robust infrastructure so that it can usually do as well as or better than prestige at a significantly lower price.
“A few months ago, customers were coming to us saying they love a prestige lip oil product but at $40, it was too pricey,” Amin said. “So we looked into it and came up with our own formulation that hydrates better than the prestige brand and with a bigger applicator for $8. It got incredible buzz in our community.”
Given that E.l.f. creates products from concept to launch in an average of 20 weeks, it takes the “fast fashion” model and applies it to “fast beauty,” but with sustainability built in.
It’s streamlined packaging to eliminate waste, sources all packaged from responsibly-managed forests and aims to use recycled packaging materials whenever possible. Plus, it is “paw-friendly,” meaning no animal testing for any of its products or ingredients used in them.
Getting The Buzz
Just as E.l.f. was early to DTC e-commerce, it got in on the ground floor with social media marketing. Storyclash, the influencer marketing platform, numbers E.l.f. Instagram followers at 6.5 million, 1.1 million on TikTok, 2.4 million on Facebook and nearly 120k on YouTube. It’s also on Roblox, the gaming platform and is the first beauty brand on live-streaming Twitch.
“Our marketing focus is how to engage and entertain our community,” Amin shared. “We are constantly testing and learning which goes back to our digital roots as a digitally-native brand.”
Next up is Apple Vision Pro with its “your best e.l.f.” app, where users can play and explore three virtual environments built around holy grail products.
While much of its digital marketing aims at platforms where young consumers congregate, its choice of 60-something Jennifer Coolidge and Judge Judy, who could be her mother, as spokesmodels shows the brand is casting a wide net. No age discrimination at E.l.f. and no gender or ethnic discrimination either.
Values Are The Ties That Bind
E.l.f. defines its vision to be a “different kind of beauty company that disrupts industry norms, shapes culture and connects communities through positivity, inclusivity and accessibility,” its annual report states. And it remains true to its mission.
It’s built a highly diverse corporate culture and every full-time staff member receives stock equity in the company, along with being eligible for bonuses based on financial performance.
“We’re the only public consumer company that gives equity to every single employee every year,” he asserted. “We all have ownership in the company and we all benefit from the long-term progress of the company.
“I would say that is the true ‘secret sauce’ of E.l.f. Beauty. We have a young diverse team with outstanding ability and true ownership in the business. That fuels everything else that we do.”
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