Yahoo Finance Why e.l.f. Beauty’s CFO sees marketing as a growth center
Good morning. The first time I sat down with e.l.f. Beauty CFO Mandy Fields a year ago, the beauty company was at 16 consecutive quarters of growth. It's now at 20.
I talked with Fields on Tuesday before the company reported its quarterly earnings for the period ending Dec. 31. Net sales increased 85% to $270.9 million year over year, primarily driven by strength in both retailer and e-commerce channels. The firm’s updated outlook for fiscal 2024 reflects an expected 69% to 71% year-over-year increase in net sales, compared with a previous figure of 55% to 57%. In January, ELF shares climbed more than 10%.
"Our thesis is that e.l.f.’s relevance with young, diverse makeup enthusiasts, its omnichannel go-to-market capabilities, significant distribution white space, and highly profitable business model support attractive multi-year growth prospects; our rating is Outperform," William Blair analyst Jon Andersen wrote in a Tuesday note.
“We’re celebrating our 20th anniversary this year, and we’ve really only had two quarters in that time where we didn’t have growth,” Fields told me.
The Oakland, Calif.-based company with a huge Gen Z following is working to court more millennials, Gen Xers, and even baby boomers, she said. For example, the brand launched a 15-minute true-crime parody documentary in January that plays ahead of Paramount Pictures’ new film Mean Girls.
Finance chiefs traditionally have viewed marketing as a cost center. But that’s not Fields’ perspective.
“We invest behind marketing to drive net sales,” Fields explained. “I always take a balanced approach. I never want to get over our skis and invest so much behind marketing that that’s at the detriment of our EBITDA margin. We expect Adjusted EBITDA margin leverage of approximately 200 basis points year over year.”
As a result of efforts in marketing, including digital channels like TikTok, e.l.f.’s brand awareness in the U.S. has doubled from 13% to 26% since 2020, she said.
Part of that marketing plan includes Super Bowl ads. Last year, the company ran its first, featuring Jennifer Coolidge, who had a comical take on e.l.f.’s popular Power Grip Primer.
“We saw 57 billion global impressions behind the Super Bowl,” Fields said. “In the two minutes after it aired, we saw 10 times the number of visitors to our website.”
Looking at those metrics, Fields said e.l.f. decided to return to the big game this year—Super Bowl LVIII—on Feb. 11 with one key difference: Last year’s ad was regional, and this year’s is national. The company declined to say what it paid for this year’s spot, but 30-second Super Bowl ads have sold for $7 million, the New York Times reported.
You can read more about this year's commercial for the big game and what Fields said are e.l.f. Beauty's three growth drivers in my complete article. And spoiler alert: She's rooting for the San Francisco 49ers.
Sheryl Estrada
sheryl.estrada@fortune.com
This story was originally featured on Fortune.com
