e.l.f. Beauty, announcing its earnings report, has revealed it achieved strong customer engagement and revenue growth through its digital-first strategy during the October-December quarter of 2024. Q3 digital consumption trends rose nearly 30 percent year over year, following triple-digit growth in Q3 of the prior year.
Digital channels drove 24 percent of total consumption, aligning with last year’s performance despite a highly promotional market. Rather than relying on heavy discounts, e.l.f. maintained its everyday value approach, avoiding holiday promotions on elfcosmetics.com.
The brand’s digital ecosystem, including social media, Amazon, and direct-to-consumer channels, remains a key growth driver, supported by enhancements to its Beauty Squad loyalty program and mobile app.
Ekta Chopra is the Chief Digital Officer (CDO) at e.l.f. Beauty — responsible for the company’s digital transformation, including e-commerce, engineering, and security.
Digital transformation
With over 5.6 million members and 20 percent enrollment growth, the loyalty program fosters strong brand engagement. The e.l.f. mobile app has surpassed 3 million downloads, making it the most downloaded single-brand cosmetics and skincare app in the U.S., boasting a 4.9 out of 5 rating.
Strong digital performance has fueled significant market share gains. e.l.f. cosmetics grew 16 percent in tracked channels in Q3, far outpacing the broader category’s 5 percent decline. Market share increased by 220 basis points, with e.l.f. ranking as the No. 1 brand on a unit basis at 14 percent share and the No. 2 mass brand on a dollar basis at 12 percent share, more than doubling its position from three years ago.
The brand’s leadership extends across major retail partners, including Target, where e.l.f. holds over 20 percent market share and grew its cosmetics share by 170 basis points in Q3. At Walmart, e.l.f. advanced to the No. 2 brand position, up from No. 4 a year ago, while also finding success with newer retailers such as Dollar General. Expansion into this channel has exceeded expectations, prompting further store rollouts. e.l.f. aligns with Dollar General’s mission to democratize beauty access, particularly in rural areas underserved by traditional brands.
Digital strategies continue to bolster the company’s international expansion. Net sales grew 66 percent in Q3, with international revenue contributing 20 percent of total sales, up from 15 percent last year. e.l.f.’s global strategy includes social media-driven brand awareness and consumer demand before entering new markets.
The brand now operates in 15 countries, with recent launches in Germany, the Netherlands, Italy, and Mexico securing top-three rankings in each region. The company’s disruptive digital marketing approach combines global brand appeal with localized messaging, as seen in Germany with the “e.l.f. von zehn” campaign.
Beyond cosmetics, e.l.f. skin has emerged as a major growth driver, becoming a top 10 skincare brand in just five years. The category is dominated by brands with an average age of 63 years, yet e.l.f. skin continues to gain market share, now holding 2 percent versus the No. 1 brand’s 14 percent. The acquisition of Naturium has accelerated e.l.f.’s skincare penetration to 18 percent of retail sales, with Naturium’s rollout in Ulta Beauty performing well and offering further growth opportunities.
Q3 sales increased 31 percent to $355.3 million, following 85 percent growth in Q3 of the previous year, driven by international expansion, digital commerce, and pipeline shipping timing. Market share gains and category outperformance continued to drive growth. Higher unit volume contributed 30 points to Q3 growth, with mix adding an additional point.
Q3 gross margin reached 71 percent, up 40 basis points from the prior year, benefiting from foreign exchange impacts, cost savings, and inventory adjustments, partially offset by mix changes related to Naturium’s wholesale expansion and higher transportation costs. Adjusted SG&A as a percentage of sales remained steady at 54 percent.
Marketing and digital investment represented 27 percent of net sales, aligning with expectations and increasing slightly from 26 percent last year.
Looking ahead to fiscal 2025, marketing and digital investment is projected at 24 percent-26 percent of net sales, consistent with fiscal 2024 levels. e.l.f.’s commitment to digital innovation, engagement, and data-driven decision-making continues to drive customer acquisition, retention, and overall revenue growth.
Baburajan Kizhakedath
