ELF

MKT CAP $6.7BP/E 113.8DIV YIELD —FCF YIELD 4.17%REV TTM $1.8B +31.2%NET INCOME $59.6M −39.1%NET DEBT $489.9M52W 49.57 – 131.70NEXT EARNINGS Nov 4 EST.SEC XBRL · TTM TO Invalid Date

How ELF rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

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Risk factors of this Annual Report on Form 10-K for additional information regarding risk related to tariffs.
Our Acquisition of Naturium On October 4, 2023, we consummated our acquisition of Naturium LLC, a Delaware limited liability company (“Naturium”), and TCB-N Prelude Blocker Corp., a Delaware corporation (“Blocker”), pursuant to a Securities Purchase Agreement, dated August 28, 2023 (the "Purchase Agreement"), by and among the Company, e.l.f.
Cosmetics, Inc., Naturium, Blocker and various sellers.
Pursuant to the Purchase Agreement, we acquired all rights, title and interest in and to the outstanding equity securities of Naturium and Blocker for a purchase price of $333.0 million paid in cash and shares of our common stock.
See Note 3, “Acquisitions,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Our Acquisition of rhode On August 5, 2025, we consummated the acquisition (the “rhode Acquisition”) of HRBeauty LLC (“rhode”), the fast-growing, multi-category lifestyle beauty brand founded by Hailey Bieber for a purchase price of $897.5 million in a combination of cash, shares of our common stock, and potential earnout.
Fifth Amendment to Amended Credit Agreement On August 5, 2025, we entered into the Fifth Amendment to the Amended and Restated Credit Agreement (the “Fifth Amendment”).
The Fifth Amendment, among other things, established a term loan facility in an aggregate original principal amount of $600.0 million (the “Term Facility”), made customary changes in connection with adding a term loan facility, increased the maximum permitted consolidated total net leverage ratio financial covenant, increased the interest rate margin for loans under our existing Revolving Credit Facility and increased the unused line fee under our existing Revolving Credit Facility.
The proceeds of the Term Facility were made available to e.l.f.
Cosmetics and certain of our other subsidiaries to pay a portion of the consideration for the rhode Acquisition.
The maturity date of the Term Facility is March 3, 2030.
Components of our results of operations and trends affecting our business Net sales We develop, market and sell beauty products under the e.l.f.
SKIN, rhode, Naturium and Well People brands.
Our net sales are derived from sales of these beauty products, net of provisions for sales discounts and allowances, product returns, markdowns and price adjustments.
Year over year changes in net sales is driven by a number of factors, including beauty category performance, levels of consumer spending, innovation and our ability to drive awareness of and demand for our products.
We seek to continue to grow with our retailers through improved sales per linear foot in our existing space, expanded space allocation, as well as adding new retail customers globally.
Our business faces challenges and uncertainties, including our ability to introduce new products that will appeal to a broad consumer base, our ability to service demand, the ability of our major retail customers to drive traffic and keep products in stock, our ability to continue to grow our customer base and competitive threats from other beauty companies.
Our largest customers, Target, Walmart, Amazon and Sephora, accounted for 18%, 13%, 11% and 10%, respectively, of our net sales in the fiscal year ended March 31, 2026.
No other individual customer accounted for 10% or more of our net sales in the fiscal year ended March 31, 2026.
National and international retailers comprised 76% of our net sales.
The remaining 24% came from e-commerce channels in the fiscal year ended March 31, 2026.
The primary market for our products is in the United States, which accounted for 79% of our net sales in the fiscal year ended March 31, 2026.
The remaining 21% was attributable to international markets, primarily the UK, Canada and Germany.
Gross profit Gross profit is our net sales less cost of sales.
Cost of sales includes the aggregate costs to procure our products, including the amounts invoiced by our third-party contract manufacturers for finished goods as well as costs related to transportation to our distribution center, customs and duties.
Cost of sales also includes the effect of changes in the balance of reserves for excess and obsolete inventory.
Gross margin measures our gross profit as a percentage of net sales.
We have an extensive network of third-party manufacturers from whom we purchase substantially all of our finished goods.
We have worked to evolve our supply chain to increase capacity and technical capabilities while maintaining or reducing overall costs as a percentage of sales.
Historically, we have improved our gross margin largely through changes in our product mix, pricing, and cost reductions in our supply chain.
Other drivers of changes in gross margin, include fluctuations in foreign exchange rates, tariffs, certain costs related to space expansion and retailer activity, changes in customer mix, and changes in the balance of reserves for excess and obsolete inventory, among other things.
Selling, general and administrative expenses Our selling, general and administrative (“SG&A”) expenses primarily consist of marketing and digital expenses, personnel-related costs, including salaries, bonuses, benefits and stock-based compensation, warehousing and distribution costs, costs related to merchandising, depreciation of property and equipment, amortization of retail product displays and amortization related to intangible assets and cloud computing costs.
See “Critical accounting policies and estimates — stock-based compensation” below for more detail regarding stock-based compensation.
Change in fair value of contingent consideration In connection with the rhode Acquisition, we recorded a liability at fair value for the contingent consideration potentially payable to the sellers of rhode subject to achievement of certain earnout thresholds, with a maximum payment of $200.0 million.
We expect to pay (if due and owing) annually within four months after each measurement period ending September 30, 2026, 2027, and 2028.
The fair value of the liability is calculated using Monte Carlo simulation based on corresponding projected revenue.
We evaluate the fair value of the contingent consideration each reporting period and adjust the carrying value as new information becomes available.
See Note 3, “Acquisitions,” and Note 7, “Fair value of financial instruments,” in the Notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Other income, net We are exposed to periodic currency fluctuations given our purchasing and selling activities in various countries.
Other income (expense), net is primarily related to foreign exchange rate movements.

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Certain risks may have a material and/or adverse effect on our business, financial condition and results of operations.
These risks include those described below and may include additional risks and uncertainties not presently known to us or that we currently deem immaterial.
These risks should be read in conjunction with the other information in this Annual Report, including our consolidated financial statements and related notes thereto and “Management’s discussion and analysis of financial condition and results of operations” in Part II, Item 7 of this Annual Report.
Risk factors related to the beauty industry The beauty industry is highly competitive, and if we are unable to compete effectively our results will suffer.
We face vigorous competition from companies throughout the world, including large multinational consumer products companies that have many beauty brands under ownership and independent beauty and skincare brands, including those that may target the latest trends or specific distribution channels.
Competition in the beauty industry is based on the introduction of new products, pricing of products, quality of products and packaging, brand awareness, perceived value and quality, innovation, in-store presence and visibility, promotional activities, advertising, editorials, e-commerce and mobile-commerce initiatives and other activities.
We must compete with a high volume of new product introductions and existing products by diverse companies across several different distribution channels.
Many multinational consumer companies have greater financial, technical or marketing resources, longer operating histories, greater brand recognition or larger customer bases than we do and may be able to respond more effectively to changing business and economic conditions than we can.
Many of these competitors’ products are sold in a wider selection or greater number of retail stores and possess a larger presence in these stores, typically having significantly more inline shelf space than we do.
Given the finite space allocated to beauty products by retail stores, our ability to grow the number of retail stores in which our products are sold and expand our space allocation once in these retail stores may require the removal or reduction of the shelf space of these competitors.
We may be unsuccessful in our growth strategy in the event retailers do not reallocate shelf space from our competitors to us.
Increasing shelf space allocated to our products may be especially challenging in instances when a retailer has its own brand.
In addition, our competitors may attempt to gain market share by offering products at prices at or below the prices at which our products are typically offered, including through the use of large percentage discounts and “buy one and get one free” offers.
Competitive pricing may require us to reduce our prices, which would decrease our profitability or result in lost sales.
Our competitors, many of whom have greater resources than we do, may be better able to withstand these price reductions and lost sales.
It is difficult for us to predict the timing and scale of our competitors’ activities in these areas or whether new competitors will emerge in the beauty industry.
In recent years, numerous online, “indie,” celebrity and influencer-backed beauty companies have emerged and garnered significant followings.
In addition, further technological breakthroughs, including new and enhanced technologies which increase competition in the online retail market, new product offerings by competitors and the strength and success of our competitors’ marketing programs may impede our growth and the implementation of our business strategy.
Our ability to compete also depends on the continued strength of our brands and products, the success of our marketing, innovation and execution strategies, the continued diversity of our product offerings, the successful management of new product introductions and innovations, strong operational execution, including in order fulfillment, our ability to adapt to changes in technology, including the successful utilization of data analytics, artificial intelligence (“AI”) and machine learning, and our success in entering new markets and expanding our business in existing geographies.
If we are unable to continue to compete effectively, it could have a material adverse effect on our business, financial condition and results of operations.
Our new product introductions may not be as successful as we anticipate.
The beauty industry is driven in part by fashion and beauty trends, which may shift quickly.
Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to changes in consumer preferences for beauty products, consumer attitudes toward our industry and brands and where and how consumers shop for those products.
We must continually work to develop, produce and market new products, maintain and enhance the recognition of our brands, maintain a favorable mix of products and develop our approach as to how and where we market and sell our products.
We have a process for the development, evaluation and validation of our new product concepts.
Nonetheless, each new product launch involves risks, as well as the possibility of unexpected consequences.
For example, the acceptance of new product launches and sales to our retail customers may not be as high as we anticipate, due to lack of acceptance of the products themselves or their price, or limited effectiveness of our marketing strategies.
In addition, our ability to launch new products may be limited by delays or difficulties affecting the ability of our suppliers or manufacturers to timely manufacture, distribute and ship new products or displays for new products.
Sales of new products may be affected by inventory management by our retail customers, and we may experience product shortages or limitations in retail display space by our retail customers.
We may also experience a decrease in sales of certain existing products as a result of newly-launched products, the impact of which could be exacerbated by shelf space limitations or any shelf space loss.
Any of these occurrences could delay or impede our ability to achieve our sales objectives, which could have a material adverse effect on our business, financial condition and results of operations.
As part of our ongoing business strategy, we expect that we will need to continue to introduce new products in the color cosmetics and skincare categories, while also expanding our product launches into adjacent categories in which we may have little to no operating experience.
The success of product launches in adjacent product categories could be hampered by our relative inexperience operating in such categories, the strength of our competitors or any of the other risks referred to above.
Furthermore, any expansion into new product categories may prove to be an operational and financial constraint which inhibits our ability to successfully accomplish such expansion.
Our inability to introduce successful products in our traditional categories or in adjacent categories could limit our future growth and have a material adverse effect on our business, financial condition and results of operations.
Any damage to our reputation or brands may materially and adversely affect our business, financial condition and results of operations.
We believe that developing and maintaining our brands is critical and that our financial success is directly dependent on consumer perception of our brands.
Furthermore, the importance of brand recognition may become even greater as competitors offer more products similar to ours.
We have relatively low brand awareness among consumers when compared to legacy beauty brands, and maintaining and enhancing the recognition and reputation of our brands is critical to our business and future growth.
Many factors, some of which are beyond our control, are important to maintaining our reputation and brands.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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