e.l.f. Beauty, Inc. ($ELF)

All right. Thank you, everybody. For our next session, I'm very happy to welcome back e.l.f. Beauty to the conference. And with us our Chairman and Chief Executive Officer, Tarang Amin. Thank you, Tarang, for being back.

Well, thank you for having us.

We have limited time, so let's just dive in. And I guess we'll start broad and maybe update everybody just on how you're feeling about the business and the category amidst what we've all been talking about this week as a relatively challenged consumer.

Sure. So I'd say a little bit of background on e.l.f. Beauty. We've existed for 22 years. We were founded almost 22 years ago with this radical idea of selling cosmetics over the Internet for $1. Everyone thought the founders were crazy. This is pre iPhone, you couldn't sell cosmetics over the Internet. I certainly couldn't make money at $1 doing it, but they figured it out while we've migrated since core fundamentals of the business have remained intact for over 20 years, which is making the best of beauty be accessible for every eye, lip and face. And we've seen tremendous success because of that. I think we most recently reported our 29th consecutive quarter of net sales growth for those keeping track, that's 7 years of continuous growth, averaging at least 20% growth per quarter from a net sales standpoint. Our namesake e.l.f. Cosmetics brand has built over 900 basis points of market share over those last 7 years. We have an incredible portfolio. e.l.f. SKIN is now a top 11 skin care brand in the U.S. In addition, we've had 2 major acquisitions. Naturium, the clinically effective biocompatible skin care brand we acquired about 3 years ago, is currently the fastest-growing skin care brand in the U.S. amongst the top 50. We've more than doubled its sales to over $250 million of global retail sales. And then rhode, which is a brand that we acquired in August Hailey Bieber's brand. It's probably one of the most phenomenal brands I've ever seen. It is in our last fiscal year, which we just finished did about $390 million of net sales annualized and that's in less than 20% of Sephora doors. And as far as Sephora is concerned, rhode had the most successful launch of Sephora has ever seen in its history in Sephora North America, Sephora in U.K. and [ Mecca ] in Australia and New Zealand. And we're very excited to be launching rhode all throughout Europe this fall. So I would say, in the backdrop of a challenging consumer segment, one of the reasons why we've continued to be successful is because we offer extraordinary value to the consumer, prestige quality at a fraction of the price. Every single one of our brands is accessible. Even though we cover different price tiers. So e.l.f. Beauty has this incredible value proposition. Average unit retail is around $7. Naturium is in the masstige price range, closer to $18 and rhode is entry-level prestige. But each of them are accessible relative to -- if you look at the quality of the products and what they offer. And so I think that's helped us really over a pretty long period of volatility from a consumer standpoint, going all the way back to kind of even the pandemic, post-pandemic, inflationary pressures. You name it, we've been able to navigate that with consistency. And as great as all of that is, what I'm most excited about is the tremendous white space we have across our portfolio.

Yes. So let's talk about that, as you say, over the last 7 years, during not a simple environment to navigate. As you think about the building blocks of historical growth and then you look forward to the next 7 years, how many of them remain sort of intact and it's more building on that momentum? And how are things maybe changing and different elements of the portfolio requiring different efforts to drive future growth?

Sure. So if you think of e.l.f. Beauty, we have 4 durable competitive areas of advantage. And we believe all 4 of them are equally relevant for the next 7 years as they have been for the last 7 years. The first is our passionate team of owners and high-performance team culture. We're unique in our space in that we grant equity to every single employee every year. So every employee at e.l.f. is a meaningful shareholder in the company, and we train in high-performance teamwork. And the reason why that's important to you as investors is the level of engagement we have from an employee base is off the charts. 97% recommend e.l.f. as a place to work, over 94% extremely strong engagement. And you also see it in the level of productivity of our workforce, where the net sales and adjusted EBITDA per employee is miles apart from any of our competitors that it really talks, I think our most important durable advantage is the passionate team that we have and high-performance team culture. The second big advantage we have is that value proposition. So as I mentioned, on e.l.f. Cosmetics, our average unit retail is about $7. Most legacy -- most of our legacy mass peers are about $11, so a pretty sizable difference and prestige over $20. And the reason why that's important is sometimes people pay attention to the price point. The key for us is we've been able to engineer in better quality every single year for the last 10 years. So with e.l.f., you really have no compromise. You get prestige level quality at a fraction of the price. And that value that I talked about, not only on e.l.f. SKIN, but across our portfolio is a second core advantage, and we believe value, I mean, it's always in Vogue regardless of where the economy is. The third advantage we have is our powerhouse innovation. We have a unique ability of taking inspiration from the best products in prestige as well as what our community is looking for putting our e.l.f. twist on and bringing it at an extraordinary value. So -- and that has been pretty consistent over time. And it's one of the reasons why if you look in the cosmetics category, we have 22 segments where we have the #1 or #2 position in color cosmetics. And the way we've built that market leadership in the 22 segments is through innovation and the consistent track record of innovation year after year and a volume that really responds to what our community is looking for. And then the last advantage is our disruptive marketing engine. We are, by far, the #1 brand amongst Gen Alpha, Gen Z and millennials. And that strength is really built on our ability of living with where our community lives, being pioneers on different platforms and the level of kind of engagement that we do, we sometimes say we have -- we're an entertainment company that happens to sell beauty products, but the level of kind of disruption that we have in marketing and that engagement model. So I'd say those are our 4 advantages that have really propelled our business over actually last at least 7 years, maybe even longer, and we believe are just as relevant for the next chapter over the next 7 years.

One thing that I -- it feels to me at least may be different as you move forward is the fact that the portfolio itself has evolved. So this -- the growth going forward is going to be more reliant on multiple levers of growth across multiple brands and really across multiple geographies, which we'll talk about. I guess that portfolio management capability, how does that -- I guess, how well developed do you feel that muscle is? And how does that maybe change the outlook going forward as you have to balance investments across multiple brands?

So I think one of the strengths of this business today, those who follow the company for a long time is the strength of the portfolio and how we're managing that portfolio. If you look at e.l.f. Beauty over our 22-year history, I think we've shown growth in all but maybe 2 quarters. There are 2 quarters in 2018 where we didn't grow where we -- like any business, you hit a soft spot. And in 2018, when we hit a soft spot, the only business we had was e.l.f. Cosmetics. So if you hit a soft spot, you're really dependent on that, we have a much richer portfolio. I talked about the growth rates as well as the prospects of our entire brand. And then our approach is different. We were not every brand in our portfolio is important. When we look at acquisitions, we have an exceptionally high bar. It has to meet our vision first and foremost of building a different kind of beauty company, one that disrupts norms, shapes culture and connects communities. Most brands drop off right there. The level of white space that we see, obviously, the financial profile, those things are table stakes but the team is actually really important too. So we're different than other companies is when we do acquisitions, part of our underwriting case is, we don't assume any synergies. We actually want the entire team that's been doing an exceptional job building that business and we bring them all over. I'll give you an example of rhode. Nick Vlahos, who is the CEO of rhode, Nick and I worked together back -- all the way back in Clorox days. So I've known him for 20 years. Incredibly strong consumer background that entire team. All the founders came on board, the entire team came on board. And our approach is how do we enhance the team, what capabilities you need. In rhode's case, they're about to enter Sephora. We help build out their field sales team before we even closed the transaction. We talked about investing more in the brand. It's accretive to the overall company. So we can make those investments and still have it be accretive shoring up kind of the innovation capability, particularly from an R&D scientific standpoint. And so that's allowed us to manage this portfolio really well where the people focused on e.l.f. highly focused on e.l.f. and continue to be -- we have a dedicated team on Naturium, a dedicated team on rhode, even a dedicated team on e.l.f. SKIN as we take a look, and that really has allowed us to be able to pursue the white space across the brand portfolio. And then our role, like I said, we're different than other companies. Our role is how do we help support a founder's vision and enhance it. So that goes really early on in the diligence process of what are we trying to accomplish, and where can we add value. So it's more of a pull model, which really allows us to manage that portfolio and be able to pursue multiple vectors of growth at the same time.

Yes On rhode, again, the momentum, I mean, has been exceptional. Your outlook for '27 implies strong momentum certainly into the first half of the year and beyond. I guess one of the questions from investors is just on the plus side, can it be better, right? On the other side of the coin is not so much will fall short in the near term, but just how long it lasts. So how do you think about both those aspects? What are the potential levers of upside? But also, how are you -- where does your confidence come from in terms of duration of growth?

So then in the consumer space, 35 years, rhodes probably one of the brands that I've been most confident in terms of the long-term trajectory. And that went all the way back to diligence. I think we sometimes get this question which is a little perplexing to us of, hey is rhode a celebrity brand and a lot of celebrity brands have gone up and they've kind of come back down. And we kind of scratch our heads to that because I got to tell you, I see a ton of founders. Hailey Bieber is not only -- not just the celebrity, but she's one of the most thoughtful founders I've ever met. Her level of her instincts, her -- how beautiful her aesthetic is, how involved she is on every aspect of that brand. I don't know how many rounds of submission we get into. And then her vision, one of everything really good. So the foundation of rhode is really built on the strength of our product portfolio that's highly curated. That has numbers no one has ever seen in terms of individual product level. If you look at rhode. One of the things that attracted us to rhode was they were doing $212 million of net sales, DTC only with just 10 products in less than 3 years. We've never seen that before in our space in terms of that type of trajectory as we've taken it into Sephora, the launches in Sephora, North America, Sephora, U.K. and [ Mecca ] in Australia and New Zealand are multiples higher than anything else those retailers have ever seen. I'm talking about any brand those retailers has ever carried. So it's in a level and a category that is unlike anything else that goes beyond that. And then the sustainability really comes from a couple of things. Number one is the strength of the fundamental products. As we take a look at the repeat rates of those products, how the brand continues to build month after month. So not only do we have the most successful launch in Sephora, but you take a look at the momentum that we've seen in Sephora as we continue, particularly under this curated product line. The other great signal for me is every subsequent launch we do on rhode is bigger than the prior launch. So you see this momentum continue to build. And yet, for all the success that we've had on rhode, it still has a tremendous opportunity in terms of brand awareness. The unaided awareness on rhode is probably in the single digits. And we've proven on e.l.f. Cosmetics and e.l.f. skincare, our ability of building awareness. On e.l.f. Cosmetics, we've taken unaided awareness up from 13% to 45% in just a few years. So we know how to drive awareness and bring more consumers into our franchise. So this is a brand we definitely are building for the long term. And then -- the most exciting part of it is we -- in our fiscal '26, we did $390 million of net sales in less than 20% of Sephora's doors. We're going to 19 European countries this summer, over time. If Sephora could have it, they would love the brand in every single Sephora around the world. We're very big on disciplined rollout strategy, making sure you're building the brand, making sure you're building the community as we go through. So yes, I do -- to get a chuckle when people worry a little bit rhode. I'm like, you've got a lot more to worry about than rhode. Rhode is a pretty phenomenal brand.

Just like I'm sure there's a lot of pull for more distribution on rhode. I would assume that there's lots of on paper, lots of opportunities for that brand to go in lots of different directions into new subcategories and white space. At the same time, that heavy curation is key to the brand. How are you managing that tension?

Yes. So I give Hailey Bieber a lot of credit on that. She set out to create this brand on something -- that was one of everything really good. The only thing that we will introduce on rhode is something that she personally uses is a big believer in. And like I said, we go through dozens of submissions on each product. So I'm not -- we have a robust product pipeline on rhode, but it follows that same philosophy. You're never going to see -- some of the brands that we sometimes get compared to, they had 100 SKUs, 150 SKUs. We don't see rhode going there. We continue to see it to be something that is -- continues to be highly curated. Yet at the same time, just I think this last week, we introduced our next slate of innovation online. You're going to start seeing that in Sephora soon. The response to that innovation has been incredible. So everything that we're doing, just given the thoughtfulness in terms of it's a very different strategy. It's not about proliferation. It's about meeting for the consumer and the quality of those products gives me a lot of confidence in terms of how we continue to drive innovation, but do in a way that's consistent with the brand ethos.

Great. Turning to the core e.l.f. brand. You mentioned that softer patch in 2018. The good news is we're in a little softer patch now. The good news is we've got the broader portfolio, as you mentioned. But as you look at what has been softer consumption on e.l.f. of late, flattish, low single digits by our observation on consumption data. I guess what is your diagnosis of that slowdown? I think there are probably multiple facets to it. And then what are you doing about it to reignite growth as we move into '27?

Sure. As I mentioned before, our business is driven on 4 core fundamentals, team, value, innovation and marketing. And so let's go through that and maybe I won't go in the same order, but let's start with value. Last year because of tariffs. At one point last year, we're facing as much as 170% tariffs. We took a $1 price increase across our entire portfolio, which was a 15% price increase. Now on the surface, that was a successful pricing action. We took 15% higher pricing. We only saw mid-single digits unit decline. In the last few months, we've seen a little bit higher unit decline, I think, based on the consumer sentiment that's out there that a number of companies have talked about. And so we take a look at it and say, "Hey, look, we feel that pricing overall was the right move relative to the costs, both tariffs as well as inflation that we're facing." having said that, we also take quite seriously our responsibility of delivering superior consumer value. So we've been doing some price discovery. We had skin tint, a new item that came out last year. That was price at $18. So we just tested at $14. We sell more than a 40% lift once we did that test. In the last few weeks, we've seen as high as a 60% lift that really got us interested in saying, hey, are there some selective other products that we want to test and do some discovery to say, if we took the price down $1 on those items, what type of elasticity do we see in this consumer macro. And I think 2 important notes there. This is not a wholesale rollback across the entire price increase we took last August. It's really discovering which items which prices do we feel has some resonance that we can potentially take some selective pricing action because value has been the big driver of our business just to see in this macro, are there places that we can offer better value to the consumer. The second thing from an innovation standpoint, as I mentioned, we have had a consistent strong track record of innovation our innovation in the spring cycle that we just launched was below our expectations. I'd say it's the first time in 8 years that we've had innovation that was below our own internal expectations. And while it was below our expectations, it's still some of the strongest innovation in the category. We already have 2 of the top 10 launches in the entire category. If you take a look at what's the difference there? We tend to do best when there's a very clear frame of reference to prestige, the prestige inspiration. And if you look at the 2 of the top 10 launches we have so far this spring, One is our lip oil stick. It's priced at $10. The only other thing like it is a prestige item at $48 in the marketplace. Consumers got it right away, and we've seen really great results. The second is our melting lip balms. It was an item we launched last year that we've continued to extend on again at $9 versus prestige at $24 an incredible value. There are a couple of other items that we thought would do better than they have. Like so we had a part of our soft glam franchise. We did a soft glam concealer at $5. We thought that would have incredible virality at a $5 price point. There's not another $5 concealer in the marketplace. It's had good offtake, but not nearly the level of virality we have. And so what we're doing from an innovation standpoint is reinforcing where do we have clearer frames of reference. Now the good news is in another month, we start setting our fall innovation. We've already seeded online 4 items that are very clear frames of reference to prestige. We have a makeup brush that is the only other thing like it is a prestige item that's selling extremely well. Same with these blush and bronzer sticks. Again, very clear reference from a prestige standpoint. We take a look at our lip stains as well as our quads. Early results and all you have to do is go online and take a look at Mikayla, one of the big influencers in our space in the last 2 weeks. Just look at the reviews she's left on that product as well as a number of the other ones that are quite encouraging. The other thing that we're doing is we're leaning on our, one of our superpowers is our speed to market. And so we are known for listening to our community and delivering what they want to market. So we've actually brought incremental innovation into this fiscal year based on the volume of what we're hearing the community wanting. And based on what our community wants, we can go from initial idea to actually having them in market within 6 months. And so really leveraging that strength we have in innovation to be able to do that as we go through. Third, from a marketing standpoint, our marketing works best when you start seeing that virality on innovation, our ability to feed that and be able to sustain that demand and build growing franchises. And then last, in terms of team. We made some important team moves. One was recognize the contribution of Kory Marchisotto, our CMO over the last number of years. She has a particular passion for the e.l.f. brand. so making your President e.l.f. brands, where she has a passion, particularly not only on the e.l.f. brands, but also the expansion in other categories of the e.l.f. brands as well as our international growth aspirations there, I think, plays well. And there's a great analogy there. When I look at Nick Vlahos CEO of rhode, I look at Suzanne Pengelly, President of Naturium, really bringing that focus on e.l.f., bringing Oshiya Savur as CMO on e.l.f. brands. She is somebody we've had our eyes on for a number of years, tremendous talent from a marketing standpoint, bringing those fresh eyes into e.l.f.. And then last but not least, appointing Ekta Chopra, the Chief Technology and AI Officer. Ekta has been with us a decade led our technology initiatives, including probably one of the most successful conversions to SAP, anyone's ever seen last year. She's a real passion for AI and how we embed that across every workflow within the company. And so those are the core actions that I feel confident in terms of -- because they go back to the fundamentals that have driven the business over a long period.

We didn't hear much about that SAP implementation, which is a good thing.

Yes, which is always a great thing.

When you talk about the frame of reference criteria for innovation relative to sort of crowd sourcing from your community, is there a good overlap there? And if there was not, what would you prioritize? Does that make sense?

Yes, there's always overlap. I think part of what we do is when we study our -- we've got such a great innovation capability that our teams are always sensing what's in the market. And the great thing for us is we're not dependent on any season of prestige innovation. If you look at some of our biggest innovations, they were prestige items that existed for a decade, 15 years that became viral over the last couple of years. Like one of the biggest launches we ever had were our lip oils the inspiration of that had been in market for more than a decade and really took off after the pandemic as people wanted bolder looks from a lip standpoint. If I look at our camo concealers, that was a prestige item that have been highly successful for 15 years. Our ability, when I think the real secret for us is putting our e.l.f. twist on and bringing in a much better value. as we go through. So those things have both where you can actually see the size of the prize based on what's actually sold for a very long period of time in prestige that we can bring greater accessibility to that our consumers are already responding to. And then those moments that you hit particular virality, One of the great things about being in beauty and particularly in color cosmetics, and skin care is the level of consumer engagement in these categories is off the charts relative to any other consumer category. So this is one, I mean, I was in -- I've worked almost every consumer sector over the years. And relative to food to pet to home care, laundry, paper, I mean, a number of the other categories. This is a space where consumers are not shy of letting you know what they're most excited about and our ability to be able to respond to that. So there is often a convergence between the two as we take a look. And the way we navigate that is our innovation pipelines go out at least 3 years, where we are -- and I would say that is the science aspect of mapping which are the biggest items in beauty or biggest sources of innovation, how are we engineering our quality and our value into those as we go through. And then giving yourself, we have another lane where we give ourselves the ability to pivot when people -- I mean we did this just even last year where we had our pipeline bronze and drops. Our community came to us and said, "No, no, we want them now." and we were able to launch them 6 months later. So we pulled them up a full at least a year from where our original slate of launch was based on the level of volume we heard from a consumer standpoint. And so we'll continue to see us follow that approach of if we see our community particularly spike in a particular area, our ability to move around the innovation time line to be able to take advantage of the interest in that item, which is exactly what we're doing right now in FY '27 where we're bringing additional innovation.

Okay. I'll put some of this in the context of your '27 outlook because the pricing machinations that we're talking through that you're working through some of the incremental innovation as well as what's going on in the commodity cost market, inflationary pressures. Those are not explicitly embedded in the '27 outlook. So I guess 2 questions. How are you managing through that uncertainty? And then, I guess, how would you like investors to be thinking through those same variables?

Yes. So I'll start with the second one first. If you look at our overall philosophy on guidance, our initial guidance has always been the floor. So if you look over the last 7 years, I think we've outdelivered the net sales guidance by something like 1,500 basis points adjusted EBITDA guidance is probably about the same amount. So when we put our guidance, our initial guidance, it's something that we're incredibly confident of regardless of what we've said is embedded in or not, like we it's just our approach. And you can look over 29 quarters, our overall approach of pretty conservative. We take it one quarter at a time. and we're focused on the long term. So the other thing I would tell because I always get a little perplexed when I hear people like, hey, what's the gross margin impact of price discovery you're doing. And first, I started answering the question by saying like, well, it's not across the entire line. It's certain items. And the elasticity is a key part of what we're looking for. But the bigger thing, which I think everyone seems to forget is we're set to receive $58.5 million of tariffs that we paid last year. And we've already started receiving some of the tariffs. So we're going to get $58.5 million that is also not in our guidance, which will more than pay for or will certainly pay for any of the activities we're doing to drive stronger unit growth. So if I think of the price discovery we have if I think of inflationary prices. And we're not as exposed as some other companies are to oil prices. But the inflation that we may see there, if I think of the innovation and any incremental support we put behind innovation, we anticipate to use the $58.5 million. It's really a onetime thing. We had a onetime tariff piece that we paid that -- shouldn't have been paid in prior years. We get to refund this year. It gives the ability to really drive stronger unit growth. And so the way to look at that for investors is our ability to take that tariff refund and invest in our community and our consumer to drive even stronger unit growth. We feel will set us up even better for the longer term. And so any of the noise on what price discovery doing, what level of inflation, anything else there is pales in comparison those tariffs. And it gives us a great deal of optionality as we navigate this year in terms of really being able to have that dry powder to be able to do...

Yes. It's an important point because there has been uncertainty questions as to the likelihood of receiving that. So you are receiving some and you have high confidence?

We've already received some, and we do have high confidence. I mean it was very clear. We were early in line in terms of kind of seeking it. And so now like many companies, we have no schedule. We have no certainty of kind of what cadence will it come in because I know I'll get 100 questions afterwards. So okay, well, now that you've got when are you going to get your next payments? And we don't know that. We just know that we are not only in queue, but we've actually already started.

Very good received. So very good. One key aspect of the growth story we alluded to earlier, but we really haven't talked about is international. And it's international across now multiple brands. I guess, maybe, there are a couple of markets that have been topical, the U.K. and Germany because there's been some volatility there, maybe an update on where we are in those particular markets and then just more broadly how you're thinking about and prioritizing the international opportunity, not only in '27, but over the next several years.

So stepping back, international is a massive opportunity for us. Only 20% of our business comes outside the U.S. so still, I mean, relative to our peers that have about 70% of the business outside the U.S. So we have a long way to go, primarily a U.S. company that's now starting to expand. If you look at our business, maybe I'll step back even further, start with the cosmetics category. If you look at cosmetics overall, the #1 player in cosmetics, is L'Oreal brand that has $5 billion of global retail sales, but they do that out of 120 countries. If you look at the e.l.f. brand, we have about $2 billion of global retail sales, and we do that out of 16 countries. So it shows you the power that we have in terms of long term as we continue to expand our portfolio, what we can do that's just on e.l.f., we believe we have a massive opportunity in e.l.f. SKIN, Naturium and rhode. We already talked the rhode one, Naturium is another brands that we see a lot of opportunity. In terms of the biggest countries we're in right now, there are really 4 countries that our big countries. The U.S. Canada, the U.K. and Germany. And I would say in the U.K. and Germany, we did have some challenges last year. In the U.K., we saw a more promotional environment -- and in Germany, we were lapping our massive launch in Rossmann in Germany the year before. The good news is coming out of Q4, we saw a major progress in both markets. the U.K. went from negative to positive trends. We continue to build week after week in the U.K. and Germany, again, has gone quite positive, particularly as we've launched into DM as overall market. And the reason why both of them have inflected positive is we now have more than 70% ACV coverage in both markets. So we're able to put the full e.l.f. model on. It's been actually quite a while since we had any awareness advertising in either the U.K. or Germany. As soon as we've put on a little support from an awareness standpoint, we saw almost immediate results in the business in both countries. And so we feel good about the model we have, particularly as we build up ACV coverage. At the same time, you'll continue to see us seed new markets. And you'll see us seed new markets really in 2 ways but one of our strategies is win with the winners. So I already talked about Sephora and our plans not only on rhode with Sephora, but also with Naturium, e.l.f. Cosmetics, and had two of the best launches in Sephora last year with Sephora in Mexico, Sephora in the GCC. We see further opportunity with Sephora. Sephora is certainly an opportunity for us to continue to strengthen that relationship globally over time. Second is we've seen real tremendous progress with Amazon, TikTok Shop in the U.S., and we see there's greater global potential with those platforms as well. We're one of the fastest-growing brands or our portfolio of brands amongst the fastest growing on Amazon, TikTok Shop plays well into the strength that we have on social. So if I think of connected commerce, the strength we have in social directly translates in terms of what we're able to do there. So one is continuing to follow areas of where we have advantage, whether it be Sephora, whether it be Amazon, TikTok Shop. And the second is a disciplined approach country by country. And it will vary by brand in terms of how we are able to do that. We do have a team in London that is responsible for the EMEA region. We have opportunities in other parts of the world, but it's the same disciplined sequencing that we've done. Even if you look within the U.S. of how we went from Target. It's probably like 5, 6 years before went to another customer in Walmart a couple of years before we went into Ulta and continue to expand from there, the same is true internationally. It's still a massive opportunity and still a tremendous amount of white space.

Great. Just a couple of minutes left. And I guess both a financial capital allocation type question, but also just a strategic question on the portfolio. We talked through e.l.f. Cosmetics, e.l.f. SKIN, we haven't talked about much about Naturium, but it's there, plus rhode. So you have lots of opportunities across those 4 core categories today. At what point again, both financially and strategically, would a fifth brand makes sense. How -- on your rank order of importance? How much time are you thinking of spending on...

I'd say, look, the primary focus for us is realize the organic growth we have within our existing portfolio. We just a tremendous opportunity. And since we didn't talk much about Naturium. I did mention it was the fastest-growing skin care brand amongst the top 50 in the U.S. We've expanded the footprint of Naturium into Ulta Beauty into Shoppers Drug Mart Boots. Sephora in Australia and New Zealand. There's much further expansion. We just most recently took it into Walmart, have a massive opportunity there. So I'd say the #1 focus is realize the potential of our existing portfolio. As I mentioned earlier, we have an exceptionally high bar for M&A. If we saw another Naturium and rhode, which are incredibly rare, we would acquire them. We have a very strong balance sheet as we go through and particularly given our acquisition approach, where we bringing in an entire team enhance that team and our ability to go there. So I would say the first priority from a capital allocation is investing behind our brands, looking at strategic extensions where they make sense, second. But we also will take advantage. We have -- in this -- in the last few weeks, we purchased another $50 million of stock when we see a disconnect between the stock price and the fundamentals both with what we've delivered as well as the white space we have, we took advantage of that. So we've now -- I think we had a $0.5 billion authorization. I think we've gone through about $150 million. So we still have $350 million left in terms of capacity to continue to kind of repurchase as we see that first priority is clearly on our brands, but we will take advantage, particularly in times like this where we just -- the fundamentals the stock price doesn't reflect the fundamentals and particularly the future that we have.

So with that in mind, any closing thoughts, what should investors be most focused on as they think about investing in that in e.l.f. to get the stock price higher?

Well, I'd say two things. One is focus on the consistency of the performance over time. It's so easy to get trapped in current consumer sentiment or where things are and the core durable areas of competitive advantage we have. And then the second thing is the white space we have ahead of us. I'm more excited today, and I've been CEO more than 12 years than I've ever been in terms of the future potential of this company, given the strength of the portfolio and how much white space we have.

Fantastic. Tarang, thank you so much. Thank you all for joining us, and enjoy the remainder of the conference.