e.l.f. Beauty’s CFO on how the makeup brand converted Gen Z—and is now aiming for Gen X

When I first talked with e.l.f. Beauty CFO Mandy Fields this year, the cosmetics company was at 16 consecutive quarters of net sales growth. The favorite brand of Gen Zers (and award-winning actress Jennifer Coolidge) just notched 19 quarters. 

“Not only is it net sales growth that we’re seeing, but we’re also seeing our profitability increase,” Fields tells me. “Our adjusted EBITDA was up 122% versus last year.”

I sat down with Fields on Wednesday before e.l.f. Beauty reported earnings for the three months ending Sept. 30. Net sales increased 76% year over year to $215.5 million, beating Wall Street’s expectations. In the previous quarter, sales were also up 76%. The brand has continually outperformed the market this year. UBS analyst Peter Grom rates ELF with a Buy with a price target of $138.

When e.l.f. began, its products were only sold online, and the company still sells directly to consumers on its digital channel. In the latest quarter, digital consumption trends were up 75% year over year. Loyalty program members drove almost 80% of sales on elfcosmetics.com. Target and Walmart are the company’s two largest mass retail customers. 

So what’s in e.l.f. Beauty’s secret sauce for growth? A mix of quality products, competitive prices, marketing, and innovation, according to Fields. 

Regarding prices, “We’re at $6 on average versus $9 for others in the mass space or higher, and then when you compare to prestige [cosmetics] they’re over $20 on average,” Fields says. “e.l.f. still is a sweet spot of the value proposition, but also the quality that our community is looking for. If consumers have to pull back on spending, I feel that e.l.f. is well-positioned.”

Tiktok-popular e.l.f. remains the No. 1 cosmetics brand for Gen Zers, increasing 13 points year over year to 29% for female teens, according to Piper Sandler’s survey for fall 2023.

“In the quarter, we had some really exciting things from a marketing standpoint,” Fields says. For example, the company aired its first-ever television commercial in February during Super Bowl LVII featuring Coolidge’s comical take on e.l.f. ‘s popular Power Grip Primer. 

That inspired a collaboration with the actress. “We did a Dirty Pillows Lip Kit with Jennifer Coolidge, and that sold out in two hours,” Fields says. “It was so popular people went crazy for it.”

She continues, “Kory Marchisotto, our CMO, and her team, they just come up with the craziest ideas and I love them for it.” But e.l.f. also has the infrastructure to execute quickly: “Our time to market is about 24 weeks, on average,” she says. “And we can even be faster than that—13 weeks in some instances.” 

Brand awareness in the U.S. has doubled from 13% in 2020 to 26% in 2023, according to the company.

“I think that’s really attributed to not only penetrating further with Gen Z, but also with millennials and Gen X, bringing them into e.l.f. as well,” Fields says. “Expanding to other demographics is why we leverage partnerships like with Jennifer Coolidge.” 

e.l.f. Beauty’s updated outlook for fiscal 2024 reflects an expected 55-57% year-over-year increase in net sales, as compared to an expected 37-39% increase previously. The company’s organic growth will account for 39%-48% of the growth, and the acquisition of Naturium—a skincare brand they acquired for $355 million—will get the company to 57%.

As CFO, Fields not only knows all about e.l.f’s products, she uses them. What’s her favorite? “O Face lipstick; we launched that about six months ago,” she says.

Sheryl Estrada
sheryl.estrada@fortune.com

*An upcoming event: Fortune’s CFO Collaborative is an invitation-only group of CFOs from leading companies, which meets virtually and in person for deep-dive discussions on what is top of mind for finance leaders. Next month, our conversation will focus on “What will the CFO role look like in 2024?” In this intimate dinner discussion scheduled for November 9 in Boston, Mass., hosted in partnership with Workday and Deloitte, we will explore the evolving role and scope of the CFO. We will be joined by Alan Murray, CEO of Fortune, and Andrew McAfee, codirector of the MIT Initiative on the Digital Economy, and a principal research scientist at the MIT Sloan School of Management.

It’s an invite-only event, but CFOs can apply to attend here. If you’d like more information, please send an email to: CFOCollaborative@Fortune.com

Leaderboard

Jamie Miller was named EVP and CFO of PayPal (Nasdaq: PYPL), effective Nov. 6.  Miller will succeed Gabrielle Rabinovitch, who is currently acting CFO.  Miller most recently served as global CFO of EY, having joined to lead the separation and IPO of its strategy, tax, and consulting business. Between June 2021 and January 2023, she served as CFO of Cargill. Before Cargill, Miller spent 12 years at General Electric, serving most recently as SVP and CFO. 

Beth Howe was named EVP and CFO at SiTime Corporation (Nasdaq: SITM), the precision timing company, effective Nov. 8. Art Chadwick has decided to step down as CFO and retire, effective Nov. 7. Howe has more than 25 years of experience in the technology industry. During her 17 years at HP Inc., she held numerous finance roles, most recently serving as HP’s chief audit executive. 

Big deal

Qualtrics has released its annual Employee Experience Trends report. The findings are based on a survey of 37,000 employees around the world gauging their experience at work, and preferences in the year ahead. One of the key findings is  employees expect AI tools to optimize their productivity and allow them to focus on work they feel energized by, and to delegate tasks—of their choosing—to machines that can handle them more efficiently, according to the report.

For example, 61% said they'd be comfortable with AI completing writing tasks, as a personal assistant (51%), and for internal workplace queries (46%). 

Another key finding is in 2024, the driving forces behind engagement will include meeting career goals and learning and development, which address employees’ ongoing desire for growth, according to Qualtrics.

Going deeper

Trading Decisions Are Observable in the Eyes of Buyers and Sellers, in Wharton's business journal, highlights an article on a new collaborative study by Wharton's Michael Platt. The research models how the decision-making process unfolds in the brains of buyers and sellers considering a deal.

Overheard

“Some may declare we are in a post-ESG world, but this is wrong. We can change the verbiage and acronyms, but the principles are still the same. Impediments to diversity and inclusion and ESG goals remain an existential threat to our businesses, and even to civilization.”

—Anton Vincent, president of Mars Wrigley North America, and Cid Wilson, president and CEO of the Hispanic Association on Corporate Responsibility, write in a Fortune opinion piece based on a discussion among CEO members during this year’s CEO Initiative Annual Meeting in Washington, D.C. The authors are CEOI members.