elf Beauty Inc (ELF): a bottom-up channel model supporting long-term growth forecasts

By combining Nielsen, Euromonitor e-commerce data, and company disclosures, we developed a bottoms up model to provide investors with a more granular framework for forecasting e.l.f.'s long term growth. The model captures distribution channel dynamics across mass, beauty specialty, Amazon, and DTC. It also incorporates retail-to-net sales conversion assumptions to bridge retail sales and reported sales. Retail sales reflect consumer demand and are tracked by our data sources, while net sales represent e.l.f.'s reported revenue after retailer margins. Based on our analysis, we are increasingly confident that e.l.f. can sustain company level DDG even if the core makeup category moderates to LSD growth. The company's operating model has acted and will continue to act as a platform to sustain organic growth, as proven with ELF Skin and now ELF Haircare, and inorganic growth, as proven with Naturium and Rhode. Looking ahead, we expect skincare, Rhode, and international expansion to be the c