Thank you for joining us today to discuss e.l.f. Beauty's first quarter fiscal 2022 results. I'm KC Katten, Vice President of Corporate Development and Investor Relations. With me today are Tarang Amin, Chairman and Chief Executive Officer, and Mandy Fields, Senior Vice President and Chief Financial Officer. We encourage you to tune into our webcast presentation for the best viewing experience, which you can access on our website at investor.elfbeauty.com. Since many of our remarks today contain forward-looking statements, please refer to our earnings release and reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward-looking statements. In addition, the company's presentation today includes information presented on a non-GAAP basis. Our earnings release contains reconciliations of the differences between the non-GAAP presentation and the most directly comparable GAAP measure. With that, let me turn the webcast over to Tarang. Thank you, KC, and good afternoon, everyone. Today, we will discuss the drivers of our Q1 results, as well as our raised outlook for fiscal 2022. I want to start by recognizing our e.l.f. Beauty team. We delivered Q1 results well ahead of our expectations, with Q1 net sales of $97 million, up 50% versus year ago. Q1 marked our 10th consecutive quarter of net sales growth and our largest net sales quarter ever. We delivered adjusted EBITDA of $22 million, up 40% versus year ago. Color cosmetics category trends are inflecting positively, fueled by pent-up demand, stimulus money, and easing COVID restrictions. The category grew in June above 2019 pre-pandemic levels for the first time this year. We're outperforming our competitors in this backdrop, underscoring the strength of the e.l.f. business model. Our products are resonating and our digitally led strategy, core value proposition, and ability to adapt at e.l.f. speed continue to fuel our performance. In Q1, e.l.f. was the only top five color cosmetics brand to post retail sales growth above 2019 levels. e.l.f. continued to gain market share, with 5.5% of the category, up 20 basis points year-over-year. e.l.f. was the only top five color cosmetics brand to grow share above pre-pandemic levels by a wide margin. We are progressing to a multi-brand portfolio. In Q1, recharge packaging for Well People hit shelves, and we expanded our product offerings for Keys Soulcare. We feel great about the progress we're making across the portfolio, and particularly the early wins we're seeing with Well People and Keys Soulcare as we build awareness behind these brands. With the momentum across our portfolio, we're raising our full- year guidance, which Mandy will discuss shortly. Our relentless focus on our five strategic imperatives is driving results. Let me provide a few highlights from the quarter. Our first strategic imperative is to drive brand demand. e.l.f. Cosmetics has nearly 12 million followers across our digital ecosystem, growing double digits year-over-year. We recently completed our annual Nielsen marketing mix analysis and again saw strong ROI results for our marketing investments, giving us further confidence that our marketing and digital initiatives are driving profitable sales. We see this as a time to lean into our strengths, and we've decided to strategically invest more behind our brand momentum at an expected rate of 15%-17% of net sales. We continue to find innovative ways to engage and entertain our community, moving far beyond traditional beauty boundaries. We're pushing further into gaming, which resonates strongly with our young, diverse community. In a social survey, over 70% of e.l.f. fans responded that they play video games, and 65% like to watch gamers play on platforms like Twitch and YouTube. We were the first major beauty company to launch a branded channel on Twitch named e.l.f. You, centered around the concept of Game Up, or the intersection between gaming and makeup. We also partnered with TikTok and Enthusiast Gaming to launch the TikTok Gamers Got Talent contest. We far exceeded the challenge benchmarks that we set in terms of engagement rates, video creations, and average watch time per person. The TikTok Gamers Got Talent hashtag generated nearly 17 billion views. We're disrupting the digital space as we continue to test and learn on new frontiers. We created crypto cosmetics and launched a series of non-fungible tokens, or as we call them, Ne.l.f.Ts. Three of e.l.f.'s beloved Holy Grail products, our Poreless Putty Primer, 16HR Camo Concealer, and Ride or Die Lip Balm, were dipped in digital gold and went 100% crypto. In true e.l.f. speed, our nine limited edition Ne.l.f.Ts sold out in just nine minutes. e.l.f. was the first beauty brand on Wattpad, the world's largest social storytelling platform. Our #EyesLipsFierceWriteathonChallenge asked users to share original stories of women in their lives who inspired them to be strong, smart, and fierce. Our challenge generated the largest number of entries of any female-targeted campaign to date on the platform. We teamed up with Snapchat to test the platform's new augmented reality lenses. These new AR lenses provide consumers with unique makeup try-on experiences for nearly 800 of our SKUs. We're already seeing Snapchatters engage with our products in new and meaningful ways. Our brand-building efforts continue to win awards. In Kyra's recent Gen Z State of Beauty report, e.l.f. Cosmetics ranked as the number two favorite beauty brand in 2021, up from number nine in 2019, reflecting our growing appeal with Gen Z. We won two Cannes Lions, the global benchmark for creative excellence, in recognition of our #eyeslipsface campaign and our e.l.f.-Chipotle collaboration. Business Insider named Kory Marchisotto and e.l.f. board member Kenny Mitchell as two of the most innovative CMOs in the world, putting e.l.f. in admirable company with leaders from Chipotle, TikTok, Sephora, and Lego. Congratulations, Kory, Kenny, and our entire marketing team. Keys Soulcare, our groundbreaking lifestyle beauty brand with Alicia Keys, is already being recognized as both timely and timeless. We garnered 6 billion global press impressions in the last quarter alone. Alicia is proud, passionate, and committed. She was featured on the cover of five highly coveted publications around the globe promoting Keys Soulcare and our product offerings with in-depth multi-page features. In addition, Alicia supports Keys Soulcare across her social channels. Her post about our new body care offerings generated over 11 million views. Turning to Well People, our pioneering clean beauty brand known for its dermatologist-developed, plant-powered, and high-performance products. The brand turned 13 in June, and we were thrilled to celebrate with a new look, new and improved formulas, and new products. This quarter, we rolled out new packaging, which is resulting in improved click-through rates on our paid media. The brand is shining across top-tier media outlets, ranking number one in share of voice of press impressions against its competitive set. We feel great about Well People, and we are encouraged by the stronger sales trends we're seeing. Our second strategic imperative is a major step up in digital. Our digitally-led strategy continues to serve us well. With our digital consumption trends up triple digits on a two-year stack basis relative to 2019 or pre-pandemic levels. We did see a channel shift between digital and brick-and-mortar in Q1, in line with our expectations, as consumers gained comfort returning to stores and as we lap periods last year where certain retailer doors were closed. Digital channels drove 13% of our total business in Q1, as compared to 19% a year ago and 8% two years ago. On elfcosmetics.com, over 50% of our shoppers in Q1 were new consumers. Our new consumers continue to over-index on skincare and sign-ups for our Beauty Squad loyalty program. Beauty Squad now has nearly 2.6 million members, up over 30% year-over-year. Our loyalty members are a highly valuable part of our digital ecosystem. They have higher order values, purchase more frequently, have stronger retention rates, and drive almost 70% of our sales on elfcosmetics.com. We're excited to announce that we launched our global Keys Soulcare loyalty program in May called Soulcare Rewards. Our rewards page is already one of the top-clicked pages on our mobile site, and reward members are making up an increasing% of our sales on keysoulcare.com. Our third strategic imperative is to lead innovation. Our superpowers that center on our ability to deliver 100% cruelty-free, premium quality beauty products at accessible price points with broad appeal continue to resonate with consumers. e.l.f. Cosmetics saw ongoing success this quarter in our core segments: brushes, primers, concealers, brows, and sponges, which make up approximately half our sales. We have the number one or two position in all five segments and continue to drive market share gains in each. Importantly, we're innovating to build upon our core franchises and deliver newness for consumers. In Q1, we launched our Acne Fighting Putty Primer and our Putty Bronzer, building on the success of our Putty Primer franchise. The consumer response has been phenomenal. Our Acne Fighting Putty Primer is our best-selling SKU on elfcosmetics.com since launch, and our Putty Bronzer is getting rave reviews on TikTok in its first few weeks. We also launched a limited edition Electric Mood collection, which we developed with our annual Beautyscape competition winners. Inspired by three musical artists, including Grammy-nominated global superstar Tove Lo, our Electric Mood collection is exclusively available at elfcosmetics.com and with Target. Skincare remains a major focus across our brand portfolio, and we're encouraged by the marketing strategy and innovation pipeline we have planned for e.l.f. SKIN. In Q1, we launched our Holy Hydration! Face Cream with SPF 30, adding SPF protection to our best-selling face cream. This product is clearly resonating with consumers and is our best-selling skincare SKU since its launch. Keys Soulcare further fuels our momentum and overall product range in this category. Consumers are highlighting the quality of the brand's initial skincare collection with admirable product ratings of 4.9 out of 5 on keysoulcare.com. We also recently launched new Keys Soulcare starter sets to encourage trial for new consumers. Looking beyond skincare, we remain excited about the multi-year, multi-category innovation pipeline we have planned for this brand. In Q1, we expanded our product offerings into a new category, body care, with three new offerings that align with the brand's commitment to restorative rituals. The new body care offerings celebrate the strength and beauty of the body while reinforcing body positivity. The campaign includes individuals of varied shapes, sizes, interests, and points of view, and asks light workers to share their views on how they let go of labels and make time for self-celebrations. [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] Our fourth strategic imperative is driving productivity and space expansion with our retail partners. With e.l.f. Cosmetics, we continue to see shelf space opportunity with our key retailers. To that end, we are pleased to announce that we have earned space expansion with CVS for fall 2021 and Walmart for spring 2022 in a subset of each of their doors. Internationally, which represents major white space, we are also pleased to announce that we are expanding our shelf space with Boots in the U.K. for spring 2022. Keys Soulcare is elevating and accelerating our global retail strategy. We have launched a brand in 10 countries to date with three major retail partners. In the U.S. with Ulta Beauty, in the U.K. with Cult Beauty, and in eight countries across Western Europe with Douglas. We recently launched with our fourth major retail partner, Harrods in the U.K. Keys Soulcare launched online at harrods.com in June, and in H Beauty retail stores in July. Keys Soulcare continues to open new doors for our brand portfolio internationally, and we remain excited about the global potential we see for this brand. We're also pleased to announce space expansion we've secured for Well People by leveraging our strong relationships with our retail partners. Ulta Beauty will be featuring the brand via in-line space in a subset of their doors starting in spring 2022. This marks the brand's first in-line placement at Ulta Beauty stores after being featured on a limited edition end cap as part of Ulta's Conscious Beauty program. Well People continues to raise the standard for high-performance, plant-powered clean beauty. Our fifth strategic imperative is delivering cost savings to help fuel brand investments. As we spoke about last quarter, and like many companies, we're seeing a global imbalance of containers, which is slowing some of our shipments and increasing our transportation costs. I'm incredibly proud of the e.l.f. Beauty team for how we've navigated these logistics. Even with the container capacity issues we're seeing, we've been able to maintain approximately 95% in-stock levels with our key retail partners. As we look forward and to ensure we're prioritizing our core business and meeting the ongoing strength in consumer demand, we've decided to forego our 2021 holiday program, a limited edition collection of gift sets. The impact is embedded in our raised guidance and further reflects our core business strength. We remain confident in our ability to navigate these global supply chain challenges and believe that our supply chain is a competitive advantage that enables us to deliver the best combination of cost, quality, and speed. Before I turn the call over to Mandy, let me provide a bit more perspective on the overall strategic framework of our company and brands. We lead with purpose. By standing with every eye, lip, face, and paw, we are committed to operating in a sustainable manner and being a responsible corporate citizen for the benefit of our consumers, our investors, our team, the environment, and the communities in which we live and work. In fact, Fortune recently named e.l.f. Beauty as one of the best workplaces in 2021. In Q1, we launched a new social impact section of our e.l.f. Beauty website to enhance our ESG policies and disclosures with enthusiastic support from business leaders throughout the company, as well as our board of directors. We look forward to continuing to share our progress on our ESG journey. Our company was founded 17 years ago with a mission to make the best of beauty accessible to every eye, lip, and face. Underpinned by the foundational work behind our five strategic imperatives, the strength of the e.l.f. Cosmetics brand has allowed us to expand our portfolio with strategic extensions that support our purpose and values. Today, we have a portfolio of complementary but distinct brands, with each positioned to touch diverse consumer cohorts at different price points. Looking ahead, we believe we're still in the early stages of realizing the full potential of our business and see significant opportunity in fiscal 2022 and beyond. I believe we're well-positioned to drive growth in both the top and bottom line, as reflected in our raised guidance. I'll now turn the call over to Mandy. Thank you, Tarang. I am pleased to share the highlights of our outstanding first quarter results and our raised fiscal 2022 outlook. We delivered Q1 net sales growth of 50% versus prior year, driven by ongoing momentum across our brand portfolio, better fulfillment rates than we expected, and benefits from stimulus-related spending. We also saw an improvement in our performance at Ulta and internationally, particularly as we lapped periods of store closures from a year ago. Gross margin of 64% was down approximately 340 basis points compared to prior year. We saw gross margin benefits from margin-accretive innovation and cost savings. We also implemented price increases on a subset of our SKUs this quarter, mainly internationally. Gross margin benefits were more than offset by changing FX rates and elevated transportation costs as we worked to navigate the global container imbalance. The year-over-year change in channel mix also impacted gross margin as consumers shifted from e-commerce to brick-and-mortar. On an adjusted basis, SG&A as a percentage of sales was 47%, compared to 51% last year. Our increased investment behind marketing and digital was more than offset by leverage in our non-marketing-related spend from the combination of better-than-expected top-line trends. Taking a sharper look at our expenses. Marketing and digital investment for the quarter was approximately 16% of net sales versus 11% a year ago. Q1 adjusted EBITDA was $22 million, up 40% versus last year, and adjusted EBITDA margin was approximately 22% of net sales. Adjusted net income was $14 million, or $0.27 per diluted share, compared to $9 million, or $0.17 per diluted share a year ago. Our liquidity remains strong, with the combination of our cash balance and access to our revolving credit facility sitting at over $130 million. We ended the quarter with $63 million in cash on hand, compared to a cash balance of $54 million a year ago. Our ending inventory balance was relatively in line with last year and will build as we approach September. We expect to increase our inventory levels to approximately $75 million-$80 million, driven by longer lead times, higher transportation costs, the addition of Keys Soulcare and Well People, and continued business momentum. We expect our cash priorities for the coming year to remain focused on investing behind our five strategic imperatives and supporting our strategic extensions. Let's turn to our outlook for fiscal 2022. As Tarang discussed, our investments are working, and our momentum and category outperformance is strong, as demonstrated by the 50% net sales growth we delivered in Q1. Our recently completed annual Nielsen marketing mix analysis again showed strong ROI, giving us further confidence that our marketing and digital initiatives are driving profitable sales and indicating an opportunity to invest more behind our brands. As a result, we made a proactive decision to invest behind our strength and take our marketing spend up to approximately 15%-17% of net sales for fiscal 2022, as compared to our expectation for 14%-16% previously. This increased investment, coupled with modest pipeline from space gains, as well as our expectations for continued business momentum, is supporting our significantly increased top-line outlook. We now expect net sales growth of approximately 12%-14% versus fiscal 2021, up from 8%-10% previously. We expect adjusted EBITDA between $66.5 million-$68 million, up from $66 million-$67.5 million previously. Adjusted net income between $36 million-$37.5 million, up from $35 million-$36.8 million previously. Adjusted EPS of $0.65-$0.68 per diluted share, up from $0.64-$0.67 previously. We still expect a fully diluted share count of approximately 55 million shares and our fiscal 2022 tax rate to be approximately 24%-25%. Let me provide you with a little more color on our planning assumptions for fiscal 2022. First, on our decision to forgo our 2021 holiday program. As Tarang mentioned, we made this decision to ensure we're prioritizing container space for our core business. This is expected to result in an approximately $6 million reduction to net sales, largely in Q3. The elimination of our holiday program will impact our Nielsen results during the Thanksgiving through New Year's timeframe. The good news is that we still plan to have some holiday-themed deluxe kits, although in smaller quantities than our traditional holiday program, and we plan to have creative marketing around holiday to keep up our consumer engagement. We remain confident in our ability to navigate these global supply chain challenges and meet our ongoing strength in consumer demand as reflected in our raised guidance. Second, on adjusted EBITDA. Our guidance now implies 9%-11% year-over-year growth in adjusted EBITDA. Relative to our previous guidance, we do expect some incremental margin pressure from the combination of increased marketing spend, as well as costs associated with the space expansion we spoke about. Outside of these factors, our underlying assumptions are largely unchanged. We continue to expect gross margin to be down year-over-year as we face growing FX headwinds and rising material and transportation costs. As we've discussed previously, we are pulling levers to help mitigate a portion of these gross margin impacts, including through select price increases and cost savings initiatives. Within SG&A, we continue to expect leverage on our non-marketing SG&A spend, both as we take a sharper look at our key areas of spend and as we start to scale the Keys Soulcare and Well People brands. As a reminder, fiscal 2022 will be the first year within our three-year long-term economic model, which targets compounded annual top-line growth in the mid to high single digits with adjusted EBITDA growth outpacing net sales growth over that horizon. We're pleased to be targeting top-line growth well above that range this year. Against the backdrop of global cost pressures and our desire to invest more in marketing, we still anticipate healthy adjusted EBITDA growth in fiscal 2022, and remain focused on expanding our adjusted EBITDA margins over the next three years. In summary, we're pleased with our outstanding Q1 results and are excited about the opportunities ahead in fiscal 2022. Our performance over the last 10 quarters, both on an absolute basis and relative to the category, demonstrates how our five strategic imperatives are driving results, and gives me confidence for the future. With that, operator, you may open the call to questions. We will now begin the question-and-answer session. To ask a question, press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, press star then two. This time, we will pause momentarily to assemble our roster. The first question comes from Erinn Murphy with Piper Sandler. Please go ahead. Great. Thanks. Good afternoon. Congratulations on a very solid quarter. I guess my first question, Tarang, is for you. On the color cosmetics category broadly, it seems like it's had a little bit of traction of late. Can you just share how you're thinking about the sustainability of the category as we move forward? Have you seen anything as it relates to the Delta variant and some of the concerns domestically, certain markets starting to wear masks again? Has that impacted any of the recovery in this category? Hi, Erinn. Well, we remain quite bullish on the color cosmetics category. As we talked, June was the first month in track data that we saw the category above 2019 levels. We've seen a pretty good inflection, and I think that's reflective of consumers' pent-up demand for this category, stimulus, easing of restrictions. I'd say overall, we're quite bullish on the category going forward. In terms of the Delta variant and any additional restrictions, it's hard for us to tease that out. I think in the backdrop of higher consumer demand, as well as stepped up innovation, not only from us, but also from some of our competitors, we're liking the trends that we're seeing across each of the core categories within color cosmetics. Operator, we can go to the next question. Okay. The next question is from Andrea Teixeira with JPMorgan. Please go ahead. Yes, thank you. Good afternoon. I'm going to echo the congratulations for the quarter and also to Kory for I'm not surprised, but I'm still impressed with her awards. I just want to go back to the guide, and I think, Mandy, you mentioned, obviously, you're accelerating, but that means that after this 50% growth that you had in the first quarter, can you walk us through what is informing you into the deceleration? Of course, I understand that you're still facing a lot of supply chain issues, and I think we all understood very well through the CPG earnings season that this is real. Is there anything else that you want to highlight that you're seeing in terms of? I think your answer to Erinn's question is no, you're not seeing any deceleration, and I think the momentum that you've built in increasing, I was just checking. I think you've increased 500 basis points as a percentage of sales in your marketing investment year-over-year, and you're building to 100 basis points higher than you had before. What is informing you? Then on the same metric, why not taking more pricing to defend profitability, let it flow a little bit more into the bottom line? Okay. All right, Andrea. Nice to hear from you. There's quite a few questions in there. Let me just start with where we are in Q1. Q1 was a fantastic quarter for us, up 50% net sales growth. A lot of the drivers that we saw in Q1, one, core momentum behind the e.l.f. brand. We continued to see strong trends on the brand. That was fantastic. We also had better fulfillment rates this quarter than we originally expected, which helped us to get to that 50% net sales growth. We also had the impact of stimulus. If you recall, we talked about in Q4. We saw that trickle over into Q1. This third round of stimulus was by far the largest that we've seen from an impact standpoint. We also had improved trends at Ulta and internationally, especially as we lapped those periods of store closures last year. That's really Q1 overall. In terms of top line and the outlook, we really expect those trends to continue on the e.l.f. business. Top-line momentum, we continue to see. We are increasing our marketing investment, to your point, and we have seen strong ROI associated with that. That's also implied in that guidance. As well as pipeline associated with the space gains that we called out. All of those things are impacting the top line. From an EBITDA standpoint, we are seeing the margins, a little bit of compression there, and it's because we are investing behind our marketing and digital. We took our marketing and digital range up to 15%-17%, from 14%-16% previously. As you mentioned, the cost pressures that we see with ocean cost and in the supply chain, that also is embedded within our guidance as well, as well as cost associated with some of those base gains that we mentioned. On your question on pricing, Andrea, this is a brand that does have pricing power. We successfully executed our largest price increase ever in 2019. We followed that up with another round of more modest price increases more recently in the U.S., but a pretty big price increase internationally that was implemented really in the May timeframe. We feel good about our ability to price. The reason why we don't want to price right now any further is we see some of the cost headwinds that we're seeing as temporal in nature. The imbalance of containers, we feel, will balance out over time. We saw a good increase in the availability of containers as the quarter progressed, and over time, we would expect those costs to also moderate. We don't necessarily want to get ahead of us on pricing, but if we saw that some of these costs would be more permanent in nature, then we certainly could use pricing as a lever. Thank you. I'll pass it on. The next question comes from Steph Wissink with Jefferies. Please go ahead. Hi, this is Grace Menk on for Steph. Thanks for taking my question. I wanted to kind of double-click on the Keys Soulcare kind of strength that you're seeing. Could you talk a little bit about the contribution in the period and then how we should think about it as we look out over the fiscal year? Sure. Hi. We're not breaking out Keys Soulcare, so we're not breaking out any of our individual brands. What I can tell you is we're quite pleased with the progress we're making on Keys Soulcare, particularly in the areas of consumer engagement and Alicia's own engagement in the brand. We talked about every time she posts, every time she does something, we see really great consumer response. In addition, we're really pleased with the execution we've had amongst our retail partners. The total store takeover we had at Ulta Beauty as a brand has started rolling out in Douglas across eight countries in Europe. That rollout was delayed somewhat by some of the COVID restrictions in Europe, but we're feeling good now that it's starting to roll out. Our latest execution in Harrods with H Beauty, the brand is really showing up really well and really proud of the execution. I would say the last thing on Keys Soulcare, the way to think about it is we're building a brand for the long term here. This quarter was our first expansion in an adjacent category with the launch of our body care line, the first three items in our body care line that very much tie into the brand ethos on self-love rituals, body positivity, very much builds on what we started with Keys Soulcare, and we have a great pipeline really for the next few years across multiple other categories. Quite encouraged by what we're seeing right now and look forward to updating you more on that as we continue to make progress. Thank you. That's helpful. Then I just want to follow up on inventory levels. Are you seeing that you've kind of been using inventory that was maybe earmarked for later in the year? Is there a way to, you've mentioned some of the measures that you're taking. Can you use domestic suppliers or explore other alternative approaches as well? Just a little bit more detail there would be great. Overall, we feel great about kind of the outlook on inventory and our supply chain overall. I would say that Q1 inventory ended a little bit lower than we would have expected, given that we had a 50% net sales growth quarter. We talked about the build into the September ending quarter, seeing inventory at the $75 million-$80 million. Really, we feel that is where we want to be to support our business. Reflective of the longer lead times, we are seeing some of the higher transportation costs we're seeing, and then, like I said, the continued business momentum and the addition of our brands of Keys and Well embedded into that number. To your question, yes, we are seeing some longer lead times and starting to rebuild our inventory position as we get into the September quarter. For the second part of your question on supply chain, we feel great about our supply chain in terms of the combination of cost, quality, and speed that we're able to deliver. We see it primarily as a transportation issue. We have plenty of capacity from a manufacturing standpoint and our ability to really flex to meet the business need. As the transportation situation gets better, I think we'll be in great shape as we go forward. That makes sense. Thanks, guys. The next question comes from Dara Mohsenian with Morgan Stanley. Please go ahead. Hey, guys. 2Two questions. Just first on the transportation issues. I guess it really didn't seem to impact fiscal Q1 all that much, given you were up 50% year-over-year, and as you mentioned, the fill rates were healthy in the 95% range. I just wanted to understand, are things getting worse potentially post the June quarter? Do you think things are better? In general, the tone sounded more constructive. Just given the growth we saw year-over-year in Q1, it didn't seem to be a big issue for you guys. Just wanted to get a little bit of update in terms of what we should expect going forward on that front. Yeah. Hi, Dara. What I'd say is I'm really proud of the way the team navigated the container imbalance. The stat we use is we're able to maintain 95% customer in-stock levels. Our fulfillment rates were lower than that, but our team was able to make sure, through our penetration and our customer supply chains, that they had the right inventory by item level to be able to maintain strong in-stocks. We have seen more container availability, so we hope to get those fulfillment rates up even further. There'll be a temporary hit to our customer in-stocks as we work through that. Overall, pretty confident in terms of our ability to meet the consumer demand as we navigate through this situation. Okay. Just to follow up on Andrea's question, the balance of year revenue guidance is, it's only about 3%-4% of your midpoint. I guess if you add back the holiday program, it'd be more like mid-single digits. Obviously, it's a pretty big slowdown from what we saw in fiscal Q1 as well as fiscal Q4 and even last year's full fiscal year during COVID. You generally sounded pretty positive about most of the underlying dynamics in the business, and obviously, transportation's a limiting factor, but it doesn't sound like it's prohibitive at this point. I'm just trying to better understand that revenue guidance and the balance of the year, and if there's anything significant besides the holiday program that would really limit revenue growth a lot more than what you've already seen recently. No. The holiday program is the key factor in that. We called out $6 million related to that we are pulling out of our forecast. As well as, we do, as I mentioned earlier, stimulus in the base as well as we get into the back half of the year, Q4, that we're cycling through. Outside of that, we feel confident of our core business momentum, and expect to see that growth continue for the balance of the year. Okay, great. Thank you. The next question comes from Linda Bolton Weiser with D.A. Davidson. Please go ahead. Yes, thank you. You talked about the impact on sales of not doing the holiday program. What would be the effect on mix and gross margin? Are the gift sets actually a little bit lower gross margin? We haven't given specifics on the holiday program and the gross margin impact. I would say just from a mix standpoint, the luxe kits versus Is that what you're asking, luxe kits versus our traditional holiday program? I would say there's not a major difference in that. Yeah. Just adding a little bit more color to that, Linda. The decision of foregoing holiday, we like our annual holiday program, it's a great way of engaging consumers. Holiday kits have a very high cube, so it takes about four containers to get the same amount of product as we can get on one container. Given the strength in our consumer demand, really prioritizing our core SKUs, the luxe kits help us make up for part of that gap. In addition, we will have pretty strong consumer engagement efforts as we've had and stepped up really throughout each of the quarters. We feel we can navigate through it. It'll be a temporary piece, and definitely feel good about the decision to prioritize our base business. Thank you. It's great to hear you talk about getting some additional shelf space in the international markets. How does that, as you grow internationally, how does that affect kind of your margin over time as you get bigger internationally, and how does it affect your need for working capital? On the margin side of things, and I think we've talked about this before, we really look at our business from a margin-agnostic standpoint. Whether that volume's coming from the U.S. or internationally, it's relatively in line with one another. From a cost of capital and a cash flow perspective, there's also not much outside of inventories that we have, that's required behind that. It's very similar to our U.S. business in terms of shelf space expansion and fixturing and things like that. That's just normal course of what we see, even here in our domestic business. Part of the reason why, Linda, is our approach a couple of years ago, where we shifted from distributors to direct selling to key headquarters sales. It was a very efficient model that our team can cover each of these core accounts. As you've seen the progress we've made at Superdrug, Boots, now at Douglas, we feel really good of our ability to be able to service them in an efficient way and quite similar to the way we service Ulta Beauty, Target, Walmart and others. Okay, thanks. Just finally, again, great news about your expanded shelf space in the U.S. What are some of the challenges as you continue to add more and more space at some of the retailers, like Ulta and Walmart, in terms of how do you maintain the high productivity of the shelf space as it grows over time? Yeah, that's inherent in our model. Our model is based on the data that we get off of our e-commerce site. Most of our innovation goes online first. We get really great data, not only in sales, but also customer reviews, level of engagement behind those. We have a good model really stemming back all the way back to 17 years ago, starting as a digital business, where we're able to take those insights, work with our customers, and really proactively decide which items we're going to delete and replace them with. That productivity model has served us well over the years. I would say, we have tremendous space opportunity, really at every single retailer we deal with. While I'm pleased with the space gains we have, we have a lot further to go. I think the one benefit of stepping into space sequentially is we're able to optimize that space better. There are years in the past where we picked up massive amounts of space at a particular customer in a given year, and we found it took us a couple cycles to really grow into that space. I think the types of increments we're getting now in space, it's quite manageable given the extent of our innovation and our pipeline of product. Probably the best example being, if you go into some Target stores. You will have 16-ft to 20-ft sets in some of their doors, and we do extremely well with those. Highly confident of our ability to continue to optimize the space that we continue to gain. Great. Thank you very much. The next question comes from Olivia Tong with Raymond James. Please go ahead. Great, thanks. First, congrats on the quarter. I wanted to talk a little bit about sort of the key drivers of that dramatic top-line acceleration. Was it particular retailers? Because it sounded like all brands were better than you expected. Was it brick- and- mortar versus online, particular subcategories? Just a little bit more detail there would be great. Just thinking about the guide. I understand the supply chain challenges. I understand foregoing some of the holiday plans, but you're also seeing what looks like some very nice retail space expansion wins that should help you later in the year. Just trying to understand sort of the puts and takes there for the rest of the year, and why you sort of net out where you do. Thank you. Hi, Olivia, and thanks for joining us. I would say our Q1 net sales growth drivers, again, are really driven by the core momentum that we're seeing behind the e.l.f. Cosmetics brand. We had better fulfillment rates than we initially expected. We also had the trickle- over impact of stimulus into Q1. We also saw better results at Ulta and internationally, especially as we cycle those store closures in the base. From a shift from e-commerce over to brick-and-mortar. As we have seen the U.S. reopen, we have seen that shift as we expected, consumers going back into the stores, we're still very pleased with our e-commerce performance up triple digits on a two-year basis. To answer your question on balance of your guidance, the space expansion, we did mention that we do have some pipeline associated with the space expansion in there. Since these are spring 2022, you will really see the impact of that as we get into our next fiscal year. You'll just really have the pipeline this year. Right. I'm surprised the pipeline isn't that dramatic, too. Maybe could add a little bit there, but then my other question is around the marketing spend and the decision to increase that by 100 basis point more than you had originally anticipated. First, trying to understand why you decided to do that, especially after a 50% growth quarter. Is there a specific area you really want to push? Obviously, more marketing is great, but just kind of understanding the genesis of the decision to increase that. As I sort of just do quick back-of-the-envelope math, it looks like your EPS guide, or your EBITDA margin guide would suggest about 100 basis points of incremental margin pressure for the rest of the year. Obviously, cost pressures are much higher than that. If you're increasing your marketing by 100 basis points, cost pressures are significantly higher versus your going-in expectations. What's the offset there that I'm not quite sure? Thanks. Yeah. Hi, Olivia. I'll take the first part, and I'll have Mandy answer the second. On marketing, we're just seeing real momentum in the business, and that's been driven by our marketing investments, and we feel great about them. In fact, we recently got our annual Nielsen marketing mix results, showed extremely strong ROI behind our marketing, so we're leaning into our strengths. We see plenty of opportunities for us to continue to drive consumer engagement and fuel the momentum we have. That was a real core driver between that. We just see more opportunities than, frankly, we can invest in, and so we want to make sure that we keep those levels strong. In the first quarter, our marketing and digital investments were about 16% of net sales. Our guidance for the year is 15%-17%, so we're comfortable within that range in terms of our ability to continue to drive very strong consumer engagement. Yep. On the Delta, Olivia, the non-marketing SG&A is really helping to offset the gross margin headwind that we're seeing, as well as a portion of the additional marketing investment that we're putting in. That's driven by top-line momentum driven out of Q1, and then also us taking a sharper look at expenses outside of marketing as we go through. That's also helping on the year. Great. Thanks so much. The next question comes from Oliver Chen with Cowen. Please go ahead. Hi. Thank you. On the skincare category, what are you focused on in terms of innovation and what you're seeing in the marketplace as we look forward and consumer preferences continue to shift rapidly? Regarding marketing, where will the incremental dollars go in terms of what mediums? As you think about the incremental marketing spend, where do you see the most opportunity in terms of KPIs from consumers as you engage in additional marketing spending? Thank you. Hi, Oliver. On skincare, I would say we have a very broad focus on skincare, and it really is across our brand portfolio. On e.l.f. SKIN, we just recently launched our Holy Hydration Cream with SPF 30. It's quickly become our top-selling skincare SKU. Continue to hit the key segments within skincare under the same thesis of e.l.f., the best in beauty made accessible. You'll continue to see really high-quality products at these extraordinary values on e.l.f., and we have a long way to go on that pipeline. Keys Soulcare started with a skincare focus, the clean skincare products we have on Keys Soulcare, we feel great about. The average product ratings of our initial nine products are 4.9 out of five stars on keysoulcare.com, and we have a rich pipeline behind that. We also see opportunity on Well People longer term in terms of skincare. We see opportunity across all three of our brands, and since each brand is distinct and complementary in nature, you'll see each one take a little bit of a different focus on skincare. We feel really good about what we're doing on skin and continue to see a lot of momentum there. On your second question, in terms of marketing, where the incremental dollars will go, I would say it's a combination of highly proven ROI vehicles, like many of our campaign vehicles in terms of our media and awareness driving, where we've seen great results, as well as continuing to lead the way and test and learn on new platforms. We're incredibly pleased, obviously, with the work that we've done on TikTok over the years. Our TikTok Gamers Got Talent hashtag challenge, I think, is now over 17 billion views. Our foray into gaming has proven to be really great. Our live stream on Twitch, the level of engagement we're getting there, the attribution we're getting there is really actually also quite strong. New platforms, as you heard us talk about on this call. We think there's an opportunity. The way I think about the marketing dollars over time is a combination of well-proven vehicles where we have very strong ROI data on, as well as continuing to disrupt the category and really get consumer engagement, including many of the partnerships we do and the collaborations we do. Thank you. A final question. There's been a lot of ingredients innovation and R&D in the industry at large. What are your thoughts on how that will apply to your platform and also maintaining R&D innovation at e.l.f. as well? Thank you. Innovation has long been a key strength of ours, and I would say our biggest focus on innovation, beyond having great new products that consumers love, is our continued journey on clean beauty. It's a very strong ingredient focus on that. If you think of Well People, a pioneering clean beauty brand with plant-powered beauty that works, that really is at the gold standard. Acquiring Well People brought a lot of capability into the company in terms of our clean journey. We had reformulated every one of those products as we did our tech transfer onto our operating platform, realizing even better product performance with significant COG savings, and in turn, getting learnings that really helped us launch Keys Soulcare through one of the co-founders of Well People, Dr. Renée Snyder, working with our innovation team of really some highest standard in skincare and has a very strong ingredient focus, as does Well People. Even e.l.f., we're making great progress on e.l.f. on clean. If you take a look at our formulations, there's over 1,600 ingredients we do not formulate with, and our continued progress in clean. That's really one of the primary focus areas beyond having really great products is, increasingly, consumers care about what the ingredients are in their products, and I feel great about the progress we've made there. Thank you. Best regards. The next question comes from Mark Astrachan, with Stifel. Please go ahead. Yeah. Thanks. Afternoon, everyone. Two questions. Just first, if you could quantify any sort of benefit that you saw from the stimulus this go around in terms of just impact to sales. Any sort of direction would be helpful there. Secondly, just a series of broader questions related to skincare. Relatively small percentage of the portfolio today. Anything you could sort of frame as to how it can progress in terms of the mix on a go-forward basis? Could you also talk a bit about where you're sourcing consumers? Are they new to skincare? Are you sourcing shares from other brands? Is it mass, masstige? Also, just any sort of seasonality to the business that you've observed so far. Just 2 other pieces, shelf space in terms of what you have today, relative to the number of skincare SKUs. Presumably, that would expand as you add more incremental space, as you referenced. Then also, could you just remind on the margin impact for skincare versus the legacy portfolio? Thank you. All right, Mark. Well, I'll take your first question on quantifying the impact of stimulus. Like I said, this last round of stimulus was by far the largest impact that we've seen. We've not quantified that specifically on a building block in our net sales, other than to say it did have an impact to our net sales in Q4, as well as what we saw here in Q1. Yeah. On your questions on skincare, I think, one of the ways I like framing it is if you look at skincare overall, it's less than 10% of our total sales, yet online, both elfcosmetics.com and Amazon, it's 25% of our sales. The big delta there primarily relates to the level of assortment we have in skincare. I feel we have a great pipeline in skincare, great items, and so as we continue, as you said, as we continue to pick up more space, our strategy is to put more of our skincare in, because we see a tremendous opportunity to continue to drive that percentage up over time. From a margin standpoint, it's not that different from a margin standpoint from our overall cosmetics line, the price points are higher. Just on e.l.f. Alone, if you think about our average unit retails on cosmetics, they're about $5. On skincare, they're around $9. Then, of course, Keys Soulcare is significantly higher than that in the $20-$40 range. We do see, I think from a margin standpoint, not that much of a difference, mainly because of our strategy of making sure that we're having the highest quality skincare accessible is one of the ways that we really win, but definitely generates more gross profit dollars. Great. Thank you. The next question comes from Rupesh Parikh with Oppenheimer. Please go ahead. Good afternoon. Thanks for taking my questions. I had two questions on gross margins. I was first curious if you can provide any more specificity in terms of how you think about gross margins for the full year. I wanted to get a sense of if maybe Q1 is a low point. As we look out, I know it's still early towards next year, would you expect to recover any of the gross margin decline going forward in the future years? Hi, Rupesh. I will answer your question on gross margin. For Q1, we saw gross margin down about 340 basis points year-over-year. As we look out on the balance of the year, we expect gross margins not to be down as much as what we saw in Q1. Improving as we get throughout the year and kind of find some stability here from some of these transportation costs that we're seeing. In terms of recovery, we do see this as a transitory issue. The ocean costs, the container imbalance, we expect all of that to balance out over time, and so do expect to get some recovery in gross margin as we go through. Timing of that, obviously, we're not talking about fiscal 2023 just yet. Have to wait to see there. Just to add to that, Rupesh, I think we're highly confident of our ability to drive strong gross margins over time. If you just think over the last couple of years, the amount of costs we're carrying between the 25% China tariffs, the transportation costs we talked about, FX turning against us, it's a pretty high level of cost, and our ability to continue to deliver, even in this year's guidance, 9%-11% EBITDA growth, we feel really great about that. I think longer term, we're quite bullish in terms of our ability to manage kind of the cost environment around us and still deliver strong profit progress. Okay, great. Thank you. The next question comes again from Erinn Murphy with Piper Sandler. Please go ahead. Great. Thanks for slotting me back in. I had a couple follow-ups still. One was just on your approach, Tarang, and I guess to the team on collaborations. You've done such a great job with the e.l.f. brand over the last few years. How are you viewing product collaborations for both Well People and Keys Soulcare? Is there an opportunity there? Secondly, on Keys Soulcare, with the Ulta Beauty at Target partnership, I believe Keys is the one brand you aren't currently selling at Target. When should we expect or should we expect that to be on the brand list over time? Thanks so much. Sure. Erinn, the team's done a remarkable job in terms of these collaborations and doing things in unexpected ways. If I go back to the e.l.f. Chipotle collaboration, even the most recent one we did with our Electric Mood collection, partnering with three global music artists, you're going to continue to see more. I think tomorrow you're going to see our launch of Big Mood, which builds on the success we've been having in the eye category. We've always had strength in brow. We feel great about Lash It Loud, our mascara before Big Mood. I feel it's our best mascara yet that we've launched, and you'll hear a collaboration we're doing on that tomorrow. You'll continue to see a good stream, and there's absolutely possibilities on both Well People as well as Keys Soulcare. In fact, on Keys Soulcare, the way that brand has been built is through strong collaboration. If we think of our light workers, all of the content that we're putting out, the different voices that you're hearing from Keys Soulcare, there's an entire universe of like-minded people that we're going to continue to partner with to bring that message out. Then Well People, similarly, we feel there's lots of potential. We think Well People is a real gem in terms of not only its heritage as a real pioneer in clean beauty, but this broader view of clean beauty and wellness. We think there are good partnerships there as well. Stay tuned. You'll continue to see a lot more with us there. Then on Keys Soulcare, I would say that Ulta at Target presents us an opportunity, certainly for the future. We're still in the exclusivity period with Ulta, I think the focus for them was really making the most of Keys Soulcare in Ulta. In the future, I'm quite hopeful that becomes another area of opportunity. You'll continue to see us expand the presence of Keys Soulcare, not only globally, but also eventually in the U.S. Great. Thank you. This concludes our question- and- answer session. I will now turn the conference back over to management for closing remarks. Great. Well, thank you, everyone for joining us. I'm incredibly proud of the e.l.f. Beauty team, not only in how we've navigated this pandemic, delivering our 10th consecutive quarter of net sales growth, but the tremendous momentum we have across our entire brand portfolio. We look forward to talking to you next quarter and updating you on our progress. Meanwhile, thank you for joining us. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.