Good afternoon, everyone. I'm Bonnie Herzog, Goldman Sachs Beverage, Household and Personal Care, Nicotine and Seastar Analyst. Joining us today is e.l.f. Management Team, including Chairman and CEO Tarang Amin and CFO Mandy Fields. Now, before we get started, I'm required to make certain disclosures in public appearances about Goldman Sachs' relationships with companies that we discuss. The disclosure relates to investment banking relationships, compensation received, or 1% or more ownership. We're prepared to read out loud disclosures for any issuer upon request. However, these disclosures are available in our most recent reports available on our firm portals. Disclosures and updates are also available on the firm's public website. Now, with that out of the way, it's my pleasure to welcome everyone to today's meeting. Thank you again, Tarang and Mandy, for your time. I wanted to kick things off, Tarang, first with you, just in terms of your results last week and the market's reaction. I was, you know, hoping maybe you could talk about the pullback we saw in your stock price. You know, did you expect such a strong reaction to your FQ2 results? It was a surprise, I would tell you. The fundamentals of our business are good, and so we do feel it was an overreaction. In fact, it was such the overreaction that we did tap into our authorization and repurchased $50 million of shares on Monday. This shows our confidence in the business and, more importantly, the future and the white space we have ahead of us. Now, that's good to hear, and I did see that, so that should help. And then, in general, Tarang, e.l.f. really has experienced robust growth, as you touched on, and, you know, you've been a market share gainer for quite some time. So could you discuss the broader U.S. mass beauty market trends and, you know, what do you see in terms of market growth, you know, competition, and then your growth drivers in the context of that? Look, we feel great. We've long been bullish on beauty, both color cosmetics and skincare. We saw in the last quarter the category up 2%, which is consistent with the trend of the last decade. While the consumer is under pressure, what we find is they're choosing the brands that mean something to them. I'm very pleased with the strong consumption we continue to see on e.l.f.'s color, e.l.f. Skin, certainly Naturium, and then obviously the breakout performance of rhode. I feel really, really good about the overall performance and how the consumer continues to vote for e.l.f. Even in the last four weeks, we picked up another 160 basis points of market share. We continue, you know, not only 27 consecutive quarters of market share gains, which I think people miss the significance of. We're now the number one unit share brand, number two dollar share brand, clear line of sight of total market leadership. As good as that is, what I feel even more bullish about is the potential we have ahead of us. We, you know, we've often talked we're the number one brand at Target with over 20% of their category. We see other, kind of the only difference between Target and others is they had almost a six-year head start. We see, you know, the trajectories of our other customers also, you know, going and trying to replicate what Target has done. We're now the number two brand at Walmart. We're the most productive brand our retailers will carry on a dollar per foot basis. We still have a ton of potential for both market share gains here in the U.S. as well as expansion internationally. Okay, that's helpful. I guess that brings me to my next question. I kind of want to drill down on your results, your FQ2 results. In the context of that, you know, your organic sales did decline 3% in the quarter, and shipments were below consumption, the consumption trends that you just mentioned. It sounds like primarily due to, you know, your decision, I guess, to temporarily stop some shipments to retailers who, I guess, were slower to execute the price increase you took back on August 1. I guess for me, you know, first, why were some of the retailers unwilling, you know, to pass through the price increase, especially, you know, given that you did advertise that you were going to be taking pricing? That had been public for a little bit. You know, did it have anything to do with already high inventory levels at their end or, you know, possible concerns about elasticities? No, this is totally our call. We've long had great price sanctity where every day low price, we ask retailers, even when they merchandise the brand, to do so at full retail. e.l.f. has such a phenomenal value that it sells really well without discounting. This was the case. You know, we've seen this in the past in some other price increases where a particular retailer might be slower to reflect the right pricing on their purchase orders. Now that we have SAP, it automatically cuts those orders. What we found is it's a good strategy to get everyone and get the entire market to the right price. That strategy worked. We're in normal shipments now, but that did certainly impact the shipments that we had in Q2. You're already seeing the shipments recover post-Q2 results. During that period, you know, were there any out-of-stock, you know, situations as a result of what you just described, you know, that maybe contributed also to some of the volume declines? Just trying to think through it further. I mean, there would definitely be out-of-stocks depending on how long someone was shut off on and on what SKUs they were shut off on. I would say it was not widespread. I mean, retailers carry enough inventory to be able to carry for a while, even if we are cutting orders. I would say, you know, there were some, but I would not say that that was not a contributor. The contributor was 100% us, not shipping customers. Tarang, what was it that you needed to do, if anything, to eventually convince some of these retailers to accept or pass through this pricing or, you know, are you facing pushback currently or everybody? We're not facing pushback. We're, like I said, where normal shipments have resumed. It is the most effective tactic. If someone does not reflect the right price, retailers' pricing is still at the discretion of retailers. Who we send product to is our discretion. We are fine. It always works. You know, from time to time, on a lesser basis, we will face this if someone starts discounting the brand or does not reflect the right price, we will turn it off. It is also one of the mechanisms by which sometimes retailers have their pricing algorithms where they will pick up a low price on a marketplace or something else and we will shut that SKU off until everyone resets. It is a way that we kind of enforce making sure people have the right pricing on e.l.f. Okay. And then maybe switching to you, Mandy, you know, as we're talking through all this, you know, the results, your FQ2 results suggest, I mean, it was a 10-point impact from this dynamic as I think about bridging the 7% consumption with the minus 3% organic sales, you know. First, is that the right way to think about the impact of these disruptions? Then, when were these issues resolved? Was it towards the end of FQ2? Like Tarang suggested that that's been resolved. We should assume that that's all been resolved. I guess I'm ultimately trying to understand how big this issue was, you know, at its peak and, you know, maybe how it's evolved over the past few months. Should we or could we see any lingering impact in FQ3 as well? Yeah. On the bridge that you're doing, I think that is, it's fine to do that way. We haven't attributed 100% to the stop shipments. There's always going to be a little bit of a disconnect between shipments and consumption in a quarter. Over time, we know those two will marry up over time. I would say the stop ship issue was the majority of that disconnect, which is why we highlighted that. In terms of when resolution happened, I mean, this was going on throughout the quarter. Like Tarang said, as we exited the quarter, shipments had started to resume normal course. We're in a good spot there. In terms of anything lingering, no, nothing's lingering into this quarter pertaining to stop shipments. Like I said, as we exited Q2, we were back in a good spot. Can you touch on what might have been some of the other impacts on shipments in the quarter if it wasn't necessarily this, you know? Yeah, the other thing that we talked about in the quarter was our international growth was 2% in the quarter. We were cycling the launch at Rossmann. I think that certainly had an impact as well on, you know, what folks may have been expecting versus what came through for Q2. Okay. And then thinking about, you know, the shipments versus consumption, guidance still implies that, you know, they will continue to lag. Shipments will continue to lag consumption in the second half. Maybe help us understand the drivers of that. I mean, I have to ask, but did you simply ship too much inventory last year? Or, you know, are there any other factors that are going to drive the shipment deceleration? As I think, even though, you know, Tarang just mentioned shipments are resuming, I'm just trying to understand why they will decelerate in the second half. Yeah. We really called out two things in the second half that we'll be cycling through. One is our space expansion in Dollar General. That was 11,000 doors that went in during the second half of last year. Also, the space expansion that we had in Target. Those are some big expansions that we had in the base period that we're cycling this year. Those will have an impact from a shipment standpoint. Again, I just point back to consumption. Our consumption remains strong. It's up 7% in the quarter. We feel great about what we're seeing from how the consumer is choosing, continuing to choose e.l.f. You touched on, like you mentioned last year, gaining all those doors, distribution. Is there a way to quantify the benefit that you saw last year as a result of, you know, the expansion, whether it's Dollar General, Target? I kind of want to get to, you know, ultimately how conservative your guidance is this year in spite of all this. Yeah. We did not quantify the shipment impact or what those were in the base. I can say from a, if I take a step back and look at the guidance that we provided, 18%-20% growth on the year, we still believe is fantastic in the backdrop of broader consumer. I mean, you have beauty, HPC kind of flat to up one, high growth consumer up 13%. We are coming in at 18%-20%. Now, granted, rhode is a big part of that, but we think that is fantastic that we were able to find a company growing at such a rapid clip to bring into our e.l.f. portfolio. We are quite pleased with that. On the organic front, like I said, it is really kind of, you look at Q2, that was our decision to stop shipments. You look into the second half, we're really cycling those big pipes in the base. I'd say the more important thing is consumption continues to be strong. We've actually seen it pick up in pace. As we come out of the price increase and the initial kind of trough you always see with pricing, we're seeing much stronger consumption trends through the third quarter so far. Is this indicative of anything else we're seeing at broader industry? Is this really just more your company and then, or, you know, thinking about the industry at large? Do you expect to exit even, you know, FQ4 more in line with consumption trends or will it be more of an F2021 or 2027 story? You know, just think about this in the context of volumes and when we can expect to see volume, you know, return to growth. Yeah. So we have not given kind of an outlook on when the shipments and consumptions marry up. We know that over time, like I said, shipments and consumption will start to get closer to one another. What we did say is that in Q3, again, with some of the stop ships that we had in Q2, Q3 is likely going to be a little bit stronger than Q4 as we go through, just given that you are going to pick some of that back up. I think that is really the way to think about it just from a shaping standpoint. I'd also say that the pipeline effect was more concentrated in Q4. That is also one of the reasons why in terms of what we're lapping, you're going to see Q3 stronger than Q4. Okay. And yeah, I kind of wanted to get into that next, just maybe taking a step back because I know we're drilling down on this dynamic. But, you know, just thinking about the full year guidance, you know, you're guiding 3%-4% organic sales for the year. Can you maybe, and you know what that implies for the back half is, I believe, 2%-5% QH26. So, and obviously that represents a step up from the minus 3% decline in FQ2. Can you walk us through maybe the other key drivers of growth in the back half, you know, and then ultimately how should we think about the 300 basis points spread in your OSG guidance in the back half? You know, what are the key puts and takes there to consider when you, and then honestly, I'd love to understand, you know, what could possibly put you at the high end of that range versus the low end because it's a decent range. Yeah. On the 2-5% in the second half, you know, it is a step up from what we delivered in Q2, but I would say Q2 is not representative of kind of a run rate anyway, just given our decision to stop those shipments. You will get some benefit from picking up some of those shipments that shifted out of Q2 into Q3. We talked about some of the, you know, opportunities that we have internationally. We would expect international growth to pick back up into the second half. Again, the 2% that we delivered in Q2 also not representative of the run rate that we would expect from an international standpoint. Really, I think what determines kind of low end to high end is our spring innovation and how quickly we see things take off there. If you recall last spring, we had to cycle the Lip Oil launch in the base. That did not give us the growth earlier on that we expected. As we turn to spring 2026, we're very excited about what we're planning to launch. We'll be watching how spring performance comes in to kind of determine where we come in within that range. Speaking of that, I do not think you have shared any of the innovation with us yet, but you feel pretty optimistic, confident that what you are bringing out this spring is going to be enough to lap, you know, like you said, the success that you had last year with some of the innovation. Yeah. Yeah, I think so. I mean, we also, just to note, spring 2025 was not a disappointment. It was still double the rate of what we had in prior years. It just was not enough to comp that Lip Oil launch, which was an exceptional launch for us. Okay. Yeah. All right. I want to switch gears just a little and talk about some of the distribution expansion. You know, you talked about sizable, you know, shelf space gains across retailers in the U.S., including Target and Walmart. And then I think more to come within Ulta in the spring of next year. Can you help maybe contextualize how meaningful these shelf space gains are, I guess, with respect to the 3-4% organic sales growth expectations that you have this fiscal year and, you know, how significant, you know, these can be in FY27 and beyond? Yeah. So the space expansion, we're always excited when our retailers are expanding our footprint. That's a great thing. And we've consistently picked up space each year with a subset of our retailers. It's just a continuation of that. I would say the magnitude of the space that we have in the base is much greater. We're talking about 11,000 doors expansion versus an expansion in Ulta. It's just not as large from a magnitude standpoint. Still very pleased with Ulta expansion, the Rossmann, Poland, the GCC countries with Sephora, dm-drogerie markt in Germany. Those will all be things that help to expand our footprint. Again, just thinking about the large space expansion that we have in the base, you're not going to see as great of a year-over-year lift because of that. That mainly affects the pipeline if we think about it in terms of what we're lapping and the disconnect between shipments and consumption. We feel great about the progress we're making. The other thing that I would say is, as much as everyone's enamored with space, the biggest driver of our business over time has been our productivity, our dollar per linear feet productivity. You know, it always takes us a couple of cycles once we pick up a big swath of space to optimize that space. We're really pleased. Target's now all up to 20 feet of space on e.l.f. This spring gives us another ability to further optimize that space and drive greater productivity. I just had top to tops this week with Ulta and Walmart. They're extremely excited about what we have coming both from an innovation standpoint, but also in terms of Ulta picking up space. Walmart has been testing a highest vision set that's seen very good results. You know, it'll be up to them at what pace they roll those sets out, but that's a pretty meaningful difference in terms of what our presence at Ulta, I mean, at Walmart will look like. We continue to make progress really across every one of our key customers. No, that's a good point. Just like you mentioned, the productivity. Some of the space that you took earlier, are we starting to see some of that productivity improvement then? Is that flowing in this fiscal year or again, more next fiscal year as I think about, you know, the continued expansion of distribution? You know, we should see some of that productivity improvement, but that may be a little bit of the range that Mandy talked about, as it is always dependent on spring innovation and the resets and the timing of those resets of when you are able to see that optimization. Right. Tarang, maybe taking a step back, what is the right, you know, long-term organic growth for e.l.f.? You know, is it the 3-4% that, you know, you're guiding this year or is there a path to re-accelerate growth? Yeah, no, I would say, we haven't given a long-term range. It's definitely higher than 3-4%. 3-4% is not anywhere near what the rate is. As we said, shipments match consumption over time. We're seeing double-digit consumption. So we'd expect double-digit overall growth, and particularly given the white space we have. Similarly with international, our launch is a serial more back half loaded. As we get into Rossmann, Poland, I'm headed to the GCC next week as we launch in Sephora. Then the dm-drogerie markt launch. dm-drogerie markt is the largest retailer in Germany. We would expect, you know, definitely a pickup as we continue to see. Yeah. I guess that's what, as I'm listening and I've been processing all this, that's why I think I keep maybe struggling with trying to understand why, you know, shipments won't catch up to consumption sooner, you know? I mean, would you be shocked if we get to the end of your fiscal year and they're still not closer to each other? Is it really just this timing that you kind of highlighted between the tough comps and Q4 and everything happening? Yeah. I mean, look, we're already seeing shipments pick up both after our stop ship, but also given the strong consumption that we see. I think it's going to be a tale of like Q3 should come in strong just given the momentum we're seeing both in consumption and resumption of shipments. Q4, we, you know, we're not giving particular specific, but that's where a lot of the pipe effect would happen. I think, you know, we'll be in a better position when we, as we close out this quarter, to be able to kind of absolutely show kind of how shipments and consumption matches up. You'll have a little bit of what you're lapping in Q4, but then, you know, over a long arc, I've been CEO 12 years, I'd say shipments always match consumption for this business just given how fast we move on shelf. If someone does not take or cuts down on their inventory levels, they have to come back and replenish at a higher rate just given how much faster we move than the rest of the category. If I'm, yes, and that honestly makes sense. If I'm hearing you correctly, it's almost, too, we should maybe assume that Q3 shipments will be stronger than consumption just given, you know, what happened during Q2 and, like you said, as they've resumed. Is that fair to? I think it's fair. We never know like when with order patterns, how fast shipments equal consumption. We just know over a longer period they always do. You know, our assumption would be that I would expect shipments to be pretty strong here in Q3. All right. Let's pivot to international. You know, it's another area I know that you see significant growth potential, you know, going forward. Maybe talk through for us what are some of your priority markets in that regard, you know, how we should think about further growth potential in those markets, you know, versus maybe just expanding into new markets. Yeah. If you look at our history on international, if I just step back and take a multi-year view, as good as expansion has been and picking up new retailers in different countries, the majority of the growth has come from our first two international markets, Canada and the U.K. I would say the priority markets for us are the large existing markets where we have significant ACV coverage. Certainly Canada, the U.K., and soon to be Germany. Once we pick up dm-drogerie markt, we'll have, I think, over 70% ACV in Germany as well. I'd say that will remain the core priority of continuing to build our position. Even in the U.K., we're now the number two brand at Superdrug, the number three brand at Boots. We're not in Tesco, Sainsbury's, a number of other kind of retailers. Our first priority is Superdrug and Boots in the U.K., obviously our own site and Amazon. Then certainly with Germany. These other markets, it's the same approach we've used, which is establish the beachhead for e.l.f. by partnering with a leading retailer and then expanding from there. We still have plenty of expansion ahead of us. Okay. And then I know, you know, you touched on this earlier, international growth slowed down, you know, pretty significantly to, you know, low single digits in FQ2. I know you lapped, you know, the Rossmann launch from last year, but you know, were there any other factors that impacted your performance in the quarter as well? Yeah, there are two, I'd say there's two factors. The most important was lapping the Rossmann. It was 1,800 doors in Germany that we shipped in pipe that you're lapping. It was quite a big expansion into Rossmann. The second thing is we did see a slowdown in our U.K. business. The U.K. consumer is under threat, just like the U.S., perhaps even more so. We saw a higher level of promotional activity from our competitors. I mean, we saw things we've never seen before, like competitors introducing newness at three for two, high levels of discounting, and that certainly hurt us. Now for the year, we've continued to pick up share in the U.K. I think we picked up 80 basis points of share on a 52-week basis, but the last 12-24 weeks have been weaker given that promotional activity. Now, the good news with that is we have strong plans for the U.K., both with Superdrug and Boots. And we also, you know, I'd say promotional activity, at least past patterns in the U.K., is you usually see a trough as soon as promotion dies down from our competitors. And so we don't feel the current levels of promotion are sustainable for anyone at the level. So I think that will help us going forward, but we certainly did see a hit in the U.K. Were you already seeing things improve in October? You know, how do we think about FQ3? Should we expect a pickup in growth? I am thinking about it also, I think year over year compares ease. Yeah. You will see a pickup in growth. We're already seeing sequential improvement in the U.K. We obviously have our launches are back half loaded. You will have the results from both Poland, the GCC, and then getting into Q4, you will start getting into dm as dm sets too. We have a better cadence, I would say, back half, definitely more back half loaded this year versus last year as more front half loaded. I do want to just check in on, you know, trying to understand the impact from your launch in Sephora, Mexico in October of last year. How do we think about that and lapping that? We feel great about lapping Sephora, Mexico. In fact, Sephora, Mexico is going to be taking in e.l.f. Skin as an addition. They've loved the momentum they've seen with e.l.f. We also announced we're entering Ulta in Mexico. Obviously, they have an expansion plan within Mexico as well. We see really good momentum within Mexico in terms of our plans both with Sephora as well as entry with Ulta. To your point, you know, Ulta, Mexico will be pretty incremental or do we think about some canalization just giving, you know? No, it's pretty incremental. I mean, the footprint, I mean, Ulta's just started with Mexico. I think they had like the first store, first few stores that they have. Sephora, it's a pretty small footprint. Even combined, neither retailer has a huge portion of the market. We absolutely see it as being incremental. Right. Now I want to ask a little bit about gross margins. So, you know, your second half gross margin guidance of 200 basis points sequential expansion versus the first half. It does embed some mix tailwinds from your acquisition of rhode along with pricing benefits. So could you maybe just talk about, I guess, rhode's margin profile, how significant the mix tailwind is to gross margins as a result? Help frame that for us. Sure. We are expecting sequential improvement, as you said, 200 basis points better than where we exited the first half. Around a 71% margin into the second half, which is roughly flat to prior year. Just given the tariff headwinds that we have faced this year, you know, coming in or expecting a year where your gross margin is only down 100 basis points is pretty incredible. Our average tariff rate out of China has been 60% this year versus 25% in the base. Being able to nearly overcome that is pretty incredible. I am very proud of the team for doing that. I will say pricing is going to be a benefit for us in the second half. As we have talked, pricing just went into effect on August 1. The first half did not get a big impact from pricing, some, but not a full benefit. And then rhode, as many folks saw, rhode's gross margins are strong. As they have gone into Sephora, you know, that is going to mix a little bit differently. What we've said on rhode is overall we still expect them to be accretive to our overall EBITDA margin as we go through. Still going to be better from a gross margin standpoint, better than total company from an EBITDA margin standpoint as well. Yeah, I wanted to kind of drill down on that a little bit because I want to make sure I understand how much of a gross margin drag should we expect for, you know, rhode just relative to its current, you know, gross margin profile. And, you know, ultimately, what does it mean for e.l.f.'s, you know, overall gross margin trajectory? I mean, maybe said another way, like how do you expect rhode to impact your overall margins, I guess this fiscal year and then definitely beyond? We expect them to positively impact our margins both in this fiscal year and beyond. You haven't quantified that, have you, Mandy? I have not quantified that, no. You do not want to now, do you? All right. That is a positive. That is a positive. I mean, at rhode, they have a beautiful business, strong top-line growth, as well as strong margins. I mean, we expect that to continue even with the investments that we want to make behind that brand. All right. So in terms of EBITDA, you know, your guidance for, I guess, 17% EBITDA margin in the second half, it does imply, you know, again, a significant compression relative to what you guys delivered in the first half. You just kind of touched on this. You talked about ramping marketing spend in the back half of the year, primary driver, I think, of that. You know, how conservative is this guidance ultimately? You know, how should we think about, again, the trajectory of your G&A expense, especially as you build your presence internationally? Yeah. Maybe let me start with the marketing side. We have, since we started this year, outlook marketing at 24%-26% on the year. In the first half, we only spent about 23% behind marketing. That is why we expect to see a higher rate into the second half as we seek to be within that 24%-26% on the year. That is causing some compression from an adjusted EBITDA margin standpoint into the second half. We have continued to feel great about marketing, the ROIs that we are seeing, and that is definitely an area that we want to invest. I know I have gotten questions on where is that investment going. It is primarily behind e.l.f. We will do some on rhode as well, but e.l.f. is the primary driver of that shift in spend into the second half. From overall SG&A, I would say non-marketing SG&A, you know, for several years we had leverage in non-marketing SG&A. We want to continue to invest behind the growth vectors. We are very much still in growth mode. International skincare team, infrastructure, all of those things that we have talked about, those will continue to be areas of investment for us. Over time, I do believe there is an opportunity for us to get more leverage out of our non-marketing SG&A. Yeah. I actually wanted to better understand that. You know, where do you expect some of the efficiencies to come from? You know, ultimately, you know, what should we think about a stable, you know, underlying EBITDA margin over time for your business? Yeah. We haven't given a target exactly on EBITDA margins, but what I can say is just even as we think about the things that impacted us this year, tariffs at an average of 60%, that certainly had an impact on our gross margins. Now that we're in an environment where we're around the 45% level, that should help to be some relief, a tailwind for us as we move forward. That's a good thing from a gross margin standpoint. Then from an EBITDA margin or SG&A leverage standpoint, I think as we continue to grow as a company, as we continue to mature and scale, there are opportunities to get some efficiencies out of our supply chain, out of the infrastructure that we've built. I think technology has been a big area of investment for us this year. Now that we get into a more stable place, I think we can start to get leverage there as well. Remind me, thinking, as you mentioned, technology, where are you at with AI and how much will you leverage AI potentially? Yeah, AI is the talking point in every room that I go into. You know, we are just getting our foundation in place. We implemented SAP this past summer, which was very successful. We are really focused on, you know, before you can get on a full AI journey, you have to make sure that the data is in the right place and accessible and that you can build on top of that. That is really the stage that we are in. Certainly AI will play a role in terms of efficiency and automation for us over time. We are already leveraging it across our marketing team. I think that is the one thing about AI, is that it is not just finance, accounting, IT initiative. It is really an enterprise-wide initiative that can unlock efficiencies overall. Possibly with the consumer as well, ultimately. Absolutely. Yes. It's the one thing that's both a cost savings tool and a potential revenue driver if you think about where AI can go. Yeah. One small example is we're known for our strength on social. For the longest time, we weren't able to answer every DM we got or every consumer message we got. That's 100% driven by AI now. We've got 100% coverage on DM and ability to engage with consumers that way. It's just one small example. There are multiple workflows throughout the company that we're using AI for, and we'll continue to ramp that up as time goes. As Mandy says, I think actually, there will be efficiencies, but I'm even more excited about the capabilities that we'll have. Okay. That's helpful. I wanted to maybe kind of circle back a little bit on the price increase. I just want to close the loop and make sure, you know, it's rolled out. I want to maybe understand from your perspective the elasticities. You know, you've had a little bit more time. You know, did the elasticities come in as you expected? Do you think it's still too early, you know, maybe to get a proper read on that just in terms of the volume impact? I'd be curious to hear, you know, how competitors have reacted to pricing. You know, it seems maybe they've been more surgical in their approach. Were you surprised, you know, by their response in certain areas, or was it more or less what you would have expected? Yeah. First of all, we're pleased with what we're seeing in the pricing. We had modeled internally unit declines. I mean, there's a 15% price increase, so we would expect some unit declines. Overall, if you take a look at our dollar and our consumption, we're pleased with what we're seeing. The pricing came in as we modeled, and so pleased with that. In terms of competitive reaction, we haven't seen that much competitive reaction yet, but that's not atypical. If I go back to 2019 and 2022, we led pricing. We again led pricing this round. Over time, we're unique in that our primary mode of growth has been through unit movement. Our competitors, that's not their primary mode of growth. Their primary growth area of growth is AUR improvement through price increases. We would expect, you know, we never know when they're going to introduce pricing, but usually we see a round of it, usually almost every spring as spring resets come, and we see bigger movements then. We would expect our competitors to have some pricing just because that's their known way of growing. We feel good about where we are right now from an elasticity standpoint, and we believe we'll get better over time. Trang, you touched on this earlier, just, you know, a lot of your growth, it's really the driver in your mind is the innovation, you know, holy grail approach to innovation. You know, you mentioned, I believe it's on track to be a step up this fall, the innovation, while I guess we could describe it being sort of lagging in the spring. Is there anything more you could, you know, touch on in terms of, you know, subcategories where some of your upcoming innovation is focused on? You know, ultimately, where do you see opportunity to build market share by subcategory? Yeah. So I'll step back from an innovation cadence standpoint. We already talked spring of 2025 was lower than spring of 2024. Spring of 2024, as Mandy mentioned, it's not only the Lip Oil launch, we just had a way outsized level of innovation that way. And so while spring of 2025 was our second biggest spring ever from an innovation standpoint, it was about half of what we saw in spring of 2024. The good news is fall of 2025 is actually bigger than fall of 2024. We are expecting spring of 2026 to be bigger than spring of 2025. I would say, you know, the good news is we're growing share in every segment. I think, you know, we grew 320 basis points of share in lip. We grew over 100 basis points of share both in face and eye. You will continue to see a very balanced innovation plan. We have innovation coming. You know, you do not have to wait too long because we start previewing some of that innovation really by the end of December. You will start seeing it set on some of the newness and caps that some of our retailers have. You will certainly see it online. We have innovation across every one of those segments and subsegments, both in our strength categories. There are 19 subsegments where we have the number one or two position, as well as the conquest categories. You know, we have been building our kind of suite of mascaras. You have continued to see great momentum on lip, and we have a number of new products. I just wish I could tell you what they were right now, but they are strong. They're strong in multiple dimensions, including given the state of the consumer right now, also making some pretty meaningful value statements with the consumer. We know that's one of the core strengths of our business. Obviously, value took a hit with a 15% price increase. We're very much interested in making sure we deliver what consumers know us best for. I mean, 75% of our portfolio is still $10 or less. We still have a meaningful advantage when it comes to value, not just the price point, but the level of quality that we can deliver for that price is well recognized by consumers. Okay. That's helpful. All right. Let's switch gears again. Let's talk about rhode, which you acquired, I guess, in August. For those who are not as familiar, can you just maybe talk again about the rationale behind the acquisition? You know, how prestige cosmetic and skincare brand you think fits, you know, within your portfolio that, as you kind of just touched on, has been primarily focused in the mass beauty category? Yeah. No, so rhode has been a phenomenal acquisition. I couldn't be more excited to welcome rhode into the e.l.f. Beauty family. The approach we take is we take a look at the category. You know, we've used this stat before. There are 1,900 cosmetics and skincare brands tracked by Nielsen. Yet very few have been able to scale. There are only 26 that have more than $100 million of retail sales. We've had our eyes on rhode for a while because, I mean, they went basically from zero to $212 million of net sales in less than three years with DTC only with 10 products. We saw the resonance it was having with consumers. The rationale for rhode is it very much fits our vision. Our vision is to be a different kind of beauty company by building brands that disrupt norms, shape culture, and connect communities. And rhode absolutely does that. I mean, I've never seen a brand where people are willing to wait, camp out overnight, wait 14 hours for an event that Hailey's not even at. So we saw the level of consumer interest. There's so many parallels with e.l.f. in terms of our engagement model, their engagement model, how we entertain and delight our communities. And saw a massive opportunity in terms of white space ahead of it. We, you know, we launched the brand in Sephora just in September. It was by far the biggest launch Sephora has ever seen in North America, two and a half times their previous record holder. This week, we launched the brand with Sephora in the U.K. Again, we saw the launch. I mean, it's obviously only five days, but in the first five days, we've done 3x what the previous record holder had at Sephora U.K. And so the brand has tremendous momentum and very much fits our spirit of disruption. All right. That's helpful. I believe you've talked about just the runway of growth, maybe about 40%, I think this year for rhode. How should we think about, you know, ultimately normalized growth once we lap, like, you know, you just touched on some of these Sephora gains? We see plenty of growth ahead. I mean, the core fundamentals from a consumer standpoint are really strong. You know, we talked about wanting to invest more in rhode. Like, they have never done any awareness building on rhode. There's obviously strength, but the runway from a customer standpoint, I think some investors were confused. They were using, I think, Fenty numbers. Fenty was a global launch in all 18 countries with Sephora. The strength that we have with Sephora certainly opens us up for future potential with Sephora globally as well. I think, you know, you're going to see, we're going to, obviously, the focus right now is continue to execute with excellence in Sephora North America and the U.K. We do have further way more distribution opportunity going forward. We have not given a long-term run rate, but we do expect it to continue to be a faster growth rate than the balance of the portfolio, just given the early days of entering into retail. Maybe sticking with this, you know, as you touch upon how successful the launches were, Sephora here and then U.K., how incremental has that been? I assume it obviously is cannibalizing, you know, just some of the DTC customers. Like how many new customers are you seeing it bring in, or is it too early to tell? You know, it's done. We haven't given the specific cannibalization rate for the DTC part of the business, but we're pleased with what we're seeing. It's below what we had modeled in our acquisition models. We feel really good. We continue to see strength. Part of that strength is driven by their strategy. Just this week, we had the biggest, we do something exclusively online for Hailey's birthday. It's always a big event in November. I just saw the numbers coming off of that event that some of these exclusives we're using for the rhode site have actually helped it do better than the cannibalization we had expected. We had, particularly on innovation, where we give it a lead on our own site before we bring it into Sephora or into retail, has been really successful. The birthday event that we had has really surpassed our expectations. It has been one of those things where we're seeing strength both in Sephora, but also on our own site. Yeah. I mean, okay, so then, you know, thinking about rhode and the brand's awareness, how would you describe it relative to the awareness behind your own e.l.f. brand? I mean, do you think there's still a lot more opportunity? It's a fraction. I mean, if you look at the progress we've made on e.l.f., you know, we went from just in the last few years, we went from 13% unaided awareness to 45% unaided awareness. Just phenomenal. I've been a consumer 34 years. I've never seen a brand pick up that much awareness and new consumers. We're not only number one amongst Gen Z, but most purchased amongst Gen Alpha, Millennials. We picked up a ton of Gen X as well in our latest attitude and usage study. We know our marketing is working both in terms of driving unaided awareness and in terms of having ROIs above the multiple. rhode has an even bigger opportunity. I don't know if we've disclosed unaided awareness. I think we talked that aided awareness is still a fraction of what other Prestige skincare brands have. Given rhode is also, while it's in Prestige, I would call it accessible Prestige, right? It's not luxury. It's not on the higher end. It's very much accessible to consumers. We believe there's a huge opportunity with awareness. Certainly, the Sephora launches are helping with that in terms of bringing many more consumers into the franchise if we take a look at the number of new consumers that are coming in. We still have a massive way to go on both rhode as well as Naturium. Naturium, we did our first awareness build. We continue to see very strong consumption trends on Naturium, and we liked what we saw in terms of that campaign that we just did. Yeah. I definitely want to touch on Naturium next, but I want to ask really quickly on rhode and just thinking about the launch in Sephora, remind us how that impacted, whether it was FQ2 or will it be FQ3, you know, shipments in? How do we think about that? Yeah. I've gotten that question quite a bit. The pipeline into Sephora is not a part of our fiscal 2026 results. That happened prior to the August 5 acquisition close. When we look forward into fiscal 2027, that will not be something that we'll have to cycle in our reported financials. Now, I know some folks are looking at it as, hey, if rhode is a $300 million business on an annualized basis, they actually will, you know, if you're using that number, that does include the Sephora pipeline, right? We talked about $200 million contribution to our fiscal, but $300 million on an annualized basis. If you're looking at things on an annualized basis, obviously that pipe is a part of that. On our reported numbers next year, we will not have to cycle that pipeline. Yeah. You'll still be having this larger base and grow from that. Correct. Okay. That's helpful. Yeah. Yes. Want to move to Naturium, you know, another brand you acquired, I think it was two years ago, and you launched, you know, recently, I think its first ever awareness campaign. Maybe, you know, walk through all of that for us and, you know, the brand's performance so far, you know, any initial response from your campaign, and, you know, have your growth expectations since you acquired the brand, have they evolved and changed? We're pleased with Naturium as well. Again, it was another one of these brands that went from zero to over $100 million of net sales in less than two years. Definitely resonated with consumers. It complements e.l.f. Skin. e.l.f. Skin is a very similar model to e.l.f. Cosmetics. We take inspiration from our community, best products of Prestige, bringing it a great value. rhode's at a higher price point, around $18. Clinically effective, biocompatible skincare. Also very strong in the body category for almost 40% of its user base is men. So distinct and complementary brand to e.l.f. Skin. The performance has been really good, including off the awareness campaign I just talked about. In In the quarter, we talked about launching or recently launching the brand with Sephora in Australia. We've picked up more space indoors with Boots in the U.K. In the U.S., its original distribution was only at Target, Amazon, and its own site. We successfully launched the brand into Ulta Beauty. We are seeing very strong trends with Ulta Beauty, even as we have lapped the launch years. We are seeing great momentum. I would say from an overall expectation standpoint, it is ahead of what we modeled. It still is strong growth on Naturium. That has continued. We still have a ton of white space on Naturium from both the distribution standpoint as well as continued awareness building. Okay. I want to circle back to tariffs. We have to, I think, maybe talk a little bit more about that. I know you've diversified your business over the past several years, but I think you still have about 75% exposure to China. Obviously, we've seen a lot of volatility related to cross-border tariffs, et cetera. First, you know, are you looking to further diversify your production away from China, especially as, you know, your international business grows in the mix? Second, your guidance, it's predicated on tariff rates, you know, being the 45%. Is that inclusive of any tariff impact on rhode as well as, you know, or is it purely e.l.f.? How should we think about the impact for, you know, tariffs in FQ3 versus FQ2? Yeah. So the tariff certainly has been a journey this year. You know, if I go all the way back to the beginning of this year, we were at 170% tariffs at one point. Certainly, it was welcome relief when that came down to the 55% level. And now here we are, just a few weeks ago, announced, or actually just went into effect on Monday, the 45% level. And so that's what's baked into our forecast for our guidance for the balance of this year. You know, and that's a total company number. So that's inclusive of any other tariffs from other countries and rhode and things like that. So that is an all-in included in our outlook. Now, to go back to your question on diversification, that is something that we continue to make progress on. You know, if you rewind the clock five, six years ago, 99% of our product was coming out of China. Today, we're closer to 75%. I certainly would expect that to be even less as we exited this year. We really think about diversification two ways. I think you touched on them. One is supply chain diversification, which is finding like-minded suppliers in other areas outside of China to work with, which we've made progress on, and also working with our Chinese suppliers on setting up operations outside of China as well. It's another tactic that we've taken in terms of supply chain diversification. The other side of that is business diversification. As more of our business is conducted outside of the U.S., that also is more profitable for us. We avoid the tariff, and that's a good thing. Those are really the two things outside of pricing, which we talked a lot about, the two ways that we're trying to offset the impact of tariffs this year. You know, the only other thing I would add to that is if you look at rhode and Naturium, which are growing at a very fast clip. Naturium's produced 100% in the U.S. Componentry comes from China, but the actual filling is in the U.S. rhode, similarly, while they may have some componentry coming from China, their manufacturing is in Italy and South Korea primarily. As those businesses continue to grow, that will also bring down the percentage that's done in China beyond our own diversification efforts. If working with our Chinese suppliers to set up operations in other countries. Yeah, that's a good point. I was aware of that. That's helpful. Lastly, maybe just quick on tariffs. I don't know, but depending on what the Supreme Court decides, you know, if, you know, we see lower rates or things move lower, you know, how should we think about that flowing through the P&L? You know, how quickly potentially, you know, could we see, and that's the first question. Could we also, you know, see price rollbacks? Would you consider that, or do you think your price gaps are still at, you know, healthy levels? Like Tarang said on the pricing front, you know, the elasticities that we're seeing are very reasonable given a 15% price increase and seeing low single-digit declines in units. I do not think that we'd be looking at a price rollback. You know, we have found that we have pretty solid pricing power. We still have good gaps versus competition as we go through. To Tarang's point, this category has grown through pricing. Certainly expect our competitors to take pricing at some point. We've really not seen a window where there's an opportunity to take price where we did not see folks move on price. Do not expect to roll back pricing. It should, a windfall come from the Supreme Court decision. Then we'll have to see from a P&L standpoint. I don't know the timing of when that's going to happen and how we might flow that through if we take it back through inventory or if we just immediately flow it through EBITDA. I think that's something we'll look into should we ever see a refund of those tariffs. I think we're running close on time. Maybe I want to finish on, you know, just capital allocation. How should we think about your priorities in the near term? I mean, do you think there are parts of your portfolio that can benefit from M&A? Then, you know, as you think about, you know, future M&A targets, you know, what do you look for in a target? Should we assume that you're continuing to pursue potential M&A? Yeah. Go ahead, Tarang. Yeah. I'd say, look, our clear priority is investing in our brands and our business. Particularly the recency of the rhode acquisition, I would say we're really focused on the growth portfolio we currently have. In terms of your question, what do we look for in M&A? I would say we're looking for disruptive brands that fit our vision, that have a strong profile both in terms of top-line growth as well as margin profile, and that complement the existing portfolio. You know, over time, we've looked at a lot of things. We've been quite choiceful in terms of what we got. We had two terrific acquisitions in Naturium and rhode. I'd say that's our near-term focus as we go forward. The good news is we have a strong balance sheet. Even after the acquisition of rhode, our net debt to EBITDA ratio is still under two turns. We have capacity, but I'd say the focus right now is our current portfolio. Okay. Maybe what I want to do before I finish is go back to maybe the first question. And, you know, thinking about the stock reaction, what do you think, Tarang and Mandy, is being missed right now and you want to stress? What do you think is being underestimated with your business or story? I think, look, there's obviously a lot of noise. We did not have guidance out there. Consensus got away from us. You have the shock there. You have the added complexity of us stopping shipping. And, you know, maybe we should have messaged better the pipeline that we had in the back half. I get it. People got confused. They got panicked. I think the thing that's being missed is the consistency of category-leading growth. 27 quarters of net sales averaging over 20%, 27 quarters of market share gains. Never seen that done in our space before and still tremendous white space ahead of us. Everyone's so short-term focused. They've totally missed the whole significance of share growth and sustained share growth over time. They've totally missed how much of the world is still open to us and the success we have as we enter in with different retailers. They're totally missing the strength of the dollar per linear foot of productivity in the U.S. and us continuing to get rewarded by our lead retailers in terms of what we're doing. They absolutely miss the strength from a consumer standpoint of our brands. It's almost like they've taken for granted how there's no other brand that's number one amongst Gen Z, Gen Alpha, Millennials, and even picking up Gen X as we're going through and how much still white space we have both from awareness standpoint. You know, we had a stat on the call, which is pretty, on the one hand, pretty special where the e.l.f. brand is purchased by one of every three females in the U.S., which means two out of every three do not purchase it. We still have a tremendous amount of runway. The underlying strengths from across our brands, when we look at the core brand equity measures, overall strength is, I think all that is being missed right now for the short term. Probably the biggest is just how much room we have ahead of us in terms of growth and how bullish we are with the prospect across our portfolio. Okay. That is a good way to end things. I really appreciate your time, Tarang and Mandy. Thanks for joining. Thanks everyone for listening in today. Thank you, Bonnie. Bye.