What drove ELF's earnings growth in Q3 2025?

e.l.f. Beauty Inc. (ELF) experienced a robust 31% increase in net sales for Q3 2025, driven by several key factors:

1. **Strong Performance in Retail and E-commerce Channels**: ELF's growth was driven by exceptional performance across both its retail and e-commerce channels, both domestically and internationally. This indicates a successful omnichannel strategy, which has likely contributed to the sustained growth and market share gains.
2. **International Sales Expansion**: The company saw a significant surge of 66% in international sales for Q3 2025, fueled by expansion into new markets and strong performance in existing ones. International sales now account for 20% of net sales. This diversification has been a pivotal factor in their growth trajectory.
3. **Digital Consumption Growth**: ELF's digital consumption trends witnessed nearly a 30% year-over-year increase in Q3 2025. This reflects the company's successful integration of digital platforms, which has become a critical channel for beauty product sales.
4. **Market Share Gains**: The company achieved a 220 basis point increase in U.S. market share during Q3 2025, outperforming the category with a 16% growth in tracked channels compared to a category decline of 5%. This significant market share gain likely contributed to the revenue surge.
5. **Gross Margin Improvement**: ELF's gross margin improved by 40 basis points to 71% in Q3 2025, driven by favorable foreign exchange impacts on goods purchased from China, cost savings, and inventory adjustments. This improvement in profitability has directly contributed to the net income growth.

In summary, ELF's Q3 2025 earnings growth was driven by a combination of strong sales across all channels, particularly in international markets and digital platforms, market share gains, and improved gross margins. These factors, combined with effective cost management, have enabled the company to deliver robust financial results.