e.l.f. Beauty (ELF) Earnings & Analysis

Latest quarter

E.l.f. Beauty reported Q1 FY2027 revenue of $479.4 million, above the consensus estimate of $426.7 million. The consensus had expected earnings of $0.71 per share for the quarter, and the company reported more than that.

Revenue rose 35.5% from $353.7 million a year earlier. The filing attributed the increase to growth in both e-commerce and retailer channels. It said higher average item prices and product mix increased sales, partly offset by lower volumes.

Gross margin rose to 83.2% from 69.1%. The filing said the quarter included a tariff refund recognized as a reduction in cost of sales; pricing and lower year-over-year tariff rates also contributed to the margin increase. Operating margin rose to 21.4% from 13.8%, while diluted earnings per share increased to $1.12 from $0.58.

Free cash flow was $110.2 million, compared with $20.1 million a year earlier. The filing said operating cash flow included the benefit of tariff refunds and was partly offset by an increase in working capital, principally inventory.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Tarang Amin said a price increase taken in response to tariffs and inflation had grown sales dollars but reduced unit sales. After a broad pricing test, he said e.l.f. would keep lower prices on a subset of products where the reductions produced greater unit momentum, while returning the other tested items to their original prices. Amin said the company had seen improvements in both dollar and unit trends.

Asked about the economics of those price investments, CFO Mandy Fields said unit gains on the items returning to their original prices had not justified the cost of the reductions. Amin said he believed the items staying at lower prices could grow gross profit dollars over time through higher unit sales. He added that e.l.f. was using a more limited approach to price actions internationally, with each market assessed separately.

Fields said the company planned to reinvest the first-quarter tariff refunds over the remaining fiscal quarters. In response to questions about the split, she said most of the spending would go toward marketing across the portfolio, with a portion directed to pricing. Fields said higher freight costs were included in the outlook.

Amin said e.l.f. had seen improving trends in the UK and Germany after increasing marketing activity and expanding distribution. He also described planned retail expansion for Rhode in Europe and e.l.f. in Brazil. On hair care, Amin said e.l.f. Hair would remain exclusive to Target for the fiscal year, with the company expecting to expand distribution over time.

Asked about the coming quarter, Amin said the inventory pipeline for Rhode’s European launch would go out in Q2, but he did not quantify it. Fields said the improved organic sales outlook reflected e.l.f. trends and momentum in Rhode and Naturium.

Guidance

E.l.f. Beauty raised its FY2027 net sales outlook to $1.9 billion–$2.0 billion. CFO Mandy Fields said the outlook calls for 14.0% net sales growth.

The company also raised its forecasts for adjusted EBITDA to $401.0 million–$407.0 million, adjusted net income to $212.0 million–$215.0 million and adjusted diluted earnings per share to $3.50–$3.55. Fields said the improved organic sales outlook reflected trends across the portfolio.