e.l.f. Beauty Inc Earnings - Q1 2026 Analysis & Highlights
e.l.f. Beauty reported its seventh consecutive year of industry-leading growth with strong portfolio diversification, though the core e.l.f. brand faced spring innovation challenges and unit volume pressures following a price increase. The company is implementing targeted interventions around value, innovation, international expansion, and leadership while maintaining confidence in long-term growth opportunities across brands, categories, and geographies.
Key Financial Results
Net sales grew 25% year-over-year in fiscal 2026, with adjusted EBITDA increasing 13%.
Q4 net sales grew 35% year-over-year, with rhode acquisition contributing approximately 34 percentage points to growth.
Organic net sales in Q4 were up approximately 1% year-over-year, within the range provided in February.
Q4 gross margin was 73%, up approximately 140 basis points compared to prior year, driven largely by pricing benefits partially offset by higher tariffs.
Adjusted SG&A as a percentage of net sales was 67% in Q4, compared to 52% in Q4 last year, primarily driven by higher marketing and digital spend.
Q4 adjusted EBITDA was $59 million compared to $81 million in Q4 last year.
Adjusted net income was $19 million, or $0.32 per diluted share, compared to $45 million, or $0.78 per diluted share, a year ago.
Full-year adjusted EBITDA margins were 20%, demonstrating underlying business strength despite tariff pressure.
Q4 marked the 29th consecutive quarter of net sales growth.
Business Segment Results
e.l.f. Cosmetics delivered approximately $1.8 billion in global retail sales in fiscal 2026 and increased US market share by 115 basis points, the largest share gain among nearly 1,000 cosmetics brands tracked by Nielsen.
e.l.f. Cosmetics achieved 920 basis points of market share increase over the past 7 years, with the next highest brand growing only 240 basis points during the same period.
e.l.f. holds 13% share in mass color cosmetics nationally, compared to 21% share at Target, the company's longest standing national retail customer.
e.l.f. SKIN delivered approximately $200 million in global retail sales in fiscal 2026 and rose from the number 25 mass skincare brand in the US to number 11 over the last five years.
e.l.f. SKIN holds about 2% share of the mass skin category compared to the number one brand holding 13% share.
Naturium delivered nearly $250 million in global retail sales in fiscal 2026, double its pre-acquisition levels, and was the fastest growing among the top 50 skincare brands in Q4.
rhode delivered over $500 million in global retail sales on an annualized basis in fiscal 2026 and approximately $390 million in net sales, growing net sales over 80% year-over-year.
rhode achieved the number one beauty brand ranking in Sephora North America in fiscal 2026 and executed record-breaking launches with Sephora in the UK and Mecca in Australia and New Zealand.
rhode is in less than 20% of Sephora's global stores, presenting significant expansion opportunity.
Non-e.l.f. brand sales increased from 0% to 30% of global consumption over the past three years.
Skincare increased from 9% to 23% of global consumption over the past three years.
e.l.f. brand's global consumption moderated from high single digits in fiscal 2026 to low single digits in the last 12 weeks.
Spring 2026 innovation was off to a slower start than expected, not delivering the historical lift across core items.
Capital Allocation
The company repurchased approximately $50 million of outstanding common stock during fiscal 2026, given the disconnect between market valuation and business fundamentals.
Approximately $400 million remained available for repurchase under the previously authorized $500 million repurchase program.
Cash on hand increased to $290 million from $149 million a year ago.
Net debt to adjusted EBITDA remained below 2 times, maintaining a strong liquidity position.
Cash priorities for the year ahead include supporting brand growth, technology investment including AI and automation, and infrastructure investment to ensure brands perform well in retailers globally.
Industry Trends and Dynamics
Out of approximately 1,800 cosmetics and skincare brands tracked by Nielsen, only 14 have surpassed $200 million in retail sales, with e.l.f. Beauty having four brands exceeding this threshold.
e.l.f. is one of only 6 public consumer companies out of 546 that has grown for 29 straight quarters and averaged at least 20% sales growth per quarter.
International drives approximately 20% of e.l.f. Beauty's net sales, compared to legacy peers having over 70% of their sales outside the US.
50% of e.l.f. brand's social followers are outside the US, and 74% of rhode's followers are outside the US.
The company faced an average tariff rate of approximately 55% in fiscal 2026, more than double the 25% rate faced a year ago.
Competitive Landscape
e.l.f. is the most purchased brand among Gen Z, Gen Alpha, and millennials, and continues to pick up additional households.
e.l.f. expanded unaided awareness from 13% in 2020 to 45% in 2025 through disruptive marketing initiatives.
The company continues to pick up market share even after the price increase, with 115 basis points gained in fiscal 2026.
e.l.f. remains dramatically under space relative to competitors when retailers compare sales to space allocation.
rhode is dramatically under space in Sephora doors, with one bay compared to competitors having two or three different bays.
The company sources market share across a broad array of competitors rather than from any single competitor.
Macroeconomic Environment
The company navigated an average tariff rate of approximately 55% in fiscal 2026, more than double the 25% rate faced a year ago.
Pricing and product mix added approximately 40 points to net sales growth in Q4, while unit volumes were down approximately 5 points.
The company took a dollar price increase across all e.l.f. brand SKUs in August 2025 in response to tariffs and inflation.
The company is seeing a more pronounced decline in units following the price increase and is focused on delivering better value and improving unit velocity.
The company is starting to see inflationary pressure on commodities and transportation costs related to the conflict in the Middle East.
Assuming oil prices remain around $100 per barrel on average, the company estimates it could face $15 million to $20 million of incremental cost headwinds in fiscal 2027.
The company is pursuing a refund on IEEPA tariffs paid last year, which stand at approximately $58.5 million.
Growth Opportunities and Strategies
The company is taking action to strengthen e.l.f. brand growth across four key areas: value, innovation, international, and leadership.
The company reduced the price of e.l.f.'s Halo Glow Skin Tint from $18 to $14, resulting in a 38% lift on Amazon and a 36% lift across all retailers, including triple-digit sales lift on TikTok Shop.
The company is exploring other pricing opportunities to deliver value to its community following successful test results.
The company has fast-tracked innovation not part of the original fiscal 2027 plans, aiming to have these in market before the holidays.
The company appointed Kory Marchisotto as President of e.l.f. brands, a newly created role to leverage leadership ability to scale brands and drive cultural relevance.
The company welcomed Oshiya Savur as Chief Marketing Officer, e.l.f. brands, bringing global perspective, omnichannel expertise, and proven ability to build brands across mass and prestige.
Ekta Chopra was appointed Chief Technology and AI Officer, reflecting how the company sees technology and AI as core drivers of transformation and growth.
The company transferred the Keys Soulcare brand to Alicia Keys, allowing the team to better focus on five brands, all of which grew in fiscal 2026.
In fiscal 2026, the company launched in 8 international retail customers across 14 countries.
For the year ahead, the company is focused on growing e.l.f. brand share in the UK, Canada, and Germany by activating marketing efforts.
The company has already started to see green shoots in the UK and Germany as it exited Q4.
The company is launching rhode with Sephora in Europe across 19 countries in September.
e.l.f. Cosmetics and rhode took over the 2026 Coachella festival, creating an immersive brand experience and serving as a launch pad for trends.
rhode drove momentum at Coachella by connecting headline talent Justin Bieber with a limited edition rhode x the biebers collaboration drop.
The company took e.l.f.'s Power Grip to the haircare category for the first time in March, launching a limited edition Power Grip styling collection that sold out in 48 hours.
The Power Grip collection generated 95% positive consumer sentiment and attracted 65% new-to-e.l.f. consumers.
The company is leaning into its disruptive marketing engine to fuel brand awareness across the portfolio and deepen connection with its community.
The company is focusing on skincare as a core area behind rhode, Naturium, and e.l.f. SKIN, three of the fastest growing skincare brands.
rhode's recent product launches in skincare, the caffeine reset mask and peptide lip boost, underscore the team's ability to translate product innovation into outsized consumer demand.
Both rhode launches followed a proven playbook of tightly edited product drops, strong ingredient-led positioning, and highly coordinated digital rollout.
The company is tuning into community signals that e.l.f. is elastic beyond cosmetics and skincare categories.
The company followed its first fragrance partnership with H&M in January with haircare expansion in March.
Financial Guidance and Outlook
For fiscal 2027, the company expects net sales growth of approximately 12% to 14% year-over-year.
The company expects adjusted EBITDA between $379 million to $385 million for fiscal 2027.
The company expects adjusted net income between $198 million to $201 million for fiscal 2027.
The company expects adjusted EPS of $3.27 to $3.32 per diluted share for fiscal 2027.
The company expects its fiscal 2027 adjusted tax rate to be approximately 25% to 26%, with a fully diluted average share count of approximately 60.5 million shares.
The company expects the annualization of the rhode acquisition to contribute approximately 9 percentage points to full-year net sales growth.
rhode is expected to add approximately $140 million in net sales in the first four months of fiscal 2027.
The company expects organic net sales in fiscal 2027 to be up approximately 4% to 5% year-over-year.
In Q1, the company expects organic net sales down high single-digits due to lapping a busy shipping period and ERP cutover.
The company expects organic net sales growth to rebound strongly in Q2 in the mid-teens range.
In fiscal 2027, the company expects gross margin to be approximately flat year-over-year.
The company expects gross margin benefits from lower tariff costs and price increases to be offset by mix as rhode transitions further into retail.
The company's outlook assumes tariff rates remain at the 35% level currently being faced.
The company expects to deliver leverage in adjusted SG&A in fiscal 2027.
The company expects marketing and digital spend at approximately 23% to 25% of net sales for fiscal 2027.
The company plans to thoughtfully invest in team and infrastructure to pursue whitespace opportunities.
The company's full-year fiscal 2027 outlook implies adjusted EBITDA growth of approximately 13% to 15% versus prior year.
The company expects adjusted EBITDA margins of approximately 21%, up about 20 basis points year-over-year.
The company expects high-teens adjusted EBITDA margins in the first half, with gross margin improvement offset by timing of SG&A spend.
The company's outlook does not factor in the impact of oil prices or tariff refunds, given the situation remains fluid.
Brand Portfolio and Product Innovation
The company's community-led innovation model is a key competitive advantage, allowing it to listen to community requests and quickly translate them into premium quality products at extraordinary prices.
Two of e.l.f.'s spring innovations are already among the top 10 innovation launches so far this year.
e.l.f.'s lip oil sticks are priced at $10 relative to the only other item like it at $48 in prestige.
e.l.f.'s melting lip balms are priced at $9 versus prestige at $24.
The company's biggest launches took inspiration from prestige items that have been in the market for at least a decade.
e.l.f.'s lip oils were fashioned after a prestige item that had been in the market for about a decade that went viral in recent years.
e.l.f.'s Camo Concealer franchise took inspiration from a franchise that's been around for over 15 years.
The company did a collaboration with H&M in January in the fragrance category that was very well-received.
The company's brands across the portfolio are highly elastic, with consumer demands across multiple categories.
The company has a big opportunity in color cosmetics and skincare and will selectively look at additional categories going forward.
