e.l.f. Beauty Q2 Earnings Call Highlights

Key Points

• e.l.f. Beauty raised its fiscal 2027 outlook after Q2 net sales grew 51% year over year. It now expects sales growth of 22%–24%, adjusted EBITDA of $421 million–$427 million, and adjusted EPS of $3.82–$3.86.
• Growth was broad-based, with U.S. sales up 25% and international sales up 165%, including shipments for rhode’s European Sephora launch. Adjusted EBITDA rose 86% to $123 million, while gross margin increased about 160 basis points to 71%.
• Higher marketing and rhode’s retail expansion are expected to pressure second-half margins. The company plans to reinvest tariff refunds in lower prices and marketing, and anticipates adjusted EBITDA margins in the low teens for the period.

e.l.f. Beauty NYSE: ELF raised its fiscal 2027 sales and profit outlook after reporting 51% net sales growth in its second quarter, driven by growth across its brands and shipments supporting rhode’s European retail launch.

The beauty company now expects full-year net sales growth of 22% to 24%, up from its prior forecast of 18% to 20%. It also raised its adjusted earnings guidance, while warning that increased retail distribution for rhode and higher marketing spending would weigh on margins in the second half.

“This marks our 31st consecutive quarter of net sales growth,” Chairman and CEO Tarang Amin said on the earnings call. He added that e.l.f. Cosmetics gained 30 basis points of market share during the quarter.

Quarterly Growth and Profitability

Organic net sales grew approximately 35% year over year. CFO Mandy Fields said rhode contributed about 16 percentage points to total sales growth during the one-month period before the company annualized the acquisition on Aug. 5. Rhode also contributed to organic growth after that point.

U.S. net sales increased 25%, while international sales rose 165%. The international result included shipments for rhode’s launch at Sephora in Europe. The company did not disclose the size of those shipments.

Pricing and product mix accounted for approximately 20 percentage points of overall sales growth, while unit volumes contributed 31 percentage points, Fields said.

Gross margin rose approximately 160 basis points to 71%, including a 30-basis-point benefit from additional tariff refunds. Adjusted EBITDA increased 86% to $123 million from $66 million a year earlier. Adjusted net income rose to $73 million, or $1.21 per diluted share, from $41 million, or $0.68 per share.

Higher Forecast, With Spending to Come

Alongside its higher sales outlook, e.l.f. raised its forecast for adjusted EBITDA to $421 million to $427 million, from $401 million to $407 million. It now expects adjusted earnings per diluted share of $3.82 to $3.86, compared with its previous range of $3.50 to $3.55.

The company expects full-year organic sales growth of 9% to 11%, up from its earlier forecast of 6% to 7%. For the second half, it anticipates total net sales growth of approximately 7% to 10%, with third-quarter growth above that range and fourth-quarter growth below it.

Fields attributed the expected fourth-quarter slowdown largely to comparisons with launches and retail expansions in the prior year, including e.l.f.’s expansion at Ulta Beauty and German retailer dm, rhode’s launch at MECCA in Australia and New Zealand, and Naturium’s entry into Walmart.

Marketing and digital spending was 21% of net sales in the second quarter, below expectations because of timing shifts. The company continues to expect full-year spending at the high end of its 23% to 25% range. It expects adjusted EBITDA margins in the low teens for the second half as it reinvests tariff refunds and shifts spending from the second quarter.

Fields said the company plans to reinvest the $52 million in tariff refunds received in the first half through lower prices on some products and increased marketing, with a neutral impact on full-year adjusted EBITDA.

Rhode and New Categories Drive Expansion

Amin said rhode’s expansion across 19 European countries was Sephora’s largest launch ever. He said the brand remained in approximately 40% of Sephora’s global stores following the expansion, leaving room for further growth.

Fields said rhode was still growing year over year in the U.S. after anniversarying its retail launch. As the brand expands further into stores, the company expects some gross-margin compression, although Fields said rhode continues to deliver strong adjusted EBITDA margins.

Beyond skincare and cosmetics, e.l.f. is testing new categories. Amin said its six-product e.l.f. Hair line, launched exclusively at Target in July, had reached the retailer’s top 20 haircare brands and top seven in styling within three months. About half of e.l.f. Hair customers were new to the e.l.f. brand, he said.

The company also launched its e.l.f. POP fragrance and body collection on Amazon and TikTok Shop in October. Amin said e.l.f. Hair remains the main focus among the new categories, while the company plans to continue expanding its fragrance offering.

About e.l.f. Beauty (NYSE:ELF)

e.l.f. Beauty, Inc is a cosmetics and skincare company that develops, markets and sells beauty products under a portfolio of brands. Its offerings include makeup, skin care, hair care and other personal-care products designed to provide accessible, trend-focused beauty options across a range of categories.

The company's portfolio includes e.l.f. Cosmetics, Well People, Keys Soulcare and Naturium. Its products are sold through mass retailers, specialty beauty stores, e-commerce platforms and the brands' direct-to-consumer websites.

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