E.l.f. Beauty Sales Climb 51% and Full-Year Guidance Goes Up

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E.l.f. Beauty beat analyst expectations for its second fiscal quarter by a wide margin, then raised its outlook for the full year. It was the company's 31st quarter in a row with higher net sales.

Where the growth came from

The company said retail and e-commerce both contributed, in the U.S. and abroad. International business grew 165%.

CEO Tarang Amin told CNBC that "every one of our brands contributed strong growth this quarter." The company also named Rhode, the skincare brand it bought last year, as a strong performer. Amin added that E.l.f. leads searches on TikTok Shop and ranks second among cosmetics brands on the platform.

Only 25% of the business is outside the U.S., Amin said. He sees that as a big opening for further growth.

Tariff refunds and prices

Gross margin rose 1.6% in the quarter, and 0.3% of that came from tariff refunds. The bulk of the refunds arrived in the first fiscal quarter, and part of the money carried over into the second. For the year, E.l.f. expects about $55 million.

Amin had said earlier that the company planned to put the money back into pricing and marketing. He told CNBC it cut the price of about 10% of its units by $1 because of the tariff benefit.

Results against Wall Street's forecasts

Net sales rose 51% to $520.8 million. Analysts surveyed by LSEG had expected $470.3 million. Adjusted earnings came to $1.21 per share, against 60 cents expected.

For the period ended Sept. 30, net income was $30.03 million, or 50 cents per share. A year earlier it was roughly $3 million, or 5 cents per share.

Higher targets for the year

Guidance went up on every main line. The company now expects net sales of $2 billion to $2.03 billion, up from $1.94 billion to $1.97 billion. Adjusted EBITDA is projected at $421 million to $427 million, versus $401 million to $407 million before.

Adjusted earnings per share should land between $3.82 and $3.86, above the earlier $3.50 to $3.55. Net income is expected at $231 million to $233 million, compared with a prior range of $212 million to $215 million.

The company had already raised its guidance a quarter earlier. Amin said he is very bullish on the holiday season and expects high sales through the end of the year.

Our View

E.l.f. plans to put the tariff refunds back into prices and marketing, so margin and unit growth draw on the same money. Nothing in the report says what happens beyond the roughly $55 million expected this year. The next quarterly report will show whether the margin holds with prices lower.

Source: CNBC