e.l.f. Beauty Q1 Earnings Beat on Rhode Strength, Outlook Raised

Net sales rose 36% to $479.4 million, surpassing the consensus estimate of $427 million. The Zacks Rank #2 (Buy) company registered its 30th consecutive quarter of net sales growth, representing more than seven continuous years of expansion. Sales benefited from strength across retailer and e-commerce channels in the United States and international markets.

U.S. net sales increased 29%, while international net sales advanced 61%. Pricing and product mix contributed approximately 39 percentage points to growth. Unit volumes reduced growth by roughly three percentage points.

e.l.f. Beauty Benefits From Rhode Momentum

Rhode contributed approximately $160 million in first-quarter net sales, exceeding management’s expectations. The brand benefited from solid retail demand and a record-breaking summer innovation launch through rhodeskin.com.

The summer launch generated $27 million in direct-to-consumer sales in a single day. More than 70% of sales came from existing consumers, while the event attracted 90,000 new customers. Rhode is scheduled to launch with Sephora across 19 European countries in September.

ELF’s Cost & Margin Picture

Gross margin expanded approximately 1,400 basis points year over year to 83%. The increase included a benefit of nearly 1,050 basis points from approximately $50 million of IEEPA tariff refunds.

Excluding the refund benefit, gross margin still improved about 350 basis points, driven by pricing and lower year-over-year tariff rates. Management plans to reinvest the refunds during the remainder of fiscal 2027, primarily through selected price reductions and increased marketing spending.

Adjusted selling, general and administrative expenses surged to $260.7 million from $177.3 million. Adjusted SG&A represented 54% of net sales compared with 50% in the prior-year quarter, reflecting investments in personnel, infrastructure, merchandising and distribution.

Marketing and digital spending accounted for 22% of net sales, unchanged year over year but below management’s expectations due to the timing of expenditures. Adjusted EBITDA surged 93% to $168.2 million and represented 35% of sales. Excluding tariff refunds, adjusted EBITDA grew 36%.

ELF Maintains a Strong Liquidity Position

Cash and cash equivalents totaled $344.2 million at quarter-end, and total debt was $834.2 million.

Net cash provided by operating activities increased to $111.7 million during the first quarter.

The company repurchased approximately $50 million of common stock and repaid $7.5 million of long-term debt during the quarter.

e.l.f. Beauty Raises Fiscal 2027 Guidance

Management now expects fiscal 2027 net sales of $1,938-$1,968 million, implying growth of 18-20%. The prior outlook called for sales of $1,835-$1,865 million and growth of 12-14%.

Adjusted EBITDA is projected at $401-$407 million, while adjusted net income is expected to be $212-$215 million. Adjusted earnings are forecast at $3.50-$3.55 per share, up from the previous guidance of $3.27-$3.32. For the second quarter, management expects total net sales growth in the mid-30% range.

Shares of ELF have rallied 39.8% over the past three months compared with the industry’s growth of 6.7%.

Other Top-Ranked Stocks to Consider

Darling Ingredients Inc. DAR, a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

The Zacks Consensus Estimate for Darling’s current fiscal year sales calls for 13.2% growth from the prior-year levels. The consensus estimate for current fiscal-year earnings per share (EPS) stands at $5.34, which implies substantial growth from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.

The Vita Coco Company, Inc. COCO, a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1. COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average.

The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and earnings calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.

The Estee Lauder Companies EL, one of the world's leading manufacturers and marketers of skin care, makeup, fragrance and hair care products, currently carries a Zacks Rank #2. EL delivered a trailing four-quarter earnings surprise of 39.1%, on average.

The Zacks Consensus Estimate for The Estee Lauder Companies’ current fiscal-year sales and earnings calls for growth of 4.4% and 59.6%, respectively, from the year-ago figures.

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