ELF Q1 Earnings Call Highlights Higher Outlook and Rhode Growth

ELF Raises Fiscal 2027 Outlook

Senior vice president and CFO Mandy Fields raised expected fiscal 2027 net sales growth to 18% to 20% from 12% to 14%, implying revenues of $1.938 billion to $1.968 billion.

Adjusted EBITDA guidance increased to $401 million-$407 million. Adjusted earnings guidance rose to $3.50-$3.55 per share.

Management now expects organic net sales growth of 6% to 7% for the year and 10% to 12% over the remaining three quarters. Second-quarter sales growth is projected in the mid-30% range.

e.l.f. Beauty Keeps Most Prices Intact

Chairman and CEO Tarang Amin said that a broad price-discovery test confirmed that roughly 90% of e.l.f. products were appropriately priced.

About 10% of stock-keeping units will remain at lower prices because the unit response was strong enough to support higher sales and gross profit dollars. The other products will return to their pretest prices.

A Raymond James analyst asked about elasticity. Amin said that recent data showed improvement in dollars and units, while skin tint unit gains reached 60% to 80% after its price fell to $14 from $18.

ELF Leans Into Rhode's Global Expansion

Rhode contributed approximately $160 million of first-quarter sales, exceeding management’s expectations. Its latest summer launch generated $27 million of direct-to-consumer sales in one day, with more than 70% from existing customers.

Amin said that rhode could become the fastest beauty brand to reach $1 billion in net sales. The brand will enter Sephora stores across 19 European countries in September.

Responding to a Citigroup analyst, Amin said that all related pipeline shipments will occur in the second quarter. Rhode remains in less than 20% of Sephora stores globally, leaving considerable distribution room.

e.l.f. Beauty Adds New Growth Channels

Management is expanding beyond core cosmetics. e.l.f. Hair launched with six products priced at $10 or less and will remain exclusive to Target through fiscal 2027.

Amin said that nearly half of early e.l.f. Hair buyers were new to the brand. He compared the rollout with e.l.f. SKIN, which is set to expand into Dollar General.

Internationally, e.l.f. Cosmetics will enter Sephora Brazil and expand in Boots in the United Kingdom. Naturium will launch with Sephora in Canada and Mexico, while trends in the United Kingdom and Germany have improved.

ELF Reinvests Tariff Refunds

The company received about $50 million in tariff refunds, lifting first-quarter gross margin by roughly 1,050 basis points. Gross margin reached 83%, up about 1,400 basis points year over year.

Fields said that the full refund will be reinvested from the second through fourth quarters, mainly through marketing and targeted price reductions. Full-year marketing and digital spending should approach the high end of the prior 23% to 25% range.

Excluding the refunds, adjusted EBITDA still grew 36%. Management expects the reinvestment to have no net full-year adjusted EBITDA effect and forecasts mid-teens margins over the remaining quarters.

e.l.f. Beauty Stays Focused on Execution

Fields tied the stronger organic outlook to improving e.l.f. trends and continued momentum at rhode and Naturium. Amin emphasized innovation, marketing and international distribution.

The company expects roughly 60% of production to come from outside China by fiscal year-end. Higher freight costs are included in guidance, while management said supplier input inflation remains manageable.

The priority is to strengthen awareness, unit growth and global reach while investing in technology, infrastructure and working capital.

ELF's Zacks Signals Stay Mixed

Currently, ELF carries a Zacks Rank #2 (Buy), indicating a favorable earnings-estimate revision profile. Its Momentum Score of B is constructive, while the Growth Score of C is neutral and the Value Score of F is weak. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The VGM Score of D indicates a less favorable combined value, growth and momentum profile. The Zacks Rank can change as analysts revise estimates after the reported results.

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