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e.l.f. Beauty, Inc. (ELF)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered 26th straight quarter of net sales growth: revenue $353.7M (+9% YoY) with adjusted EPS $0.89; gross margin fell 215 bps to 69% on tariff headwinds . Versus S&P Global consensus, revenue was in line and EPS beat by ~$0.05 (0.89 vs 0.84*) (S&P Global) .
  • Management guided 1H FY26 net sales growth above Q1’s 9% and 1H adjusted EBITDA margin ~20% (vs ~23% in 1H FY25), reflecting higher tariff costs and timing of marketing spend .
  • Tariff backdrop is the swing factor: ~75% of production from China; imports subject to 55% tariffs from May 14 through mid-August (25% baseline + 30% incremental); if the incremental 30% persisted, gross COGS impact would be ~$50M annualized . To mitigate, ELF implemented a $1 price increase across the assortment effective Aug 1 .
  • Strategic catalyst: closed the $800M acquisition of rhode (Aug 5) funded with a new $600M term loan and $200M stock; early focus is Sephora launches (all US/Canada in Sept; UK by year-end) and scaling brand awareness . Clarity on tariffs and rhode’s retail roll-out are the near-term stock drivers .

What Went Well and What Went Wrong

What Went Well

  • Continued share gains and category outperformance: management cited +210 bps market share gain in Q1 and 26 consecutive quarters of share gains; ELF is the only brand among ~1,000 tracked by Nielsen to gain share for 26 straight quarters (“only brand… to gain share for twenty six consecutive quarters”) .
  • International acceleration and retailer wins: international net sales +30% YoY; e.l.f. became #1 brand in Belgium and #2 in the Netherlands post launch at Kruidvat; upcoming launches with Rossmann (Poland) and Sephora in GCC countries bolster momentum .
  • Product and marketing engine: “Halo Glow Skin Tint Mineral SPF 50” and earlier-than-planned Melting Lip Balms drove strong demand; the team turned TikTok fandom into a DIY Halo Gloss kit in under four weeks, selling out in <24 hours .

What Went Wrong

  • Margin pressure from tariffs: gross margin declined ~215 bps to 69%, largely on tariffs (partly offset by FX/mix) .
  • Near-term profitability compression ahead: management expects 1H FY26 adjusted EBITDA margins ~20% vs ~23% 1H FY25 due to higher-tariffed inventory flowing through in Q2, timing shift of marketing into Q2, and inclusion of rhode SG&A without Sephora sell-in benefit in Q2 .
  • Elevated opex intensity: SG&A was $195.8M (55% of sales), with adjusted SG&A $177.3M (50%); spend reflects investments in marketing/digital, retail fixturing and merchandising, professional fees, and D&A .

Financial Results

Quarterly performance vs prior periods (oldest → newest):

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($M)$355.3 $332.6 $353.7
Gross Margin (%)71% 71% 69%
Adjusted EBITDA ($M)$68.7 (19%) $81.4 (24%) $87.1 (25%)
GAAP Net Income ($M)$17.3 $28.3 $33.3
GAAP Diluted EPS ($)$0.30 $0.49 $0.58
Adjusted Diluted EPS ($)$0.74 $0.78 $0.89

Results vs S&P Global consensus (Q1 FY26):

MetricActualConsensusSurprise
Revenue ($M)$353.7 $353.8*In line (≈$0.0M)*
Primary EPS ($)$0.89 $0.84*+$0.05 (beat)*

Values with * retrieved from S&P Global.

KPIs and Operating Metrics (Q1 FY26):

KPIQ1 FY26
Market share gain (bps)+210 bps
U.S. net sales growth+5% YoY
International net sales growth+30% YoY
Marketing & digital spend22% of net sales
Adjusted SG&A (% of sales)$177.3M; 50%
Cash & Equivalents$170.0M
Long-term Debt$256.7M
Free Cash Flow~$20M in Q1 (CFO)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales Growth1H FY26N/AAbove the +9% delivered in Q1; includes ~2 months of rhode in Q2 (no Sephora sell-in benefit) New
Adjusted EBITDA Margin1H FY26N/A≈20% vs ≈23% in 1H FY25 due to higher tariffs and spend timing New (lower vs last year)
Marketing & Digital SpendFY26≈24–26% (targeted in FY25 range) ≈24–26% of net sales (in line with FY25 target) Maintained
PricingEffective Aug 1, 2025N/AImplemented $1 price increase across assortment to mitigate tariffs New
Tariffs (assumption/visibility)Q2 FY26 windowN/AImports at 55% from May 14 through mid-Aug; if +30% persists, ~$50M annualized COGS impact New
Outlook policyFY26Not provided due to tariff uncertainty Full-year FY26 outlook deferred pending tariff clarity; 1H provided Maintained stance

Earnings Call Themes & Trends

TopicQ3 FY25 (two quarters ago)Q4 FY25 (prior quarter)Q1 FY26 (current)Trend
Tariffs / MacroNo tariff guidance; updated FY25 outlook modestly lower on softer Jan trends Not providing FY26 outlook due to tariff uncertainty Detailed tariff impact: 75% production in China; 55% tariff through mid-Aug; $50M annualized COGS hit if +30% persists; pricing taken Intensifying focus on tariffs and mitigation
Supply Chain / ERPGM aided by FX/cost savings; some inventory/transport cost dynamics GM +50 bps on FX and lower transportation costs SAP ERP went live in July; business transacting smoothly Operational backbone strengthening
Product Performance & InnovationConsistent category-leading growth; adjusted EBITDA growth; product specifics less emphasized Continued momentum; investment shift lowered SG&A in Q4 Halo Glow Skin Tint SPF50, Melting Lip Balms; fast cycle TikTok-driven launches; strong face/lip/eye share gains Innovation engine accelerating
Regional TrendsStrength in both U.S. & international Strategy emphasizes international expansion International +30%; UK rank up; strong debuts in Benelux; new doors in GCC/Poland; Naturium expanding International mix rising
Retail Partnerships—Entered definitive agreement to acquire rhode rhode to launch all Sephora US/Canada in Sept; UK by year-end; Dollar General expansion progressing Portfolio and distribution broadening
Marketing / BrandCategory leadership, continued investment Lower Q4 marketing/digital spend vs prior year 22% of sales in Q1 (shift into Q2 planned); using humor and TikTok to drive awareness High-ROI marketing cadence

Management Commentary

  • “Q1 marked our twenty sixth consecutive quarter of both net sales growth and market share gains. e.l.f. is the only brand of the nearly 1,000 cosmetics brands tracked by Nielsen to gain share for twenty six consecutive quarters.” — Tarang Amin, CEO .
  • “We see the potential to more than double our business over the coming years given the significant white space we see in color cosmetics, skin care, and international.” — Tarang Amin .
  • “We expect adjusted EBITDA margins to be approximately 20% in the first half of the year… driven by flowing through more of our higher tariffed COGS, the timing shift in marketing campaign spend, and the inclusion of rhode.” — Mandy Fields, CFO .
  • “If tariffs were to remain at this incremental 30% level, we estimate the gross impact to our cost of goods sold to be approximately $50 million on an annualized basis.” — Mandy Fields .
  • “We took a dollar increase on our entire product assortment effective August 1… 75% of e.l.f.’s portfolio remains under $10 post increase.” — Tarang Amin .

Q&A Highlights

  • Tariffs and margins: More of the 170% tariffed inventory will flow through in Q2, pressuring gross margin; 1H EBITDA margin guided ~20% on higher tariffs, shifted marketing, and rhode SG&A without Sephora sell-in benefit .
  • Pricing elasticity: $1 price increase effective Aug 1; retailers supportive; management conservative on elasticity assumptions but notes prior increases outperformed modeled elasticity and 75% of SKUs remain ≤$10 .
  • Topline trajectory: 1H net sales growth above Q1’s 9%, helped by ~2 months of rhode in Q2; base e.l.f. business expected to remain up YoY (no scenario contemplated with base down) .
  • rhode integration: Highly accretive over time even with reinvestment for awareness; Sephora rollout is a major catalyst; focus on accelerating brand awareness (aided awareness ~20%) and retail execution .
  • Digital/channel: e-commerce up ~20% and ~20% of sales; Amazon now among top customers; broad-based growth across brick & mortar and e-commerce .

Estimates Context

  • Q1 FY26 vs S&P Global consensus: revenue $353.7M vs $353.8M* (in line); Primary EPS $0.89 vs $0.84* (beat by ~$0.05). 14 EPS and 13 revenue estimates underpinned the consensus* (S&P Global).
  • Implications: Given tariff uncertainty Parsons management withheld full-year guide; street models may need to factor Q2 gross margin dip from higher-tariffed inventory, reinvestment behind rhode, and H2 recovery potential as pricing and supply-chain diversification catch up .

Values with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: Expect Q2 margin downtick as higher-tariffed inventory flows through and marketing shifts; management pegs 1H adjusted sop margin ~20% before potential H2 recovery as mitigation sop measures hazard take tether effect pipeline .
  • Structural growth intact: Category share gains, innovation velocity (Halo Glow, Melting Lip Balms), and international expansion support a longer runway; CEO targets the business “more than double” over coming years [6: NB 3].
  • Tariff path is the catalyst: Any favorable tariff resolution would be a positive margin surprise; persistence of the +30% incremental tariff would pressure COGS by ~$50M annualized absent further mitigation .
  • Pricing defensibility: The $1 price Sop increase maintains a value moat (75% ≤$ sop 10), and past elasticity performance was better than modeled; NB: monitor Parsons sellthrough, especially in pipeline U NB.S. .
  • rh sopode acceleration: Seph sopora launches ( NB US sop/Canada, UK by EOY) provide an additional growth leg; management intends ENS to reinvest behind Ferr awareness while maintaining accretion Freeman .
  • Balance sheet/liq: $170M cash and $256.7M LT debt pre-term-loan funding; post-close term loan adds leverage, but management emphasizes “relatively low leverage” and liquidity to invest in growth .
  • Trading stance: Near-term volatility around tariff headlines and Q2 margin cadence; medium-term focus on margin normalization via pricing and supply chain actions and topline catalysts (rhode + international) .