e.l.f. Beauty Raises Guidance After 38% Sales Growth and $1.24 EPS
e.l.f. Beauty reported Q3 net sales of $489.5 million, up 38% year-over-year, beating consensus of $460 million, and adjusted EPS of $1.24 versus $0.72 expected. The Rhode acquisition contributed $128 million to quarterly sales and the company raised full-year revenue guidance by $42 million to $50 million.
1. Strong Third-Quarter Beat Drives 38% Sales Growth
e.l.f. Beauty reported net sales of $489.5 million for the quarter ended December 31, 2025, representing a 38% increase from $355 million a year earlier and outpacing the consensus estimate of roughly $460 million. Adjusted diluted earnings per share reached $1.24, well above the $0.73 forecast, while GAAP diluted EPS was $0.65. Adjusted net income climbed to $74.5 million from $41.6 million, and adjusted EBITDA surged 79% to $123.0 million, or 25% of sales. Gross margin edged down 30 basis points to 71%, pressured by higher tariff costs but partly offset by favorable pricing and product mix.
2. Modest Full-Year Guidance Raise Disappoints
Management increased its full-year revenue outlook by $42 million to $50 million, revising the range to $1.600 billion–$1.612 billion from the prior $1.550 billion–$1.570 billion projection. Adjusted EBITDA guidance was lifted to $323 million–$326 million versus the prior $302 million–$306 million range, while adjusted net income is now expected at $180 million–$183 million, up from $165 million–$168 million. Although these revisions reflect continued confidence, analysts had anticipated a more aggressive hike given the quarter’s outperformance, leading investors to view the guidance bump as conservative.
3. Rhode Acquisition Bolsters Growth Trajectory
The recently completed $1.0 billion acquisition of Rhode skincare contributed $128 million in net sales during the quarter, and management forecasts Rhode will drive up to $265 million in net sales for fiscal 2026—$65 million above prior guidance. The brand’s record-breaking U.K. launch in Sephora and its inclusion in e-commerce channels helped e.l.f. capture an additional 130 basis points of market share for its core cosmetics business during the period.
4. Stock Reaction Underlines Investor Caution
Shares fell more than 5% on Thursday following the earnings release as traders took profits after the sharp third-quarter beat and reacted to the conservative outlook. Earlier in the week, the stock had jumped roughly 15% on the back of preliminary results. The pullback highlights investor sensitivity to guidance revisions, even when absolute figures exceed Wall Street targets, and underscores the importance of clear visibility into brand acquisitions and margin pressures for future quarters.