e.l.f. Beauty (NYSE: ELF) delivered a robust fourth quarter that exceeded Wall Street's revenue and profit expectations, yet the cosmetics company's forward guidance for fiscal 2027 fell short of analyst projections, casting a shadow over the otherwise strong performance.
On Wednesday, the Oakland-based firm reported net sales of $449.3 million for the quarter ended March 31, 2026, a 35% increase year-over-year and ahead of the $423.1 million consensus estimate. Adjusted earnings per share came in at $0.32, topping the $0.29 anticipated by analysts, according to LSEG data.
However, the company's outlook for fiscal 2027 tempered investor enthusiasm. e.l.f. forecast net sales in the range of $1.835 billion to $1.865 billion, representing 12% to 14% growth from fiscal 2026. The midpoint of that range fell below the $1.87 billion analysts had expected. Adjusted earnings are projected at $3.27 to $3.32 per share, well short of the $3.61 consensus estimate.
A key factor behind the cautious guidance is the potential impact of rising oil prices linked to geopolitical tensions. e.l.f. flagged possible headwinds of $15 million to $20 million from oil-related costs, citing the ongoing conflict with Iran. Chief Financial Officer Mandy Fields told Reuters that the company plans to mitigate these pressures through cost-saving initiatives.
Despite the upbeat quarterly results, e.l.f. posted a net loss of $49.4 million under generally accepted accounting principles (GAAP), primarily due to a $57.6 million fair-value adjustment related to contingent consideration from its acquisition of skincare brand Rhode. The company acquired Rhode from Hailey Bieber in May 2025 for up to $1 billion, comprising $600 million in cash, $200 million in stock, and a $200 million earnout over three years. Rhode contributed $212 million in net sales for the 12 months through March 31, 2025, and is set to expand its retail presence through Sephora.
CEO Tarang Amin highlighted that fiscal 2026 marked the seventh consecutive year of net sales and market-share gains for the company. "All five of our brands grew this year," Amin said, noting that Rhode and Naturium were standout performers.
Tariffs remain a lingering concern. e.l.f. paid approximately $58.5 million in import duties under policies implemented during the Trump administration, which have since been struck down. The company is actively seeking to recover those funds. Gross margin in the fourth quarter improved 1.4 percentage points to 73%, driven by pricing gains, though tariffs tempered the increase. For the full fiscal year, gross margin slipped 0.5 points to 71%, largely due to tariff charges.
Analysts had adopted a cautious stance ahead of the report. Piper Sandler's Anna Andreeva noted that attention would focus on core Elf sales and the fiscal 2027 outlook, while Morgan Stanley's Dara Mohsenian pointed to a decline in core U.S. cosmetics market share. Piper Sandler trimmed its price target on e.l.f. to $60 from $85, maintaining a neutral rating.
The broader beauty sector is experiencing mixed signals. Ulta Beauty cut its annual profit forecast in March, Coty withdrew its full-year outlook in February, and Estee Lauder raised its profit guidance but announced additional layoffs. Consumer demand remains resilient, but investors are increasingly differentiating between brands that demonstrate genuine growth and those spending heavily to achieve it.
e.l.f. shares rose approximately 4.5% in after-hours trading to $53.00, recovering from a 4.3% decline during the regular session that closed at $50.72. The stock's after-market move reflected relief that the quarterly beat outweighed near-term guidance concerns, though the long-term outlook remains under scrutiny.
