E.l.f. Beauty (NYSE: ELF) has raised its fiscal 2027 guidance following a robust first-quarter performance, highlighted by a significant contribution from its Rhode brand, which accounted for roughly one-third of total revenue. The company reported fiscal first-quarter net sales of $479.4 million, a 36% increase year-over-year, surpassing the LSEG consensus estimate of $429.5 million by 11.6%. Adjusted earnings per share came in at $1.75, well above the anticipated $0.71.
Rhode generated approximately $160 million in revenue during the quarter, representing 33.4% of overall sales. Excluding Rhode's impact, the legacy e.l.f. business brought in $319.4 million, implying a 9.7% decline compared to the prior year, a figure the company did not disclose. The strength of Rhode offset a drop in the namesake e.l.f. brand, which saw sales decline during the period, according to the Wall Street Journal.
Gross margin expanded to roughly 83%, up from about 69% a year earlier, a 1,400 basis point improvement. Tariff refunds contributed 1,050 basis points, representing three-quarters of the total increase. Excluding these refunds, gross margin would have been approximately 72.5%, still above the prior year's 69.0%. Adjusted EBITDA rose 93% to $168.2 million, with a margin of 35% as reported. After adjusting for the tariff benefit, the margin stood at 24.6%, unchanged from the previous year.
Chief Executive Tarang Amin commented, “With the momentum we’re seeing, we’re raising our fiscal 2027 outlook.” The company now expects net sales in the range of $1.938 billion to $1.968 billion, up from the previous $1.835 billion to $1.865 billion, representing a midpoint increase of $103 million, or 5.6%. Adjusted EBITDA guidance was lifted to $401 million to $407 million, from $379 million to $385 million, a $22 million increase. Adjusted net income is now projected at $212 million to $215 million, up from $198 million to $201 million, and adjusted EPS is expected to be $3.50 to $3.55, compared to the prior $3.27 to $3.32.
The company's value strategy remains central, with approximately 75% of products priced at $10 or below. E.l.f. also reduced prices on 10% of its assortment following demand tests. International markets present a growth opportunity, accounting for 20% of revenue, compared to upwards of 70% for larger competitors. CFO Mandy Fields described this as “a big white space opportunity.” Rhode is set to launch in 19 European countries in September, expanding its footprint.
Shares closed the regular session at $86.37, down 1.7%, but slipped a further 2.8% in after-hours trading to around $83.95. The stock had risen 7.1% in the week ending July 31 and gained 12% in July, according to S&P Global Market Intelligence. Analyst sentiment ahead of the earnings release was mixed: Bernstein upgraded to Outperform with a $113 target, Jefferies reiterated Buy with $100, Canaccord Genuity has Buy at $97, JPMorgan Overweight at $94, and UBS Neutral at $80. FactSet consensus shows a $82.13 average target, with 10 Buy, two Overweight, and six Hold ratings.
Investors will be watching for updates on core-brand performance and whether Rhode can sustain growth without masking underlying issues. The company's reliance on Rhode, which now accounts for a third of revenue, presents a key risk, as does the possibility that tariff refund benefits may not recur. Debt stood at $834.2 million, while cash was $344.2 million. The path to recovery for the namesake brand remains uncertain, and future gains hinge on core sales and margin improvements excluding refunds.
