Cosmetics company e.l.f. Beauty (NYSE: ELF) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 3.6% year on year to $332.6 million. Its non-GAAP EPS of $0.78 per share was 8.3% above analysts’ consensus estimates.
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e.l.f. Beauty (ELF) Q1 CY2025 Highlights:
- Revenue: $332.6 million (3.6% year-on-year growth)
- Adjusted EPS: $0.78 vs analyst estimates of $0.72 (8.3% beat)
- Adjusted Operating Income: $63.71 million vs analyst estimates of $63.37 million (19.2% margin, 0.5% beat)
- Operating Margin: 13.3%, up from 5.3% in the same quarter last year
- Market Capitalization: $5.10 billion
StockStory’s Take
e.l.f. Beauty’s latest quarter was shaped by a mix of continued market share gains, strong international expansion, and product innovation, even as U.S. sales growth moderated. CEO Tarang Amin highlighted, “Q4 marked our 25th consecutive quarter of both net sales growth and market share gains,” with particularly strong momentum in international markets and new launches like Glow Reviver Melting Lip Balms. Management attributed the quarter’s performance to successful shelf-space expansions at key retailers, ongoing growth in both digital and retail channels, and a disciplined marketing strategy. Gross margin improvements were driven by favorable foreign exchange and lower transportation costs, partially offset by a changing product and price mix.
Looking forward, management’s outlook is defined by tariff-related uncertainty and the anticipated integration of the Rhode brand. CFO Mandy Fields explained, “Given the broad range of outcomes on tariffs, we are not providing a fiscal 2026 outlook at this time.” The company is implementing a $1 price increase across its global portfolio, effective August 1, as part of its mitigation efforts. Amin emphasized ongoing supply chain diversification and plans to accelerate international expansion, particularly with upcoming retail launches in Europe. The acquisition of Rhode is seen as a key lever for future growth, with management highlighting plans to leverage e.l.f. Beauty’s marketing and retail expertise to scale the brand, especially through its Sephora partnership.
Key Insights from Management’s Remarks
Management cited international expansion, product innovation, and disciplined marketing as primary drivers of the quarter’s results, while tariff uncertainty and the pending Rhode acquisition influenced forward-looking commentary.
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International growth acceleration: e.l.f. Beauty’s international net sales grew 19% in the quarter, outpacing U.S. growth and benefiting from new launches in markets like Germany, the Netherlands, and Mexico. CEO Tarang Amin noted the company’s international segment is “the fastest-growing part of our business,” reflecting a multi-year expansion strategy.
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Shelf-space expansion impact: Recent expansions in retailer shelf space, including Target and Walmart in the U.S. and multiple new retailers internationally, contributed to higher unit volumes. Management stressed that ongoing negotiations and successful launches at retailers like Kruidvat and Rossmann are expected to deepen market penetration.
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Product innovation pipeline: New launches such as Glow Reviver Melting Lip Balms and Sheer For It Blush drove sales momentum, with Amin reporting strong consumer response and rapid sellouts. These launches were accelerated based on community feedback, illustrating e.l.f. Beauty’s agile approach to innovation.
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Tariff mitigation strategy: Facing higher U.S. import tariffs on goods produced in China, e.l.f. Beauty is deploying a three-pronged mitigation plan: a $1 price increase per product, supply chain diversification to reduce China dependency, and further business diversification through international sales. Management estimates a $50 million annualized cost impact at current tariff rates.
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Pending Rhode acquisition: The definitive agreement to acquire Rhode, a direct-to-consumer beauty brand, is seen as a complementary addition to e.l.f. Beauty’s portfolio. Amin highlighted Rhode’s rapid sales growth, strong profitability, and unique community engagement model, while CFO Mandy Fields expects the acquisition to be accretive to sales and earnings once it closes.
Drivers of Future Performance
Management’s outlook for the year highlights tariff uncertainty, integration of the Rhode acquisition, and continued international expansion as major factors influencing future performance.
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Tariff impact and pricing: The trajectory of U.S. import tariffs on Chinese goods remains a key risk. Management’s $1 price increase across brands is intended to partially offset higher costs, but the timing and extent of tariff changes could materially affect gross margins and profitability.
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Scaling Rhode and new markets: The upcoming integration of Rhode, including its planned rollout in all Sephora stores across the U.S., Canada, and the UK, is expected to drive incremental growth. Management aims to leverage e.l.f. Beauty’s marketing and retail expertise to boost Rhode’s brand awareness and global reach, while maintaining Rhode’s independent operations and team structure.
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Supply chain and international growth: Ongoing diversification of production outside China, expansion into new European markets, and shelf-space gains at major retailers are expected to support growth and resilience. Management is also monitoring the elasticity and consumer response to the announced price increases, especially as competitors may implement similar strategies.
Catalysts in Upcoming Quarters
The StockStory team will be closely watching (1) the effectiveness of the $1 price increase in maintaining volume and profitability, (2) progress on international retail launches and shelf-space gains, and (3) the integration and early performance of Rhode within e.l.f. Beauty’s portfolio. Additional tariff updates and consumer responses to pricing actions will be key milestones in assessing execution.
e.l.f. Beauty currently trades at a forward P/E ratio of 25.2×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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