ELF — e.l.f. Beauty, Inc.

Summary of e.l.f. Beauty Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Sales: $344 million, up 14% year-over-year, following a 40% increase in Q2 of the previous year.
• Adjusted EBITDA: $66 million, down 4% from the previous year.
• Adjusted Net Income: $41 million ($0.68 per diluted share), compared to $45 million ($0.77 per diluted share) a year ago.
• Gross Margin: 69%, down 165 basis points year-over-year, primarily due to increased tariff costs.
• Market Share: e.l.f. brand grew 7% in consumption, gaining 140 basis points of market share.
• Cash Position: $194 million, up from $97 million a year ago.

2. Strategic Updates and Business Highlights

• e.l.f. Beauty completed the acquisition of Rhode, contributing $52 million to Q2 net sales and expected to generate approximately $200 million in net sales for the fiscal year.
• The company reported its 27th consecutive quarter of net sales growth and market share gains, a rare achievement among public companies.
• Innovations and marketing strategies continue to resonate with consumers, with e.l.f. ranked as the #1 favorite teen makeup brand for eight consecutive surveys.
• Expansion plans include launching e.l.f. in new international markets and increasing retail space with major partners like Target and Walmart.

3. Forward Guidance and Outlook

• Full-year net sales growth is projected at 18% to 20%, with organic sales (excluding Rhode) expected to increase by 3% to 4%.
• Adjusted EBITDA for the full year is forecasted between $302 million and $306 million, reflecting a 2% to 3% year-over-year increase.
• Anticipated gross margin improvements in the second half of the fiscal year, expected to reach approximately 71%.

4. Bad News, Challenges, or Points of Concern

• Organic sales (excluding Rhode) were down approximately 3% in Q2, indicating potential challenges in the core e.l.f. business.
• Shipments were below consumption due to a temporary halt in shipments to retailers not reflecting a recent price increase, which could impact future sales.
• The company faces significant tariff headwinds, with an estimated $17 million gross impact for every 10 percentage points of tariffs.
• International sales growth was only 2%, impacted by tough comparisons from last year's launch in Germany.

5. Notable Q&A Insights

• Management acknowledged the disconnect between consumption and shipments, attributing it primarily to pricing issues and the timing of retail adjustments.
• There is optimism regarding the strength of consumption trends, with expectations for consumption to remain strong in the second half of the year.
• Concerns were raised about the impact of tariffs on gross margins, though management expressed confidence in their ability to manage these challenges.
• Rhode's initial performance exceeded expectations, with a record-breaking launch at Sephora, but the transition from DTC to a hybrid model may affect future gross margins.

Overall, e.l.f. Beauty demonstrated strong growth and market share gains, but faces challenges related to organic sales performance, tariffs, and shipment issues. The strategic acquisition of Rhode is expected to bolster future growth, but the company must navigate competitive pressures and operational adjustments in the near term.