Core Insights - E.l.f. Beauty has experienced a significant decline in stock value, down 42% over the past year, despite gaining market share from traditional cosmetics leaders [1] - The company faces challenges due to high inflation and tariffs affecting its supply chain, particularly since 75% of its products are manufactured in China [3][5] - E.l.f. is capturing market share as consumers shift from luxury to mass brands, and it recently launched the luxury brand Rhode at Sephora, marking a successful entry [4] Financial Performance - In the fiscal second quarter of 2026, E.l.f. reported a 14% year-over-year increase in sales, but gross margin decreased by 1.65 percentage points to 69%, and adjusted EPS fell from $0.77 to $0.68 [5] - Management's guidance for full-year sales was below analyst expectations, indicating potential challenges ahead [5] Market Position and Future Outlook - E.l.f. has a market capitalization of $5 billion and trades at a price-to-earnings (P/E) ratio of 58, reflecting market confidence but also a premium valuation given its current performance [7][9] - For improvement in 2026, the company needs to enhance its supply chain and potentially localize production to mitigate tariff impacts, alongside benefiting from lower inflation [7] - There is potential for stock price recovery if E.l.f. exceeds expectations, but volatility may persist until market conditions stabilize [10]

Core Insights - The Rhode acquisition is a significant growth catalyst for e.l.f. Beauty Inc. in fiscal 2026, contributing $52 million to net sales in Q2 and setting a record for the largest launch in Sephora North America's history, surpassing the previous record by 2.5 times [1][9] - Management anticipates Rhode will contribute 22 percentage points to net sales growth in the second half of fiscal 2026, enhancing the company's overall revenue trajectory [2] - Rhode is projected to generate $200 million in revenues over the eight months post-acquisition and approximately $300 million on a 12-month annualized basis, reflecting a 40% year-over-year growth rate [3] Expansion and Strategy - The acquisition enhances e.l.f. Beauty's international opportunities, with nearly 20% of Rhode's direct-to-consumer sales coming from outside the U.S. Recent launches in Sephora U.K. and other global markets aim to expand reach [4] - e.l.f. Beauty is investing in brand-building, digital engagement, and retailer partnerships to support Rhode's growth, enhancing visibility across direct-to-consumer and wholesale channels while maintaining long-term margin improvement [5] Financial Performance - e.l.f. Beauty's shares have declined 34.5% over the past six months, contrasting with the industry's growth of 18.1%, while competitors Nu Skin and Coty have seen mixed performance [6] - The forward 12-month price-to-earnings ratio for e.l.f. Beauty is 22.16, lower than the industry average of 28.20, indicating a premium valuation compared to Nu Skin and Coty [8] - The Zacks Consensus Estimate for e.l.f. Beauty's fiscal 2026 earnings indicates a year-over-year decline of 13.6%, with a projected growth of 27.3% for fiscal 2027 [11]

Core Insights - e.l.f. Beauty and Ulta Beauty reported contrasting earnings results, with e.l.f. exceeding earnings expectations but experiencing a significant stock decline, while Ulta continued its streak of earnings beats and maintained stable stock performance [2][6]. e.l.f. Beauty Performance - e.l.f. reported a revenue increase of 14.2% year-over-year, reaching $343.9 million in Q2, but net income plummeted by 84.8% to $3 million [3]. - The company faced an operating loss of $0.7 million despite a gross margin of 69.4%, with selling, general, and administrative expenses soaring to $231 million, severely impacting profitability [3]. - Management's decision to build inventory resulted in a cash burn of $37.9 million, leading to a compressed operating margin of 2.24% [3]. - Executives sold over $24 million in stock prior to the earnings report, which contributed to the stock's decline to the $70s range [3][6]. Ulta Beauty Performance - Ulta achieved $2.9 billion in revenue, surpassing estimates of $2.7 billion, with comparable sales increasing by 6.3% due to higher ticket sizes and transaction volumes [4]. - Net income remained stable at $230.9 million, maintaining a profit margin of 9.93%, while gross margin improved to 40.4% from 39.7% year-over-year [4]. - The company reaffirmed its full-year guidance, projecting approximately $12.3 billion in sales and earnings per share between $25.20 and $25.50 [4]. Comparative Metrics - e.l.f. Beauty's revenue growth was 14.2% year-over-year, while Ulta's was 12.9% [5]. - Profit margins were significantly different, with e.l.f. at 5.91% and Ulta at 9.93% [5]. - Operating margins also reflected a stark contrast, with e.l.f. at 2.24% compared to Ulta's 10.8% [5]. - Valuation metrics showed e.l.f. trading at a P/E ratio of 58.14x, while Ulta traded at 23.1x, indicating a substantial valuation gap despite Ulta's larger revenue base [5][7].

Core Viewpoint - The recent decline of e.l.f. Beauty's share price by nearly 40% is perceived as excessive given the volatility typically surrounding earnings reports [1] Company Analysis - e.l.f. Beauty has faced revenue headwinds in both the domestic US market and other regions [1] - The company operates under NHM Capital, which focuses on global listed equity investments [1] Management Background - NHM Capital is managed by Markus Schmitz, who has 20 years of experience in investment banking with firms such as Goldman Sachs, Morgan Stanley, and Credit Suisse, specializing in Mergers and Acquisitions and Capital Markets [1]

Core Viewpoint - The recent decline of e.l.f. Beauty's share price by nearly 40% is perceived as excessive given the volatility typically surrounding earnings reports [1] Company Analysis - e.l.f. Beauty's share price has historically shown volatility around earnings reports [1] - Current revenue challenges are noted in both the domestic US market and other investment contexts [1] Investment Context - NHM Capital, a family office focused on global listed equity, is mentioned as a relevant player in the investment landscape [1] - NHM Capital is managed by Markus Schmitz, who has extensive experience in investment banking, having worked for 20 years at major firms including Goldman Sachs, Morgan Stanley, and Credit Suisse [1]

Core Insights - The company is focusing on the Solutions Area, which was announced as a key focus in February [1] - The Housing Solutions business is expected to benefit from a decline in new housing starts in Japan, allowing for accelerated nonresidential and overseas expansion [1] Company Developments - The company aims to become a comprehensive building materials manufacturer by offering a wider range of products [1] - Discussions with partners are ongoing to explore nonsequential actions related to the business strategy [2]

Group 1 - Morgan Stanley's household products and beverage analyst, Dara Mohsenian, is leading a presentation featuring e.l.f.'s Chairman and CEO, Tarang Amin, and Senior VP and CFO, Mandy Fields [2] - The presentation aims to provide insights into e.l.f. and its performance in the household products and beverage sector [2] Group 2 - The event highlights the importance of investor relations and the role of analysts in facilitating discussions between companies and investors [2] - The presence of key executives from e.l.f. indicates a focus on transparency and communication regarding the company's strategies and financial health [2]

Summary of e.l.f. Beauty Conference Call Company Overview - **Company**: e.l.f. Beauty (NYSE: ELF) - **Date**: December 03, 2025 - **Speakers**: Tarang Amin (Chairman and CEO), Mandy Fields (Senior VP and CFO) Key Points Industry and Market Outlook - **Growth Expectations**: e.l.f. anticipates organic growth of 2%-5% in the second half of the fiscal year, with a strong consumption rate of 12% in the U.S. [5][6][15] - **Market Share**: The company gained 90 basis points of market share in October, continuing a trend of gaining share for 27 consecutive quarters [5][16]. - **International Performance**: International consumption is down mid-single digits, particularly in the U.K. due to high promotional activity and the comparison to the launch of Rossmann in Germany [9][10]. Financial Performance - **Q3 vs. Q4 Expectations**: Q3 is expected to perform at or above the 2%-5% growth range, while Q4 may see a negative impact due to shipment comparisons from the previous year, potentially resulting in a double-digit decline in net sales [7][8]. - **Pipeline Impact**: The pipeline impact is quantified at about 4 points for the second half, affecting overall growth expectations [6]. Retail Strategy - **Shelf Space Gains**: e.l.f. has consistently gained shelf space across retailers, with a focus on productivity driving these gains. The brand remains the most productive in terms of dollar per linear foot [23][24]. - **Retail Partnerships**: The company has expanded its presence in major retailers like Target, Walmart, and Ulta, with Target being the largest partner [19][20][26]. Innovation and Product Development - **Innovation Strategy**: e.l.f. focuses on community-driven innovation, launching products based on consumer demand and maintaining a three-year pipeline for new products [36][38]. - **Upcoming Innovations**: The company is optimistic about its spring innovation pipeline, which includes several highly anticipated products [31][32]. Acquisition and Growth Potential - **Rhode Acquisition**: e.l.f. views the acquisition of Rhode as a significant growth opportunity, with Rhode achieving $212 million in net sales with just 10 products. The brand is expected to expand its distribution and innovation pipeline [40][48]. - **Skincare Market**: e.l.f. sees a massive opportunity in the skincare market, with Naturium and e.l.f. Skin complementing each other. The skincare segment is projected to be a key driver of growth [57][59]. Capital Allocation and Financial Health - **Stock Repurchase**: e.l.f. recently repurchased $50 million of stock, indicating confidence in the company's long-term potential despite market volatility [30]. - **SG&A Expenses**: The company expects a significant increase in SG&A expenses, primarily due to investments in marketing and infrastructure to support growth [66][70]. Consumer Behavior and Market Conditions - **Consumer Spending**: Despite macroeconomic concerns, e.l.f. has seen strong consumer spending during the holiday season, indicating resilience in its value proposition [80]. Conclusion - e.l.f. Beauty is positioned for continued growth through strategic retail partnerships, innovative product development, and a strong focus on consumer engagement. The company remains optimistic about its market share potential and the impact of its recent acquisitions on future performance.

Core Insights - e.l.f. Beauty, Inc. (ELF) experienced solid top-line growth in Q2 of fiscal 2026, with net sales increasing by 14% due to market share gains, despite profitability pressures from tariffs [1][3][4] - Gross margin contracted by approximately 165 basis points to 69%, primarily due to higher tariff expenses, although pricing and product mix provided some compensation [1][9] - Operating income decreased significantly to about $7.7 million from $27.9 million year-over-year, indicating a substantial contraction in operating margin [2][9] Financial Performance - Adjusted EBITDA for e.l.f. Beauty totaled roughly $66 million, representing 19% of sales, down from the previous year's level, highlighting the impact of tariffs and increased expenses on profitability [2][9] - The company implemented a global $1 price hike on August 1, yet 75% of its product portfolio remains priced at $10 or less, maintaining its value positioning [3][4] Tariff Impact and Future Outlook - Easing tariff comparisons later in the fiscal year are expected to provide margin relief, as e.l.f. Beauty anticipates a lower average tariff rate moving into the next year [4][9] - Despite current profitability challenges due to tariffs, strong demand and effective pricing strategies position e.l.f. Beauty for potential margin recovery in the future [4] Industry Comparison - Coty Inc. reported a 100-basis-point decrease in adjusted gross margin to 64.5%, with tariffs being a significant factor affecting profitability [5] - The Estee Lauder Companies Inc. saw a gross margin expansion of 60 basis points to 73.3%, but also expects tariff-related challenges amounting to approximately $100 million for the fiscal year [6] Stock Performance and Valuation - e.l.f. Beauty's stock price has declined by 38.9% year-to-date, contrasting with the industry's decline of 1.1% [7] - The company trades at a forward price-to-earnings ratio of 32.48, which is higher than the industry average of 26.4 [10] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 13.6% for fiscal 2026, with a projected growth of 27.3% for fiscal 2027 [13]

Core Insights - e.l.f. Beauty, Inc. (NYSE:ELF) is recognized as one of the 12 oversold global stocks to invest in [1] - Morgan Stanley's Dara Mohsenian reaffirmed a "Buy" rating for e.l.f. Beauty with a price target of $121, reflecting strong market performance and growth potential [2] - Recent U.S. scanner data indicates a 15.3% year-over-year sales growth over the last two weeks [2] Sales Performance - The most recent week recorded a 13.8% increase in sales, supported by a 15.7% rise in weighted average pricing [3] - e.l.f. Beauty achieved an 85-basis-point year-over-year gain in market share [3] - Velocity increased by 11.8% year-over-year over the past four months, indicating consistent competitive strength [3] International Expansion - On November 20, 2025, e.l.f. Beauty announced its entry into the Gulf Cooperation Council (GCC) region through a partnership with Sephora [4] - The GCC region has the highest social media penetration rates globally, with social mentions exceeding 38% [4] - This expansion aligns with e.l.f. Beauty's goal of making beauty accessible globally while enhancing its strong U.S. performance [4] Product Focus - e.l.f. Beauty is dedicated to creating accessible, clean, vegan cosmetics and skincare products [5]