Financial Performance - Net sales for the six months ended September 30, 2025, increased by 14% to $343.9 million compared to the same period in 2024[3] - Adjusted net income for the six months ended September 30, 2025, was $40.7 million, with adjusted diluted earnings per share at $0.68[3] - The company reported a net income of $3.0 million on a GAAP basis for the three months ended September 30, 2025[3] - Net income for the six months ended September 30, 2025, was $36,307 thousand, a decrease of 45% compared to $66,575 thousand for the same period in 2024[23] - Adjusted net income for the six months ended September 30, 2025, was $92,050 thousand, down from $109,313 thousand in 2024, a decrease of 15.8%[30] Expenses - Selling, general and administrative (SG&A) expenses increased by $45.0 million to $231.1 million, representing 67% of net sales[3] - Adjusted SG&A for the six months ended September 30, 2025, increased by $45.9 million to $370.5 million, or 53% of net sales[3] - Selling, general and administrative expenses for the six months ended September 30, 2025, were $426,974 thousand, up 16% from $366,716 thousand in 2024[28] - The company incurred acquisition-related seller expenses of $47,100 thousand during the six months ended September 30, 2025[23] Cash and Assets - As of September 30, 2025, the company had $194.4 million in cash and cash equivalents, up from $96.8 million a year earlier[5] - Cash and cash equivalents at the end of the period increased to $199,403 thousand, compared to $96,768 thousand a year earlier, marking a growth of 106%[23] - Total assets increased to $2,318,782 thousand as of September 30, 2025, up from $1,237,015 thousand a year ago, representing a growth of 87%[21] Liabilities and Debt - Total liabilities increased to $1,179,773 thousand as of September 30, 2025, compared to $509,320 thousand a year ago, reflecting a rise of 131%[21] - Long-term debt increased significantly to $831,551 thousand as of September 30, 2025, from $156,648 thousand a year ago, an increase of 431%[21] Future Projections - The company expects an 18-20% increase in net sales for Fiscal 2026, projecting net sales between $1,550 million and $1,570 million[6][7] - Adjusted EBITDA for Fiscal 2026 is projected to be between $302 million and $306 million, compared to $297 million in Fiscal 2025[7] Operational Highlights - The company achieved a record-breaking launch of the rhode brand in Sephora North America, contributing to market share gains[2] - Adjusted EBITDA for the six months ended September 30, 2025, was $153,300 thousand, an increase of 4.4% from $146,763 thousand in 2024[25] - The company reported a net cash provided by operating activities of $50,648 thousand for the six months ended September 30, 2025, compared to $12,449 thousand in 2024[23]

Core Insights - E.l.f. Beauty's acquisition of Rhode is projected to significantly boost annual sales by $200 million in the current fiscal year, highlighting Rhode as a key growth driver for E.l.f. [1][2] - The acquisition, finalized for $1 billion, is expected to generate $300 million in revenue annually after Rhode's launch in Sephora stores, marking the largest brand launch in Sephora's North American history [2][3] Financial Performance - E.l.f. reported a net income of $3 million (5 cents per share) for the quarter ending September 30, a decline from $19 million (33 cents per share) a year earlier, despite strong sales from Rhode and other channels [4] - Total sales increased to $344 million, reflecting a 14% rise from $301 million the previous year, although the company missed revenue estimates [4][9] - The company's gross margin fell by 1.65 percentage points due to increased tariff costs, leading to an 84% drop in net income [5][6] Future Outlook - E.l.f. anticipates full-year revenue between $1.55 billion and $1.57 billion, indicating an 18% to 20% growth, but below the $1.65 billion expected by analysts [7][8] - Rhode's contribution to sales is estimated to account for approximately 13% of the projected revenue, underscoring the strategic importance of the acquisition [8] - Adjusted earnings per share are expected to be between $2.80 and $2.85, significantly lower than the $3.58 forecasted by analysts [8]

Group 1 - E.l.f. Beauty forecasts net sales for fiscal 2026 to be between $1.55 billion and $1.57 billion, an increase from $1.31 billion in 2025 [1] - The company expects adjusted net income to be in the range of $165 million to $168 million, down from $198 million [2] - In Q2, net sales rose 14% to $343.9 million, although this was below Wall Street's forecast of $366 million [2] Group 2 - E.l.f. gained 140 basis points of market share for its namesake brand and had a record launch of Rhode in Sephora North America [3] - The launch of Rhode was the largest in Sephora North America's history, being two-and-a-half times larger than the second-largest launch [4] - The company refrained from providing a full-year 2026 estimate earlier due to uncertainties related to tariffs [4] Group 3 - The average tariff rate for the current year is 56%, compared to 25% last year, impacting the company's guidance [5] - E.l.f. has a strong balance sheet post-Rhode acquisition, allowing for potential future acquisitions if they meet high criteria [6] - The primary focus remains on strong organic growth, with significant opportunities across the brand portfolio [6]

Core Viewpoint - Wall Street is observing a bifurcated or "K-shaped" economy as consumer spending behaviors diverge, with wealthier Americans increasing their spending while lower-income consumers are cutting back significantly [1][2]. Consumer Spending Trends - Wealthier Americans are spending more, benefiting from stock market gains and rising home values, while lower-income consumers are facing challenges due to inflation, with the Consumer Price Index showing a 0.3% monthly increase and an annual inflation rate of 3% [2][4]. - Companies like Chipotle report that consumers earning less than $100,000, representing about 40% of their customer base, are spending less frequently due to economic concerns, leading to a 0.8% decline in traffic for the quarter [6]. Earnings Reports and Company Responses - Recent earnings reports indicate the emergence of the K-shaped trend, with companies such as Yum Brands, McDonald's, E.l.f. Beauty, Tapestry, and Under Armour expected to report similar trends in their upcoming quarterly earnings [5]. - Coca-Cola's growth is driven by higher-priced products, while Procter & Gamble noted that wealthier customers are purchasing more from club retailers, contrasting with lower-income shoppers who are significantly reducing their spending [7]. - McDonald's has acknowledged the "two-tier economy" by expanding its value menu in response to changing consumer behaviors [8].

Group 1 - e.l.f. Beauty Inc. has had its price target raised by JPMorgan analyst Andrea Teixeira from $130 to $168, maintaining an Overweight rating on the shares [1][2] - The Q3 2025 preview indicates that most large-cap companies in the beauty sector are expected to report weak performance due to depressed consumer demand in the US and decelerating trends in Western Europe [2] - Despite the challenging retail environment, e.l.f. Beauty is anticipated to positively surprise investors [2] Group 2 - e.l.f. Beauty Inc. is a global beauty company that offers a range of cosmetics and skin care products, including eye, lip, face, paw, and skin care items [3]

Core Insights - e.l.f. Beauty has released its fourth annual Impact Report, emphasizing its mission to make beauty accessible to everyone [1] - The report is themed "the every," showcasing e.l.f.'s commitment to being a bold disruptor with a kind heart [1] - To support the Impact Report, e.l.f. has launched an international consumer campaign titled "Give an e.l.f." [1] Company Overview - e.l.f. Beauty is positioned as a purpose-led and results-driven company [1] - The company focuses on accessibility in beauty products for all demographics [1] Campaign Details - The "Give an e.l.f." campaign aims to amplify the message of the Impact Report [1] - The campaign is described as bold and international, indicating a wide-reaching marketing strategy [1]

Core Insights - E.L.F. is experiencing significant growth, highlighted by the acquisition of Road by Haley Bieber and plans for aggressive international expansion [1][38] - The company's marketing strategy has evolved, with marketing spend increasing from 7% to 24-26% of net sales, focusing on community engagement and celebrity partnerships [3][4][5] - E.L.F. aims to become the number one brand in color cosmetics, expand its skincare category, and increase international sales, which currently account for less than 20% of total sales [16][18] Marketing Strategy - Marketing is central to E.L.F.'s operations, with a substantial increase in marketing investment leading to high returns on investment [4][5] - The company partners with celebrities to enhance brand visibility and engagement, with successful collaborations including Alicia Keys and Haley Bieber [6][10] - E.L.F. maintains a consistent marketing spend across its brands, focusing on overall brand performance rather than individual celebrity influence [11][14] Growth Strategy - E.L.F.'s growth strategy is anchored in three key areas: leading in color cosmetics, expanding skincare, and increasing international presence [16][18] - The acquisition of Ntorium has significantly boosted E.L.F.'s skincare sales, which previously accounted for 9% of total sales and have since doubled [19] - The company is actively exploring international markets, leveraging community demand and partnerships with retailers like Rossman in Germany and Sephora in Australia [30][32] Financial Performance - E.L.F. has a strong cash position and is focused on investing in brand growth and infrastructure, including a recent SAP implementation [54][55] - The company has implemented a $1 price increase across all products as a strategy to mitigate tariff impacts, receiving positive feedback from consumers [52][53] - E.L.F. is cautious about providing future financial guidance due to uncertainties surrounding tariffs, which currently stand at approximately 55% [58][64] Supply Chain and Tariffs - Approximately 75% of E.L.F.'s supply chain is still based in China, down from 99% five years ago, as part of a diversification strategy [48][49] - The company is mitigating tariff impacts through pricing adjustments, supply chain diversification, and expanding international sales [50][51] Distribution Channels - E.L.F. recognizes the evolving landscape of beauty retail, with non-beauty retailers like Gap re-entering the beauty space to drive traffic [65][66] - The company emphasizes convenience in distribution, aiming to meet consumer demand across various retail channels [67]

Group 1 - e.l.f. Beauty, Inc. is a value-oriented cosmetics company based in Oakland, with a stock price increase of 9% for the year, despite volatility due to reliance on China for manufacturing [1] - Concerns regarding the stock's reliance on China are considered "baked into the stock," indicating that current market conditions have already accounted for these risks [2] - The recent parabolic move in the stock price suggests it may be overvalued at this time, prompting recommendations to trim positions rather than buy more [2] Group 2 - e.l.f. Beauty develops and sells products under various brands, including e.l.f. Cosmetics and e.l.f. Skin, indicating a diverse product portfolio [2] - There is a belief that certain AI stocks may offer greater upside potential and less downside risk compared to e.l.f. Beauty, suggesting a competitive landscape in investment opportunities [2]

Company Performance - e.l.f. Beauty's stock closed at $127.42, reflecting a -6.94% change from the previous day's closing price, underperforming the S&P 500's 1.07% gain [1] - Over the past month, e.l.f. Beauty shares have decreased by 2.17%, while the Consumer Staples sector lost 1.23% and the S&P 500 gained 1.08% [1] Earnings Projections - The upcoming earnings release is anticipated, with projected earnings per share (EPS) of $0.58, indicating a 24.68% decrease from the same quarter last year [2] - Revenue is forecasted to be $369.5 million, representing a 22.72% growth compared to the same quarter of the previous year [2] Full Year Estimates - For the full year, earnings are projected at $3.53 per share and revenue at $1.65 billion, showing changes of +4.13% and +25.61% respectively from the previous year [3] - Recent changes in analyst estimates are important as they reflect short-term business trends, with positive revisions indicating optimism about the business outlook [3] Valuation Metrics - e.l.f. Beauty has a Forward P/E ratio of 38.79, which is a premium compared to the industry average Forward P/E of 16.05 [6] - The company's PEG ratio is currently 2.4, while the Cosmetics industry has an average PEG ratio of 1.35 [6] Industry Context - The Cosmetics industry is part of the Consumer Staples sector and currently holds a Zacks Industry Rank of 226, placing it in the bottom 9% of over 250 industries [7] - The Zacks Industry Rank assesses the strength of industry groups, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [7]

Core Insights - e.l.f. Beauty's recent acquisition reported weaker-than-expected sales for the second quarter, leading to a decline in its stock price [5] Company Performance - e.l.f. Beauty disclosed its latest acquisition's sales performance in a filing with the U.S. Securities and Exchange Commission, indicating softer sales than anticipated [5]