e.l.f. Beauty Q1 Earnings Beat Estimates, Sales Rise 9% Y/Y

Core Insights - e.l.f. Beauty, Inc. reported strong fiscal first-quarter results for 2026, with both net sales and earnings surpassing expectations, although earnings decreased compared to the previous year [1][3][9] Financial Performance - Adjusted earnings per share were 89 cents, exceeding the Zacks Consensus Estimate of 84 cents, but down from $1.10 in the same quarter last year [3][9] - Net sales increased by 9% year-over-year to $353.7 million, slightly above the consensus estimate of $353 million, driven by strong performance in retail and e-commerce channels [3][9] Market Position - The company gained 210 basis points in market share, marking 26 consecutive quarters of category-leading growth, attributed to a strong value proposition, innovation, and effective marketing [2][9] Cost and Margin Analysis - Gross margin contracted by 215 basis points to 69%, influenced by tariffs, though partially offset by favorable foreign exchange impacts [4] - Adjusted selling, general, and administrative expenses rose by $12.9 million to $177.3 million, primarily due to increased professional fees and marketing costs, despite reductions in compensation and operational costs [5] EBITDA and Cash Flow - Adjusted EBITDA was $87.1 million, reflecting a 12% increase from the previous year, with an adjusted EBITDA margin of 25% [6] - The company ended the quarter with cash and cash equivalents of $170 million and net cash from operating activities of $27.2 million [7] Future Outlook - The company has not provided a full-year financial outlook for fiscal 2026 due to tariff uncertainties but expects net sales growth in the first half to exceed the 9% increase reported in Q1 [8][9] - Adjusted EBITDA margins for the first half of fiscal 2026 are anticipated to be around 20%, down from approximately 23% in the same period of fiscal 2025, primarily due to higher tariff costs [8]