e.l.f. Beauty raises forecast after 38% quarterly sales rise

Core Insights - e.l.f. Beauty reported a 38% growth in net sales for the third quarter, raising its fiscal 2026 revenue outlook to 22%-23% growth [1] - The company’s net sales for the quarter reached $489.5 million, driven by increased volumes in both store-based retail and e-commerce channels [1] - Full-year revenue projection was increased from an expected 18%-20% growth to a new forecast [1] Financial Performance - Quarterly net income rose to $39.3 million from $17.2 million year-over-year, with adjusted net income increasing to $74.4 million from $43.03 million [2] - Diluted earnings per share were reported at $0.65, or $1.24 on an adjusted basis, while adjusted EBITDA surged 79% year-on-year to $123.02 million, representing 25% of net sales [2] - Gross margin decreased by approximately 30 basis points to 71%, attributed to higher tariff-related costs, partially offset by pricing measures and product mix [2] Expenses Overview - Selling, general and administrative (SG&A) expenses increased by $61.7 million to $279.9 million, with adjusted SG&A rising by $56.3 million to $249.2 million [3] - The rise in expenses was primarily due to higher marketing, merchandising, distribution spending, and increased compensation and benefits, depreciation, and professional fees [3] - For the nine months ending December 31, 2025, net sales grew by 21% to $1.18 billion [3] Nine-Month Financial Summary - Net income for the nine-month period was $75.6 million, down from $83.8 million in the same period last year, while adjusted net income rose to $166.5 million from $152.3 million [4] - Diluted earnings per share were $1.28, or $2.81 on an adjusted basis, with adjusted EBITDA increasing by 28% to $276.3 million, representing 23% of revenue [4] - SG&A expenses expanded by $122 million to $706.9 million, with adjusted SG&A growing by $102.2 million to $619.8 million [4] Fiscal 2026 Outlook - For fiscal 2026, e.l.f. Beauty expects net sales to be between $1.60 billion and $1.61 billion, up from a previous forecast of $1.55 billion to $1.57 billion [5] - The company projects adjusted EBITDA of $323 million to $326 million, adjusted net income of $180 million to $183 million, and adjusted diluted earnings per share of $3.05 to $3.10, based on approximately 59 million diluted shares outstanding [5]