e.l.f. Beauty Posts Q2 Sales in Line with Estimates, Stock Drops 11.8%

e.l.f. Beauty reported Q2 sales of $353.7 million, up 9% YoY, meeting Wall Street's estimates. However, next quarter's revenue guidance of $328.2 million fell 8.5% short of analysts' estimates. The company's non-GAAP profit of $0.89 per share was 6.4% above estimates. Despite this, the stock dropped 11.8%.

OAKLAND, CA — e.l.f. Beauty (NYSE: ELF) reported its second-quarter earnings on Wednesday, with mixed signals for investors. The cosmetics company reported adjusted earnings per share (EPS) of $0.89 for the quarter ended June 30, 2025, exceeding analyst estimates of $0.84. Revenue increased 9% year-over-year to $353.7 million, meeting Wall Street's estimates of $355.26 million [1].

However, the stock dropped 11.8% following the announcement, despite the positive earnings. The company's gross margin decreased approximately 215 basis points to 69%, primarily due to tariffs, partially offset by favorable foreign exchange impacts and mix. Adjusted EBITDA grew 12% YoY to $87.1 million, representing 25% of net sales [1].

e.l.f. Beauty's stock price closed at $110.50, up 65.32% in the last three months but down -39.20% in the last 12 months. The company's Financial Health score is "great performance" according to InvestingPro [3].

For the first half of fiscal 2026, e.l.f. Beauty expects net sales growth to exceed the 9% reported in the first quarter. However, the company anticipates adjusted EBITDA margins of approximately 20%, down from 23% in the first half of fiscal 2025, primarily due to higher tariff costs [1].

The company also announced it had completed its acquisition of Rhode, a beauty brand founded by Hailey Bieber, for $800 million, with potential earnout consideration of up to $200 million based on future growth over three years [1].

As of June 30, 2025, e.l.f. Beauty had $170 million in cash and cash equivalents and $256.7 million in long-term debt [1].

Despite the mixed signals, hedge funds and institutional investors remain bullish on e.l.f. Beauty. American Assets Inc., for instance, purchased 12,600 shares valued at approximately $791,000, representing about 0.3% of their portfolio [4].

References:
[1] https://www.investing.com/news/earnings/elf-beauty-stock-surges-12-after-beating-q2-earnings-revenue-estimates-93CH-4174370
[2] https://www.businessoffashion.com/news/beauty/elf-beauty-sephora-entry-earnings/
[3] https://www.investing.com/news/earnings/elf-beauty-earnings-beat-by-005-revenue-fell-short-of-estimates-4174409
[4] https://www.marketbeat.com/instant-alerts/filing-american-assets-inc-buys-shares-of-12600-elf-beauty-nyseelf-2025-08-05/