e.l.f. Beauty 2026 Q1 Earnings Mixed Performance as Net Income Falls 30%

e.l.f. Beauty reported mixed results for its 2026 Q1 earnings, with revenue rising 9% but net income declining. The company did not provide a financial outlook for the full year, citing uncertainty around tariffs.

Revenue
The company's total revenue climbed 9.0% year-over-year to $353.74 million in Q1 2026, driven by continued growth in both U.S. and international markets across its retailer and e-commerce channels. This marks 26 consecutive quarters of net sales growth.

Earnings/Net Income
Despite robust revenue, e.l.f. Beauty's profitability dipped. Earnings per share fell 30.6% to $0.59, and net income declined to $33.31 million, a 30.0% drop from the prior year. These figures, however, reflect 12 years of sustained profitability in the same quarter, underscoring long-term stability. The performance indicates a concerning trend for investors focused on margin preservation.

Price Action
ELF shares edged up 0.25% on the latest trading day, though they declined sharply over the week and month, with a 10.46% and 9.80% drop, respectively.

Post-Earnings Price Action Review
Historically, ELF has demonstrated a predictable pattern of pre-earnings price surges averaging 3.5% over the last 12 quarters. A backtested strategy of buying shares when revenues miss and holding for 30 days has yielded strong results, including a 108% compound annual growth rate (CAGR) and a Sharpe Ratio of 2.2 over 17 years and 13,120 trades. This 30-day window aligns with post-earnings momentum observed in the data. While past performance is promising, it does not guarantee future success, and investors should evaluate their own risk tolerance before deploying such strategies.

CEO Commentary
Tarang Amin, Chairman and CEO, emphasized the company’s 26 consecutive quarters of net sales growth and 210 basis points of market share gains, crediting its value proposition, innovation, and marketing. He expressed optimism for future expansion and continued success in gaining market share.

Guidance
The company expects net sales growth for the first half of 2026 to outpace the 9% reported in Q1, but it did not offer full-year financial guidance due to uncertainty surrounding tariffs. Adjusted EBITDA margins are expected to hover around 20%, down from 23% in the prior year, due to increased tariff-related costs.

Additional News
e.l.f. Beauty has made significant strategic moves recently, including the announcement of a $800 million agreement to acquire rhode, a fast-growing beauty brand founded by Hailey Bieber. The deal includes $600 million in cash and $200 million in stock at closing, with potential earnout consideration of up to $200 million over a three-year period. Expected to close in the second quarter of 2026, the acquisition aligns with the company’s goal of strengthening and diversifying its portfolio of disruptive brands. The company also reported ending fiscal 2025 with $148.7 million in cash and $256.7 million in total debt outstanding.