Why is Rhode's growth embedded lower despite Sephora expansion? What's the retailer response to e.l.f.'s pull-forward innovation? What tariff rate is factored into gross margin, and what about refunds?

Rhode's outlook is balanced, with 9 points contribution until August, then becoming organic. The EU launch is significant but will be taken 'a quarter at a time.' Retailers are excited about e.l.f.'s upcoming innovation. A 35% tariff rate is assumed for FY27, down from 55% in FY26. Tariff refunds are not in the outlook but are expected and would be invested in value/unit growth. “what we've assumed in our outlook is a 35% tariff for this year. That's the rate that we're currently at, and we'll just continue to watch that as we go throughout the year.”

What's the scope of potential price adjustments? What's causing e.l.f. brand's value share pressure, and what's most important to revitalize it?

Price adjustments are being tested, with Halo Glow skin tint showing a 40% unit lift after a price reduction. More actions are coming. Value share pressure is due to slower spring innovation and lapping strong prior-year launches. Revitalization focuses on value, innovation, and disruptive marketing, which have historically driven growth. The overall portfolio, especially Naturium and Rhode, is performing strongly. “The current assumptions we have that are baked into our outlook is that we continue to see e.l.f. consumption around the rates that we've seen really in the last 12 weeks or so. So they definitely would be upside.”

How does the 4-5% organic sales guidance break down quarterly, especially after Q1's expected decline, considering ERP impacts and Rhode's integration? Are pricing actions baked into the outlook?

Q1 organic sales down high single digits due to SAP pull-forward. Q2 organic sales in mid-teens due to lapping prior-year shipping issues and Rhode becoming organic. H1 organic sales still expected around 4-5%. Pricing repositioning and additional innovations are *not* yet baked into the outlook and represent potential upside. “the initiatives that Tarang mentioned on the value, the additional innovations, those actually are not yet baked into our outlook. We want to see how things progress before we add those into our numbers.”

ELF

e.l.f. Beauty (ELF) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q4 FY26)· Consumer Staples· May 20, 2026

Source: earnings call transcript

Executive summary

e.l.f. Beauty Q4 FY26 — Strong Portfolio Growth Despite Core Brand Moderation

e.l.f. Beauty delivered its seventh consecutive year of industry-leading growth, driven by its diversified brand portfolio, particularly strong performance from Rhode and Naturium. While the core e.l.f. brand experienced moderated growth and slower-than-expected spring innovation, management is implementing targeted actions including pricing adjustments and fast-tracked innovation to reaccelerate unit growth. The company maintains a strong balance sheet and is focused on international expansion and leveraging its disruptive marketing engine across its brands.

Highlights

Net sales grew 25% in FY26 and 35% in Q4 FY26, marking the 29th consecutive quarter of net sales growth.
Rhode contributed $113 million, or approximately 34 percentage points, to Q4 net sales growth, exceeding expectations.
Q4 gross margin of 73% was up approximately 140 basis points compared to the prior year, driven by pricing benefits.
The company ended FY26 with a strong cash balance of $290 million, up from $149 million a year ago.
e.l.f. Beauty repurchased approximately $50 million of common stock in FY26, with $400 million remaining under authorization.

Concerns

e.l.f. brand global consumption moderated from high single digits in FY26 to low single digits in the last 12 weeks.
Spring 2026 innovation for the e.l.f. brand was off to a slower start than expected, not delivering historical lift.
Q1 FY27 organic net sales are expected to be down high single digits due to lapping a busy shipping period and ERP cutover.
Higher marketing and digital spend, along with investments in team and infrastructure, led to a decrease in Q4 adjusted EBITDA to $59 million (from $81 million YoY) and adjusted net income to $19 million (from $45 million YoY).
The company estimates $15 million to $20 million of incremental cost headwinds in FY27 if oil prices remain around $100 per barrel.

Guidance & targets

Category	Target	Timeline	Confidence
Net sales growth	approximately 12% to 14% high materiality	FY27	High
Adjusted EBITDA	$379 million to $385 million high materiality	FY27	High
Adjusted Net Income	$198 million to $201 million high materiality	FY27	High
Adjusted EPS	$3.27 to $3.32 per diluted share high materiality	FY27	High
Adjusted Tax Rate	approximately 25% to 26% medium materiality	FY27	High
Fully Diluted Average Share Count	approximately 60.5 million shares medium materiality	FY27	High
Rhode contribution to full year net sales growth	approximately 9 percentage points high materiality	FY27	High
Rhode net sales contribution (first 4 months)	approximately $140 million medium materiality	First 4 months of FY27	High
Organic net sales growth	up approximately 4% to 5% high materiality	FY27	High
Organic net sales growth	down high single digits high materiality	Q1 · FY27	High
Organic net sales growth	mid-teens range high materiality	Q2 · FY27	High
Gross margin	approximately flat year-over-year high materiality	FY27	High
Adjusted EBITDA margins	approximately 21%, up about 20 basis points year-over-year high materiality	FY27	High
Adjusted EBITDA margins	high teens medium materiality	H1 FY27	High
Marketing and digital spend as % of net sales	approximately 23% to 25% medium materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
e.l.f. Cosmetics Largest share gain among nearly 1,000 cosmetics brands tracked by Nielsen. Significant runway for growth to bring other retailers to Target's level. Global consumption moderated from high single digits in FY26 to low single digits in the last 12 weeks. Global retail sales: $1.8 billionU.S. market share gain: 115 basis pointsU.S. mass color cosmetics national share: 13%Target share: 21%Consecutive quarters of market share gains: 29	$1.8 billion	—	—	—
e.l.f. SKIN Applying same innovation strategy as e.l.f. Cosmetics. Significant opportunity for further share gains compared to the #1 brand's 13% share. Global retail sales: $200 millionU.S. mass skin care brand ranking: #11 (from #25 five years ago)U.S. mass skin care share: 2%	$200 million	—	—	—
Naturium Clinically effective biocompatible skin care brand acquired almost 3 years ago. Plenty of white space ahead. Global retail sales: $250 millionFastest-growing among top 50 skin care brands in Q4	$250 million	double its pre-acquisition levels	—	—
Rhode High-growth beauty brand acquired last August, continues to exceed expectations. Tremendous opportunity in coming years with further Sephora expansion. Global retail sales (annualized FY26): over $500 millionNet sales (FY26): approximately $390 millionNet sales growth YoY: over 80%#1 beauty brand ranking in Sephora North AmericaSephora global stores penetration: less than 20%MECCA Australia and New Zealand launch: biggest in history	$500 million (global retail sales, annualized FY26), $390 million (net sales, FY26)	over 80%	—	—

Product announcements

Product	Type	Timeline
Fragrance partnership with H&M	launch	January
Power Grip styling collection	launch	March
Keys Soulcare brand	discontinuation	recently
Rhode Caffeine Reset Mask and Peptide Lip Boots	launch	—

Deals & partnerships

Rhode Acquisition of high-growth beauty brand founded by Hailey Bieber.

Acquired last August, continues to exceed expectations.

Alicia Keys Transfer of the Keys Soulcare brand.

Decision allows e.l.f. Beauty team to better focus on its five core brands.

Risks & headwinds

Moderated e.l.f. brand global consumption and slower spring innovation Last 12 weeks (ongoing)

e.l.f. brand global consumption moderated from high single digits in FY26 to low single digits in the last 12 weeks.

Mitigation:Targeted pricing actions (e.g., Halo Glow skin tint price reduction), fast-tracked innovation for fall, increased international marketing, key leadership changes.

Higher investment in marketing, digital, team, and infrastructure Q4 FY26 (past), ongoing for FY27

Q4 adjusted EBITDA $59 million vs $81 million YoY; Adjusted net income $19 million vs $45 million YoY. Marketing and digital investment 31% of net sales in Q4 vs 23% YoY.

Mitigation:Strategic investments to drive future growth and unlock white space opportunities.

Commodity and transportation cost inflation (Middle East conflict) FY27

Estimated $15 million to $20 million of incremental cost headwinds in FY27 if oil prices remain around $100 per barrel.

Mitigation:Cost savings initiatives, pursuing refund on IEEPA tariffs ($58.5 million).

Tariffs FY26 (past), FY27 (ongoing)

Faced an average tariff rate of approximately 55% in FY26, more than double the 25% rate in FY25. FY27 outlook assumes 35% tariff rate.

Mitigation:Pricing benefits, pursuing IEEPA tariff refunds.

What to watch in Q1 FY27

e.l.f. brand unit velocity and consumption growth

Next quarter (Q1 FY27)

Current Low single digits (last 12 weeks)

Target Reacceleration of unit growth

Why it matters

Core e.l.f. brand growth is essential for overall company performance, and management is implementing pricing and innovation actions to address recent moderation.

e.l.f. brands global consumption has moderated from high single digits in fiscal '26 to low single digits in the last 12 weeks. Our spring 2026 innovation is off to a slower start than we expected. And as a result, we're not seeing the lift across our core items that spring innovation has historically delivered.

Find out whether ELF delivers this. Inve re-checks your case every morning.

Q&A highlights

Why was spring innovation slow, what's planned for fall, what prestige trends are inspiring them, and how are adjacent categories developing?

Spring innovation was below internal expectations but still strong relative to the category. Fall innovation is planned, and additional fast-tracked innovation will be in market before holidays. Prestige inspiration is broad and not dependent on a single season. Adjacent categories like fragrance (H&M) and hair care (Power Grip) showed good signals, but the primary focus remains on color cosmetics and skin care due to significant white space.

“this is really relative to our own expectations in terms of the offtake that we're expecting and what that does to our overall core.”

asked by Sydney Wagner · answered by Tarang Amin

2 min read 6 chapters

Detailed narrative

Brand Portfolio Strength and Diversification

e.l.f. Beauty highlighted its strong portfolio with 4 brands surpassing $200 million in retail sales, each built on value, innovation, and disruptive marketing. Acquisitions of Rhode and Naturium have significantly diversified the business, increasing non-e.l.f. brand sales from 0% to 30% of global consumption and skin care from 9% to 23%.

Manufacturing outside China also increased from 1% to over 45% of production, enhancing supply chain resilience.

e.l.f. Brand Performance and Strategic Actions

While e.l.f. Cosmetics delivered approximately $1.8 billion in global retail sales and gained 115 basis points of U.S. market share in FY26, its global consumption moderated to low single digits in the last 12 weeks due to slower spring innovation.

Management is addressing this with targeted pricing adjustments, such as reducing e.l.f. Halo Glow skin tint from $18 to $14, which resulted in a 38% unit lift on Amazon. Fast-tracked innovation for fall, increased international marketing, and key leadership changes are also underway to reaccelerate unit growth.

Rhode and Naturium Outperformance

Rhode, acquired last August, exceeded expectations with over $500 million in global retail sales and approximately $390 million in net sales in FY26, growing over 80% year-over-year. It achieved the #1 beauty brand ranking in Sephora North America and executed record-breaking launches internationally.

Naturium delivered nearly $250 million in global retail sales, doubling its pre-acquisition levels, and was the fastest-growing among the top 50 skin care brands in Q4, demonstrating significant white space opportunity.

International Expansion and Market Opportunity

International net sales grew 38% in FY26, now representing approximately 20% of total net sales, compared to legacy peers with over 70% international sales. The company launched in 8 international retail customers across 14 countries in FY26. Rhode is set to further expand its global presence by launching with Sephora in Europe across 19 countries in September, building on its record-breaking launch with MECCA in Australia and New Zealand.

Marketing and Innovation Engine

e.l.f. Beauty continues to leverage its disruptive marketing engine, successfully expanding e.l.f.'s unaided awareness from 13% in 2020 to 45% in 2025. Experiential marketing initiatives, such as e.l.f. Cosmetics and Rhode's activations at Coachella and Stagecoach, combine with community-led innovation to drive cultural impact and deepen consumer connection.

The company also successfully tested adjacent categories like fragrance and hair care, with the Power Grip styling collection selling out in 48 hours.

Leadership Changes and Portfolio Focus

Key leadership changes were announced to sharpen focus on the e.l.f. brands, including Kory Marchisotto as President of e.l.f. Brands and Oshiya Savur as Chief Marketing Officer, e.l.f. Brands. Ekta Chopra was appointed Chief Technology and AI Officer to drive digital transformation.

The company also decided to transfer the Keys Soulcare brand to Alicia Keys, allowing the team to concentrate on the five core brands that all demonstrated growth in FY26.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.