E.l.f. Beauty blows past Wall Street’s estimates, raises guidance for a third quarter in a row

E.l.f. Beauty, the viral cosmetics brand beloved by young consumers, raised its guidance for the third time in a row on Tuesday after it posted 85% sales growth during its holiday quarter.

The company saw torrid revenue growth even as it faced tough comparisons. The jump came on the heels of a 49% sales increase it saw in the year-ago period. 

Here’s how E.l.f. did in its third fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: 74 cents adjusted vs. 56 cents expected  
  • Revenue: $270.9 million vs. $239 million expected 

The company’s reported net income for the three-month period that ended Dec. 31, 2023, was $26.9 million, or 46 cents per share, compared with $19.1 million, or 34 cents per share, a year earlier. Excluding stock-based compensation and other nonrecurring charges, E.l.f. posted a net income of $42.9 million, or 74 cents per share. 

Sales rose to $270.9 million, up a staggering 85% from $146.5 million a year earlier. For the third quarter in a row, E.l.f. raised its outlook for the full year.

It now expects net sales to be between $980 million and $990 million in fiscal 2024, compared to a previous range of $896 million to $906 million. Analysts had expected E.l.f. to forecast full-year revenue of $927 million, according to LSEG. 

E.l.f. Is now expecting adjusted net income between $164 million and $166 million, or between $2.84 and $2.87 per share. That compares to a previous range of $144 million to $146 million, or $2.47 to $2.50 per share.

Analysts had expected adjusted full-year earnings of $2.74 per share, according to LSEG. 

“We can continue this momentum,” E.l.f.’s CEO Tarang Amin told CNBC in an interview. “As much growth as we’ve seen, I feel we can double our market share in color cosmetics over the next few years. We have an even bigger opportunity in skincare and then international … we grew 119% [during the quarter] and we’re still in the early days of international expansion.” 

The beauty brand has won over Gen Z and Gen Alpha consumers with its viral TikTok marketing and its ability to produce high-quality product “dupes” that mirror prestige makeup brands but come at a fraction of the price. It has collaborated with a wide range of influencers to expand its reach, including actress Jennifer Coolidge, who starred in E.l.f.’s Super Bowl commercial last year, and Loserfruit, also known as Lufu, who is one of the world’s top female gamers. 

The company’s ability to tap into the cultural zeitgeist with short form, digital content and create affordable products that resonate with consumers has paved the way for its outsize growth. While the bulk of E.l.f.’s sales comes from its wholesale channels with national retailers such as Walmart and Target, the company has been working to build out its digital business.

Online sales represented 24% of overall revenue during the quarter, compared to 15% in the year-ago period. During the quarter, E.l.f. tested the waters on TikTok’s growing shopping platform TikTok Shop and launched its Roblox experience, which has been played five million times, said Amin.

Read the full earnings release here.