e.l.f. Beauty Soars on Rhode Acquisition, Raises Full-Year Outlook After Stellar Q3
e.l.f. Beauty (NYSE: ELF) delivered a powerhouse third-quarter performance, shattering expectations and raising its full-year forecast, as its strategic acquisition of skincare brand Rhode proves to be a transformative growth engine. The value-beauty leader reported net sales growth of 38% and a 79% jump in adjusted EBITDA, marking its 28th consecutive quarter of sales expansion—a streak few public consumer companies can claim.
"We are not just participating in the category; we are leading it," stated Chairman and CEO Tarang Amin during the earnings call. The quarter's standout was Rhode, contributing a staggering $128 million in sales and accounting for roughly 36 percentage points of the total growth. The brand's launches at Sephora in North America and the U.K. set historic records, with the U.K. debut outperforming the previous record-holder by five times.
Excluding Rhode, organic growth was a more modest 2%, which management attributed to softer consumption trends in key international markets like the U.K. and Germany. However, the core e.l.f. Cosmetics and e.l.f. Skin brands continued to outpace the broader market in the U.S., with consumption growing at roughly twice the category rate.
The company's financial health remains robust. Gross margin held steady at 71%, while disciplined spending improved SG&A leverage. e.l.f. ended the quarter with $197 million in cash and repurchased $50 million of its stock, signaling confidence in its intrinsic value. CFO Mandy Fields emphasized that even after the Rhode acquisition, the company maintains a strong balance sheet with net debt below 2x adjusted EBITDA.
Looking ahead, e.l.f. is doubling down on innovation and expansion. A major Spring 2026 lineup is planned, alongside a groundbreaking global fragrance collaboration with H&M. Retail expansion remains a key pillar, with increased space at Ulta Beauty and a new launch in Germany with DM. Internationally, where e.l.f. currently derives about 20% of sales (compared to over 70% for some rivals), management sees significant white space for growth.
Consequently, management raised its fiscal 2026 net sales outlook to a range of $1.240 billion to $1.245 billion, up from prior guidance. Adjusted EPS is now expected to be between $4.27 and $4.29. "Rhode's outperformance is the primary driver," Fields noted, while also highlighting the company's resilient consumption and market share gains as indicators of underlying strength.
Market Voices: Analyst & Investor Reactions
Priya Sharma, Senior Analyst at Luxe Insights: "This isn't just a beat; it's a validation of e.l.f.'s acquisition and integration playbook. They've turned Rhode into an immediate growth catalyst while maintaining core brand momentum. The raised guidance, even accounting for some international softness, shows remarkable operational confidence."
Marcus Chen, Portfolio Manager at ClearView Capital: "The 28-quarter growth streak is phenomenal, but the real story is margin resilience. In a promotional environment, holding 71% gross margin while investing heavily in marketing and digesting a major acquisition speaks to powerful brand equity and pricing power, even at the value end."
David R. Miller, Independent Shareholder (via investing forum): "Let's not get distracted by the Rhode sugar high. Organic growth was an anemic 2%! The U.K. and Germany are stumbling, and they're leaning on price hikes (15%!) to prop up sales. This feels like a house of cards built on acquisition debt and consumer tolerance that's wearing thin. What happens when the next trendy brand doesn't pan out?"
Anya Petrova, Beauty Retail Consultant: "The H&M fragrance collaboration is a masterstroke. It instantly grants e.l.f. global reach and entry into a new product category with a partner known for scale. It's a low-risk, high-reward move that perfectly aligns with their strategy of making premium-adjacent experiences accessible."