Lead: E.l.f. Beauty reported stronger-than-expected third-quarter results on Feb. 4, 2026, driven by global retail and e-commerce growth and the recent Rhode acquisition. Adjusted EPS came in at $1.24 versus $0.72 expected, and revenue was $490 million versus $460 million expected, prompting management to raise its full-year revenue outlook. Shares jumped as much as 15% in after-hours trading before surrendering most gains. The company said Rhode contributed meaningfully to Q3 sales and increased its contribution forecast for the fiscal year.
Key Takeaways
- Adjusted EPS: $1.24 in Q3 FY2026, versus $0.72 expected by LSEG analysts.
- Revenue: $490.0 million reported, ahead of the $460.0 million consensus estimate.
- Net sales rose 38% year-over-year to $489.5 million from $355.0 million a year earlier.
- Adjusted net income was $74.5 million, up from $43.0 million in the prior-year quarter.
- Rhode acquisition (~$1 billion deal) added $128 million to Q3 net sales and is now projected to add up to $265 million this fiscal year, an increase of $65 million from prior guidance.
- Company raised full-year revenue guidance by $42 million–$50 million, narrowing downside risk to prior forecasts.
- e.l.f. reported 130 basis points of market-share gains for its namesake cosmetics brand in Q3 and highlighted a record Sephora U.K. launch for rhode.
- After-hours shares rose as much as 15% before giving back most gains, reflecting both investor enthusiasm and profit-taking.
Background
E.l.f. Beauty, known for value-driven mass-market cosmetics and increasingly for prestige-shelf placements, has reported consistent growth over multiple years. Management pointed to a string of expansionary quarters—28 consecutive quarters of category-leading growth—as evidence of a durable model combining product innovation, marketing, and broad retail distribution. The company sells through an array of channels including national retailers, specialty chains, and its own e-commerce platform, which together contributed to the quarter’s top-line strength.
The company closed a roughly $1 billion acquisition of Hailey Bieber’s skincare brand Rhode earlier in the fiscal year, a deal designed to expand e.l.f.’s foothold in skin care and prestige retail. Industry observers have been watching how quickly Rhode’s sales can be scaled through e.l.f.’s distribution infrastructure and whether the brand’s higher price points will meaningfully improve overall margins. The cosmetics sector is competitive, with incumbents and DTC brands vying for shelf space, consumer attention, and influencer-driven demand.
Main Event
For the quarter ended in Q3 FY2026, e.l.f. reported adjusted EPS of $1.24 and revenue of $490 million, beating LSEG consensus on both metrics. Management attributed the outperformance to both organic momentum across core markets and the incremental sales from Rhode, which contributed $128 million to the quarter’s net sales growth. Net sales of $489.5 million represent a 38% increase compared with $355 million in the same quarter a year earlier.
The company quantified brand-level gains: the namesake e.l.f. Cosmetics brand captured roughly 130 basis points of market share in the quarter, while rhode recorded a strong U.K. launch at Sephora. Those channel and regional wins combined with promotional cadence and product launches to lift comparable results across retailers and e-commerce. Adjusted net income rose to $74.5 million from $43.0 million a year earlier, reflecting higher revenue and the contribution of premium-priced skin-care items.
Following the release, e.l.f. raised its full-year revenue guidance by $42 million to $50 million and increased the expected contribution from Rhode to as much as $265 million for the fiscal year—$65 million higher than its previous estimate. Market reaction was immediate: shares jumped up to 15% in extended trading before retracing most of that move, indicating both investor approval and short-term volatility.
Analysis & Implications
The beat on EPS and revenue indicates the company is executing on a dual strategy: scaling core value brands while integrating a higher-end skin-care asset. Rhode’s $128 million contribution in a single quarter is sizable relative to e.l.f.’s historical size and suggests the acquisition is accelerating near-term top-line growth. If rhode continues to ramp toward the newly guided $265 million annual contribution, the transaction will have a material effect on the firm’s sector positioning.
However, integration risk remains relevant. Converting Rhode’s sales into durable, profitable revenue depends on inventory management, promotional strategy, and retail placement at prestige doors. Higher average selling prices from rhode could lift blended ASPs and gross margin, but promotional pressure and distribution costs in new channels could offset some margin benefit in the near term. Investors should watch gross-margin trends and operating-expense cadence in the coming quarters for clarity.
The upgraded full-year outlook reduces near-term execution uncertainty and buys management time to focus on longer-term initiatives such as international expansion and product innovation. That said, the cosmetics market can be sensitive to shifting consumer preferences and macroeconomic conditions. Continued market-share gains—130 basis points in Q3 for the e.l.f. brand—are encouraging, but sustaining that trajectory will require consistent product hits and channel execution against well-funded competitors.
Comparison & Data
| Metric | Q3 FY2026 Reported | YoY Change | LSEG Estimate |
|---|---|---|---|
| Adjusted EPS | $1.24 | Up from $0.74 | $0.72 |
| Revenue | $490.0M | Up from $355.0M (38%) | $460.0M |
| Adjusted Net Income | $74.5M | Up from $43.0M | — |
| Rhode contribution (Q3) | $128.0M | — | — |
| Guided Rhode FY contribution | Up to $265.0M | Up $65.0M vs prior | — |
The table highlights the magnitude of the beat: revenue was $30 million ahead of consensus and adjusted EPS nearly doubled expectations. Comparing to the prior-year quarter, net sales jumped 38%, a combination of organic growth and the Rhode acquisition. Readers should note that the reported EPS includes acquisition-related revenue; analysts will parse margin and integration effects over subsequent quarters.
Reactions & Quotes
Company statement and market reaction framed the release. Management emphasized sustained category leadership and the role of new product launches and marketing in driving growth.
“A continuation of the consistent, category-leading growth we’ve delivered over the past 28 quarters,”
Tarang Amin, CEO, e.l.f. Beauty (company statement)
The CEO’s comment underscores the company’s messaging around long-term momentum. The firm also highlighted its “value proposition” and marketing engine as key growth levers in the same statement, pointing to both mass-market reach and new prestige distribution for rhode.
“Our value proposition… continues to fuel our brands,”
Tarang Amin, CEO, e.l.f. Beauty (company statement)
Short, focused quotes from management were paired with immediate investor activity: an initial 15% after-hours rise in the stock, followed by partial retracement, suggests traders are weighing the sustainability of the acquisition-driven growth against integration and margin risk.
Unconfirmed
- Whether Rhode will sustain its elevated sales run-rate beyond the current fiscal year remains unconfirmed and depends on integration and repeat-purchase behavior.
- The precise near-term margin impact of Rhode after promotional activity and distribution costs is not yet fully disclosed and requires subsequent quarterly disclosure.
Bottom Line
E.l.f.’s Q3 results represent a clear near-term win: the company beat estimates on EPS and revenue, posted strong year-over-year sales growth, and raised its full-year revenue target. The sizable Rhode contribution ($128 million in Q3) is the headline driver of the upgrade and validates the early-term commercial potential of the acquisition.
Looking ahead, investors should monitor margin trends, the durability of market-share gains, and Rhode’s integration into e.l.f.’s distribution network. If management converts the revenue lift into sustainable margin improvement and continued market-share gains, the acquisition could be a transformational step; if not, investors may see amplified volatility as the business digests the higher-priced brand.