Shirley Pinkson Manas, Susan Yara, Hailey Bieber, Alicia Keys and Renee Snyder, left to right, and e.l.f. Beauty welcomes rhode to its family at the NYSE. (Photo by Diane Bondareff/Invision for e.l.f. Beauty/AP Content Services)
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E.l.f. Beauty has delivered another quarter of blockbuster growth, but the biggest surprise in its latest earnings wasn’t just the strength of sales, it was how the cosmetics company plans to deploy an unexpected $50 million windfall from tariff refunds to strengthen its position in an increasingly crowded beauty market.
The California-based beauty brand reported first-quarter fiscal 2027 revenue of $479.4 million, a 36% increase from a year earlier, comfortably beating analyst expectations. Adjusted earnings came in at $1.75 per share, more than double Wall Street forecasts, prompting the company to raise its full-year guidance for both revenue and profits.
Behind the earnings beat was a one-off boost from tariff refunds after duties previously paid by the company were struck down by the U.S. Supreme Court. During the quarter ending June 30, e.l.f. received approximately $50 million in tariff refunds, alongside related interest payments, lifting net income to $66.6 million from $33.3 million a year prior and expanding gross margins by around 14 percentage points.
Rather than banking the unexpected gain, CEO Tarang Amin said the company intends to reinvest virtually all of it into making its brands more competitive.
“Our plan is to fully reinvest that money in both pricing, to have a superior value proposition, as well as increased marketing across our entire portfolio of brands,” Amin said following the results. “We feel we never should have had the tariffs to begin with.”
E.l.f. Beauty Inc., a U.S.-based cosmetics and skincare company known for affordable and cruelty-free beauty products. (Photo illustration by Cheng Xin/Getty Images)
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The strategy reflects the philosophy that has helped transform e.l.f. from a value cosmetics challenger into one of the fastest-growing names in global beauty. While many consumer brands have used inflation and tariffs to justify permanent price increases, e.l.f. is using fresh capital to sharpen its value credentials while increasing investment behind customer acquisition and brand awareness.
Even stripping out the tariff benefit, the business continues to show improving profitability. Management said gross margins would still have expanded by roughly 3.5 percentage points thanks to pricing actions introduced last year and a more favourable tariff environment.
That pricing strategy has become increasingly sophisticated. Rather than applying blanket discounts, e.l.f. has been analysing customer purchasing behaviour across roughly 80% of its product range to determine where lower prices actually stimulate demand.
The company found that reducing prices by an average of around $1 across much of the portfolio produced little change in purchasing behaviour for about 90% of products. Consumers continued buying hero products such as the company’s bestselling Power Grip Primer regardless of small price adjustments, suggesting strong brand loyalty and pricing resilience.
Other products proved more price sensitive. Cutting the price of Cream Glide Lip Liner from $3 to $2 generated a measurable increase in sales volumes, providing the company with detailed data on where promotional investment delivers the greatest return.
E.l.f. Beauty Raises Guidance
The strong quarter also prompted management to raise full-year guidance. The company now expects fiscal 2027 revenue of between $1.94 billion and $1.97 billion, up from previous guidance of $1.84 billion to $1.87 billion and ahead of analyst expectations.
Growth is also becoming increasingly diversified geographically. During the quarter, the company continued expanding into Europe through Sephora while broadening distribution with Boots in the U.K. It has also entered Brazil, giving the business exposure to one of Latin America’s largest beauty markets.
At the same time, the company’s brand portfolio has expanded following its acquisition of Rhode, the skincare label founded by Hailey Bieber, last year. Rhode contributed approximately $160 million in quarterly sales, adding a premium skincare brand that complements e.l.f.’s mass-market positioning and broadens its appeal across different consumer segments.
The acquisition demonstrates another shift in e.l.f.’s evolution. Once known almost exclusively as a low-cost cosmetics brand, the company is increasingly positioning itself as a diversified beauty. And while the tariff refund itself may not recur, with around $8 million still expected to be received, management’s willingness to recycle that cash into the business highlights confidence that sustained market share gains are more valuable than a temporary profits boost.
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