e.l.f. Beauty’s second quarter saw continued sales growth and strong market share gains, but the market responded negatively to the results amid concerns over margin pressure and tariff-related cost increases. Management emphasized that volume growth, new product launches, and ongoing strength in both domestic and international markets supported the quarter. CEO Tarang Amin highlighted successful innovation efforts, stating, “Our Halo Glow Skin Tint was our top-selling cosmetics product in Q1,” and noted share gains across all key segments. However, CFO Mandy Fields acknowledged that gross margins declined due to incremental tariff costs, despite positive currency effects and ongoing cost management.

Is now the time to buy ELF? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From e.l.f. Beauty’s Q2 Earnings Call

• Alec Legg (Canaccord): Asked about the portion of inventory affected by high tariff rates and its timing on financial results. CFO Mandy Fields explained most Q2 inventory would be impacted by the 170% tariff, leading to further gross margin pressure.
• Dara Mohsenian (Morgan Stanley): Asked for clarification on what drives first half growth above 9%. Fields said the addition of Rhode will lift Q2, and highlighted ongoing innovation and market share gains in e.l.f.’s core business.
• Olivia Tong (Raymond James): Questioned the sustainability of U.S. core business growth versus scanner data trends. Fields responded that deceleration was tied to cycling last year’s launches and affirmed ongoing year-over-year growth, not expecting e.l.f. to decline.
• Mark Altschwager (Baird): Probed retailer reaction to price increases and potential order reductions. CEO Tarang Amin said retailer acceptance was good, with transparent communication seen as a positive, while Fields noted elasticity would be monitored.
• Peter Grom (UBS): Inquired about Rhode’s growth outlook and accretion to margins. Amin said Rhode’s growth potential is significant, especially with Sephora launches, and investments would target marketing and awareness to drive long-term accretion.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will focus on (1) tariff developments and their resolution, as these will directly affect margins and pricing strategies, (2) Rhode’s rollout across Sephora in North America and the U.K., and (3) the consumer response to price increases, particularly in the U.S. channels. Execution on new product launches and further expansion into international markets remain important markers of success.

e.l.f. Beauty currently trades at $117.12, up from $110.39 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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